Learning From Failure.

Business Lesson from Failures in 1979 - The best way to learn about the Future

All decisions are not equal. Some choices will not impact your Future or the Future of your company, and other options will result in chaos and disorder and the ultimate ruin of your enterprise or, perhaps even, your life. Let’s face it, we make 100’s of decisions every month, and the vast majority can be reversed in short order if you are wrong. But some choices have long-term consequences.

This series of posts describes a methodology to isolate the decisions that are very important and ways to test the various solution sets to ensure you win more than you lose. No time in our history is this needed more than now. Public Health and Saftey are facing enormous challenges, and we must make the right choices for humankind.

I learned the four “Acid Tests” for making good choices by failing with my first company Insta-Call. The story of success was also achieved by applying these tests to any major decisions I had to make while I built Calian Technologies from a one-person. consulting company into a publicly-traded technology services business with over $ 200M per year sales. (CGY: TSX ) at the time that I retired from the Board in 2012.

The lessons of failure were brutal, but the awards earned by applying the study of failure were incredible. The story of learning starts with my first company -- Insta-Call Ltd.

Insta-Call -  My Six-Month MBA Course

It was Christmas, and a young Prime Minister, Joe Clark, and I shared a similar experience; we were both, albeit and under differing circumstances, about to fail. He was a 39-year-old, Prime Minister, starting the ill-fated 1979 Christmas election campaign, and I was a 29-year-old, risk-taking entrepreneur, standing alone, at the Ottawa International Airport, watching my fortunes fade. 

We were both at that airport at Christmas in 1979 on our independent journeys. He is boarding his campaign plane heading for electoral defeat, and I, in my radio pager rental booth, was waiting for my first and final customer and total personal devastation.   Joe lost that election to a rejuvenated Pierre Trudeau. B March 3, 1980, Trudeau was sworn in as Prime Minister, and my business was teetering on the edge of bankruptcy, only to tip ultimately, within a few weeks. We both were bringing it on ourselves by making bad choices, but he was high profile, and mine was just sad.

 After losing that Christmas election in early 1980, Joe stayed on as Leader of the Progressive Conservative Party and, by all reports, did a solid job as Leader of the opposition. In 1983, Joe Clark decided to hold a conservative leadership convention after only receiving a 66% personal approval rating at the biennial convention. He lost to rising star Brian Mulroney, who, upon becoming the Leader, went on to win a majority government in 1984. The ex-PM worked as a senior member of Mulroney’s cabinet until the Progressive Conservatives lost power in 1993. That year, Joe dropped out of politics to return as the Leader again in 1998. 

I did not have the chance to meet this “proud” but decent man until after he re-entered politics. It was a pleasant experience, he is a wise and thoughtful man, and it was hard to understand how he lost his chance to affect change in Canada. In politics, mistakes usually are judgment errors, and those errors are complicated to quantify. Some would argue that calling that leadership convention in 1983 was a mistake in judgment, and had he not, it might have been him who won the 1984 election. I would suspect he felt strongly that his judgment had been sound. I, on the other hand, had crashed, leaving me no option but to accept that every decision I made had been my fault.  

Whether Joe Clark saw his choice as an error, or a necessity, has always been an intriguing political question. Maureen McTeer elaborated on Clark’s decision in her 2003 autobiography In My Own Name. Mrs. McTeer argued that her husband Joe anything less than 75% endorsement would not be enough to forge ahead. He believed that he could beat the challengers, which was a judgment mistake, as evidenced by the result. If it was not an error, it was an exciting conclusion to a set of facts that even raised the eyebrows of Charles, Prince of Wales, on a State visit in 1987. He asked Joe, “why 66% was not enough? “Joe had made a decision, and the consequence of that choice was sad for him and great for Brian Mulroney.

While the judgments of Joe Clark were known on a national and even international stage, my poor business choices were only truly understood by myself, my friends and the professionals who helped me start the company. My errors did not have the potential to alter the federal government's direction, but they did feel grotesque to me. The failure of Insta-Call in 1979 was a textbook case of a bad idea, executed poorly, without forethought, or any common business sense. Yet, without loss, this awakening of humility, I would have never have learned the four acid tests for successful decision making, and I would not succeed with Calian.

  My failure was guaranteed from the beginning, and I thought I had a world-beating solution to the lack of roaming services available in Canada.   In 1979, unlike today,  the radio frequencies that cell phones and pagers worked on were different in every city in Canada, and for that matter, almost every town in the USA.   This meant that it was impossible to roam freely with the same cell phone or radio pager.

