MISTAKE #64: You’re focused on earning as much money as possible, not learning all you can
New products are launched to make the money, right? And most companies understandably have revenue models that expect significant profitability in year one.
Few act like technology companies that lose money year over year, regularly needing to raise more capital and operate in the hope of being bought by a larger company actually capable of making the business model profitable.
However, many product companies operate at the other extreme, with a ‘maximize year one profits’ mentality which can come at the cost are greater future profits and possibly even the long-term viability of the product.
I’ve previously written about the year three defeat I’ve seen many companies experience which happens due to a lack of longer-term planning.
Another keep source of failure comes from a misdirected focus on profit over knowledge.
Any new product will deal with dozens of educational moments during the first year. Short-sighted managers view each issue as a threat to their profitability that needs to be quickly fixed and forgotten.
Experienced, longer-term-focused managers see every issue as an opportunity to learn, improve and not repeat the same mistake again.
CHOOSE TO LEARN BEFORE YOU EARN
As a small business owner, I completely understand the stress of making sure enough money is coming in to pay the bills. I know exactly what it feels like to be facing 99 problems but getting rich ain’t one.
I’ve experienced the exasperation of watching a project’s profitability disappear overnight as unexpected issues surfaced or gross miscommunication wasn't in my favor.
And I’ve worked with a lot of clients that have faced everything from product quality issues to crippling lawsuits from competition to stores refusing to put their product on the shelf due to high theft.
In each of these situations, the client has several choices to make related to how they solve the problem. And those choices almost always fall on a spectrum from fast, easy, or inexpensive fixes that don’t really solve the problem to more painful and expensive solutions that make the business stronger.
On a parallel spectrum, the client can decide how they handle the process of solving the problem. They can try to make the problem disappear and be forgotten as quickly as possible or they can use it as an opportunity to take responsibility and make the organization better.
How a problem is fixed frequently comes down to the basic economics of which solution makes the most financial sense.
How a problem is handled comes down to the values the company operates on.
I like the company that both finds the best solution to fix the problem and handles the process of solving the problem so future mistakes are avoided.
MAKE THE BETTER CHOICE
Making the decision to recall a product is not cheap or easy. Telling a buyer that you made a mistake or mislead them in some way is scary. Admitting that your shoestring budget was inadequate to accomplish what you promised can hurt.
Denial or placing external blame is easier in the short term.
But if you ask around, I’m not sure you’ll be able to find a single company that would indicate they regret the times they owned up to a problem and busted their ass to find a solution and make it right.
These are the events that make companies better. They are the lessons that get learned and passed on so they are not repeated.
SOLVING A PROBLEM IS ALWAYS NECESSARY. LEARNING FOR IT IS OPTIONAL
As your product launch starts to deviate from the original plan or begins to crumble right in front of you (I guarantee one of the two will happen), think carefully about what you let drive your response.
Make wise decisions that keep you solvent and ensure you’ll be around for year two. But don’t base your decision solely on cost and impact to profit.
View every issue and challenge as an educational moment that can make your business better. Your response can not only impact your reputation and relationships, but it can make sure certain mistakes are never repeated and other mistakes are avoided due to your new knowledge.
It has been my experience, with both my own business and with clients, that the lost profit is forgotten long before lessons learned to stop paying far greater dividends.