Business Analysis - How To Learn From Your Mistakes

They say everyone makes mistakes, and of course it's true. However, the biggest error is the failure to learn from one's mistakes. The lessons of misjudgment, mismanagement and failure can be more valuable than those of success. But you have to face up to the realities of failure and that's where business analysis comes in.

A double partnership between two pairs of advertising men in an agency called FWWH failed faster than most, but what lessons can be learnt from its rapid demise?

Richard Hall (an associate of Richard French), one of the two leavers of the partnership, analysed the case himself and while remaining partners Gary Walton and Phil Wiggins might have disagreed with his analysis, ultimately it's one's own soul searching that counts.

High on Hall's list of words of wisdom for failed deal-makers is 'lick your wounds and reflect'. Likewise 'limit the PR machine on the downside'. The partners were celebrating too soon - it was a good story but it was told prematurely.

More importantly, though, the set-up had fatal flaws. Before any venture or project is started, the structure must match the purpose. The business analysis must provide clear answers, especially when it comes to the old question of 'who's in charge here?' The answer was uncertain at FWWH.

French and Hall were perhaps the most obvious candidates to take charge on the basis of experience and character but they were joining the existing business of their new partners. Hall gives the advice not to 'seize someone else's toy', and while in fact the seniors didn't attempt to, the scope for misunderstanding and confusion is apparent.

Perhaps the failure in the meeting of minds might have been avoided if the quartet had realized that taking on partners is no different to any aspect of senior hiring. Psychometric tests are now commonplace for job candidates at large firms. While the value of these tests is often challenged, the principle of this kind of analysis remains valid.

Don't underestimate the importance of personal relationships in working relationships. A personality clash can lead to failure. Although these incompatibilities don't have to be fatal, experience is the ultimate test - as Hall said, 'A trial marriage is probably a smart idea.' A good number of successful mergers have only proved successful after an extended period of working together.

But the FWWH failed in the analysis of the chemistry, so there was discord in the business. Hall said: 'We were intolerant of them and they were over-expectant of us.'

Hall also realized in hindsight that his 'gut feeling' was unsure about the business in the first place. Perhaps going against the basic principles of business analysis, Hall was nevertheless right when he said 'always obey your stomach' over these gut feelings. Don't ignore a hunch because an idea out of left field, if properly analysed and executed, can create a more successful business than the best laid, most rational plans.

Hall ignored his initial gut feeling but he heeded the most important lesson of business analysis - learn from your mistakes. And thus he followed his final piece of advice: 'Get out early if it's wrong.'

The above article was written by Robert Heller, renowned management and business analysis expert and co-author of the website Thinking Managers along with world renowned thinker and creativity expert Edward de Bono.

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