Hello.
Reading American periodicals, I noticed the comments of ordinary readers around the cancellation of the Batgirl movie from Warner Bros. The film studio filmed another creation with superheroes for more than a year, spent $ 90 million on the film and unexpectedly canceled it. The reason, which few people understand, is that the film turned out bad, it should not have been released to the public. The test screenings were disappointing, and experts called to rectify the situation issued a verdict that films can only be sent in one direction – to the trash can. Of course, third-party resources write about this, and the film studio said that they would show the film at the moment when it begins to meet high internal standards. Translated from the Aesopian language, this apparently means never.
It doesn’t fit in the head of many people how you can spend that kind of money and not release a film, conditionally every third comment is about this. Moreover, the film studio followed the usual path and stirred up interest in the film: all kinds of interviews, shots from the filming, actors charged for successful success. In a word, the marketing machine worked in the usual format, but at the end of the journey there was a failure.
No one is immune from failures, but at the very beginning of the journey, almost no one thinks about them, and this is a property of human nature. When buying this or that thing, we never think about where the service is located, how it works. After all, it is illogical to assume that something will break down for you, and immediately calculate the options for how to repair a fresh purchase. You are more likely to choose the brand that tells little about the service, because it seems that there are no special problems there.
While working on various projects in the field of electronics, I constantly came across a stereotype of thinking, when it is customary to talk only about victories, conquering the market, and there is no doubt that something can go wrong. Top management does not want to hear about a plan B, especially for startups that are guided by a simple motto: win or die. Unfortunately, this approach is completely wrong and results in many problems for all participants in the process. I understand that investors don’t want to hear about the potential for failure, but by turning a blind eye to reality, you are always deluding yourself.
Personal experience is not a measure of anything, but out of several dozen projects, I met only a few where they thought out a plan for failure. Typically, it was these projects that were successful, as the teams carefully worked out all the issues. It is important to understand that the development of a plan B does not automatically mean the success of the project, but shows the level of the team.
It is impossible to treat potential failure as inevitable, but keeping in mind the idea that no one is immune from this is important. And such knowledge completely changes your approach to business, the way you work with your tasks. For example, when communicating with customers or developers, you do not turn on the absolute victory mode, but try to speak reasonably. What in the modern world looks unusual in itself, almost always we are promised the very best, the best without impurities, and so on.
The economics of the project, designed for unconditional growth, does not imply a reasonable approach, as a rule, there are no flags in it that stop you from mindless spending. I will give one of the examples that I encountered in practice.
A new smartphone model, a new generation of chipset both for the market and for the manufacturer. Demand from partners is maximum, there is an opportunity to expand orders in China, but there are several serious problems:
- Lack of components for repair;
- Lack of available funds.
The decision that is being made looks at least controversial. Assume a maximum reject rate of 2%, reserve funds for this reject percentage for the first batch. All subsequent batches are temporarily considered defective by default, ship goods to partners with the condition of replacing broken devices one by one. That is, in fact, a pyramid is created in which the service is abandoned, and replacements are financed by new supplies.
Exactly the same story, in which the possibility of failure is ignored and internal risk is created. In some ways, this is reminiscent of playing in a casino, when a person “knows” for sure that he will be lucky and raises the stakes, there is a risk.
In this story, at first everything went fine, they made fun of me, they say, your desire to lay straws is commendable, but look at the sales volume – due to savings on the service, we managed to squeeze out an additional 10-15%, which resulted in additional profit. In the fourth month, large partners who claimed that everything was fine with the model unexpectedly came with a marriage, according to their calculations, it was about 4%. From all sides it was a disaster, there was a need to urgently deal with this issue. Look at the marriage, replace the devices with similar ones as soon as possible. The possibilities of one engineer, who could competently assess the marriage, were exhausted on the very first day, several people were hired to strengthen him. Their work was not of very high quality, 100% working devices went into marriage. Curiously, the partners also handed over fully functional devices, as they earned customer loyalty and did not refuse to replace them. There was no reason for the return of smartphones, but it happened.
Inside, there was a feeling of endless rush, there were no procedures that would describe the situation. The decision made on how smartphones are replaced created a financial hole within a week, all profits from current supplies were eaten up by service and replacements. A stereotype arose on the market that the model was unsuccessful, although a year later, estimates of real marriage showed its level of 0.9% of all deliveries. The partners considered it at the level of 5-8%, it was beneficial for them from all points of view.
Here we can say that there was no clear plan, there was a refusal of the service, because “everything will be fine.” And these are mistakes that can be called a childhood disease when management plays roulette (yes, you can win it up to a certain limit). But you can lose much more here, which happened in this situation.
Let’s look at another example that can be considered a classic for startups. The Russian team created the Linza car recorder, voice control was a competitive advantage.
A little over a year later, it became clear that the project did not take off, but that very pyramid was built in it, assuming that sales should grow. No one considered the unit economy, that is, the maintenance of the service had to occur at the expense of current sales, they funded everything. What happens if sales do not meet expectations? That’s right – it’s impossible to support those who have already bought this registrar!
The product was disabled all the key features for which many bought it. The failure here is associated with building a business, the unit economy, taking into account the maintenance of the service, did not work out, so the service was simply thrown out, they forgot about it. Everything will be fine with us, and we will find money for the service, it’s a penny. And then it turned out that everything was going wrong. And the losers were both the startup and those who believed in its product. A sad picture that could easily have been avoided.
Let me give you an example from another company. The Russian brand Senseit produced smartphones, but at some point everything went awry. Usually the situation looks bad for the brand, it stops paying for service, users are left face to face with broken devices. Immediately, the work was lined up in such a way that at any given time the service had resources for at least another year of maintenance. That is, there was a plan B from the first day, which played a role when the company started having problems.
Of course, the question here is how the team of any project sees itself – temporary workers who came for a short time, or those who plan to work on the market for many years. It depends on how you build your business. Calculate a plan B or just turn a blind eye to any possibility of failure. The last approach can be safely called a casino game.
Each of us wants to believe in the best, for a person this is a normal feeling. It’s definitely not worth inventing problems, but it’s vital to calculate the exit routes, the possibility of failing certain stages in the project. How your company will be evaluated in the future will depend on this. And not only the company, but also you. For most, failure means the crumbling reality of business—non-payments, layoffs, negative feedback from partners and the outside world. All this can be avoided at minimal cost, but you need to think about it in “peaceful” time, before the crisis. Plan B is always about preparing the team for how to deal with stressful conditions. So that everyone knows exactly what needs to be done, and this is not a task, the solution of which is thought up on the go, and hasty actions only exacerbate the problem. So my advice is: always think of a plan B. There is no decadence in this, on the contrary, this is the right approach.