The solution to this problem seemed evident to me; I would establish a nicely designed kiosk at every airport, train station, and bus station in Canada to hand out and collect radio pagers and cell phones to travelling business people. My travelling customers could pick up and hand in pagers and cell phones, at their pleasure, for a single low rate of $4.50 per day. My first booth, the start of a communications empire, was at the Ottawa International Airport. I was pretty confident about the prospects of this new venture, even thinking about just what colour Mercedes I would acquire, and I went into the experience asking, “How could I lose?”

I stood in that booth, day in and day out, for almost six months to prove I could not lose. After six months, I was stubborn, if not smart; I had not rented a single pager to anyone, not even to a friend. I became pretty good at identifying travellers from the companies that had committed to using the service from Insta-Call. As soon as they saw my booth, they moved over to the other side of the foyer and passed by to pick up their bags, without even glancing around, in any display of curiosity. When I pitched the pager, I was amazed at the positive response that management had shown to track down their staff anywhere in the country on a moment’s notice. Still, nobody, and I mean nobody, approached the Insta-Call booth to rent a radio pager or cell phone, and I was running out of money.   The ‘how could I lose?’ question slowly changed to “What was I thinking?”

The end was mercifully short. A faceless businessman walked up to my booth and asked to rent a pager. My dreams were coming true –I was in business. As he was walking away with that $300 pager, I held the $4.50 tightly in my hand, thinking about the 40% gross margin I was making on that daily pager rental. I was in a dreamland of contentment until the next day when I asked another question. The question I, unfortunately, had to ask was, “Where did that pager go?” My first customer stole the pager! I never saw him or that pager again, and Insta-Call was closed within a few days. It was over, and I was crushed.  

The postmortem questions were chilling. “Did I ask the wrong questions to the wrong people?” Should I have been asking the travellers, “When you are travelling would you like to be contacted on a minute’s notice by your boss?” The answer, I suspect, would not have been as encouraging. As an intelligent technologist, why did I not try to think about the long-term solution to the problem of roaming? Instead of investing in building up the wireless network with common frequencies and more antennas towers, I used wood to build booths. Where were the long-term thinkers? They saw and ran -- nothing to see here.

Where were all my professionals once I had lost my ability to pay them for their enthusiasm? They were gone, just like the money I paid them.

The questions and, unfortunately, the answers all pointed back to me.   The consequence of my actions had been a failure, and the evidence was clear—I could not make wise and long-term decisions, and I was not brilliant, nor humble, and that was a combination of traits that led me to failure.

It was a very tough revelation for a young and cocky man. What remained of my self-esteem was in “tatters.” My foolishness was rubbed in my face like a puppy dog that had made a mistake. My car was towed, the condo apartment foreclosed upon, and wages garnished. I ended up in ICU at the Queensway Carleton Hospital, listening to young Dr. Ron Vexler expressing concern about the punishing lifestyle that had resulted in the funny heartbeat of a 29-year-old jogger. My foolishness truly humbled me.

 After such a brutal financial and emotional beating, it was hard not to change. I had lost my money, health, and courage and declared bankruptcy. Not the gentle corporate version either, but the messy degrading personal version of insolvency that steals your optimism and craters your hope. I kept asking myself a single crushing question; “How could someone as smart as I thought I was, fail so badly?” It was a time to understand what was wrong with me.

The blunt truth was that I had a value system that encouraged weak ethical choices, and my pride prevented me from seeing that truth. My intentions were never measured against a rigid set of moral values because I was never exposed to ethics as a business decision-making tool as a child or as a man. Even if I was proven wrong, I always found a way to blame my errors on other people. I always found clever ways to misdirect the blame until the failure and devastation of Insta-Call refused to slide away with some cute rationalization. These mistakes did not go away, and failure at this level forced me to look internally to find the solution. I needed the humility to create a new value system to help me make better, more everlasting decisions. 

So, in the darkness of bankruptcy and shame, and with newfound humility, I went about rebuilding the base of my value system. In many ways, I was a fortunate man. I had a deep drive to be a business success, and the obstacle to achieving that goal was my pride, and my ego had been shamed into non-existence. I had a once-in-a-lifetime chance to rebuild, to come up with a more humble set of values, and I took that opportunity.     The result was four simple rules that I used to check every decision since 1980.  

Acid Test number One--Is the decision honest?

Rule number one is ‘always be honest.’ Not just honest with others but also with yourself. A business person must be impeccable with their word to be successful. Impeccability means without sin, which means refraining from speaking ill of others or spreading gossip. An ethically honest person will make choices that are fair to others as well as themselves, and over time your business associates and friends will cheer you on to success. Honesty will also let you achieve a greater sense of reality and truth. In spirituality, you have the everlasting word of God; in business, you must have the bond of your comment.

Getting to the truth is quite simple, but it is not easy. To find the fact requires hard work and study for even a small insight into the reality on a given topic.

 In my Insta-Call example, I did not know enough about retail marketing in the radio paging industry. Had I approached an existing pager company and tried to sell them on the idea of opening up these booths all across the country, I would have received a polite no as a response. Years later, whenever I was asked my judgment on a new, revolutionary business venture that would rock a specific industry, I would often ask if the promoter if they had tried to sell the idea to that particular industry, they were about to rock.   In my case, the answer would have been no, and in my case, that meant I did not understand enough about the opportunity.  

Acid Test Number Two --Is the solution a long-term solution?

 One great observation is that the long-term solution ALWAYS produces the shortest term results by getting noticed by others who think long term. It is seldom easy to make long-term decisions when you have short-term solutions that could patch a problem but following this test will work for you-- I guarantee it. You see, long-term thinkers are in short supply in this world of ours. Your fellow visionaries will often help you along the road to success because they know you will be there over the years to repay the favour, and they want partners they can count on. I called it factor X  because you can never foresee the help that will come to you until you make the right long-term choice and get the attention of other successful people.

As I thought about the long-term solution to nationwide radio paging never would have built wooden kiosks in airports. I might have looked harder at a long-term solution that included having one frequency that worked nationwide and I would have set up radio towers in every city and accomplished the mission in a way that would last forever.   No, I thought short-term with Insta-Call and was doomed from the very start.

Acid Test number 3—Are you adding value?

The idea of adding value to your customer is well understood. Your customers will not buy from you if they do not perceive good value; that part of adding value is self-correcting and works very efficiently in the free market system. But there is another component of adding value that is much more important -- generosity and fairness in your dealings with partners and customers.

When you are fair and generously add value to partners and others you do business with, your reputation for being fair will grow over time.  

  If, for example,  you know something that will help a partner, a client, or even a competitor, do not charge them for that knowledge. Business is a verb, not an adjective, and it is important not to charge for what you know but what you do to add value. This insightful help, just like faith, will pay back dividends from others as your reputation grows. It can be your choice--earn a reputation as a user or be awarded the reputation as an outstanding and generous business person or become one of those people who is only ever thinking about themselves. When your competitors are talking good of you, you know you are doing value-added with a generous spirit, and it will pay big dividends.  

During my Insta-Call adventure, I was so self-absorbed on my project I would never have shared my insights with anyone lest they be stolen. As a result, I didn’t receive the critical feedback needed to prevent the disaster I experienced.     

 The first three laws along with hard work and self-awareness enable you to start and build a business. The fourth law lets you keep what you earn. 

 Test number Four -- Be Prudent with your Resources

The fourth law is prudence.    

The bankers and the professionals have their place in business, but let me make it very clear that they can lose more money out the back door with teaspoons than you will ever be able to bring in the front door with a shovel. I often said, “Never Buy your banker’s lunch.”

The folks at Enron bought investment bankers a lot of lunches with those commissions. The bankers also include your professional help, such as lawyers, accountants and management consultants. When starting your own business, if you need too much outside help, assume you do not know enough about the company to succeed. These lessons are fitting, and I proved them correct when I started Calian.

These acid tests inspire anyone who sees them in action. As the Founder and CEO of Calian, I used these values and preached them to my staff, and over time they became the company culture. As former mentor, General Bill Casley often  said, “Nothing succeeds like success.”  

By 1990, Calian had pulled away from the pack and had a considerable lead over the other one-person consultant companies that started in the early eighties. The decade had seen a confluence of positive factors work in the company's favour, and we rode the wave of technology opportunities.   We continued to grow, and our culture of values strengthened over time. We had acquired another company that was four times our size called SED Systems, and by 1992 we were talking about going public on the Toronto stock exchange. By 1993 we were ready for the big time, and I took Calian Public. My goals had been achieved. I had built a Publicly traded company, and for that, I was happy, and mostly I was grateful to the gift of values sent to me in 1979.

Conclusion

Using the values of honesty, long-term thinking, adding value and prudence for making essential choices almost guarantees your success. We need to apply these lessons to the issues we face today in North America - Public Health and Public Safety; MY blog will attempt to do that!