The time value of failure

There are many advantages to embracing failing and reaping the benefits.

However, we think people learn and grow from failure more than they actually do.

You should also create a failure resume on your LinkedIn profile. Learn to quit and learn from your mistakes, like this one of mine.

If you don't take personal responsibility for your failure, you won't learn from it and will continue to fail.

Pull the plug and learn.

But there is more to failure than whether or if you should make it part of your mindset. There is also the consideration of when you fail and how to factor the time value of failure.

Engineers are familiar with failure analysis and how to report it.

Here's how to create a Failure Reporting, Analysis, and Corrective Action System (FRACAS)

There are two parts to the time value of your personal FRACAS. One is the benefit, and the other is the cost.

Consider the future value of money.

The future value calculator can be used to calculate the future value (FV) of an investment with given inputs of compounding periods (N), interest/yield rate (I/Y), starting amount, and periodic deposit/annuity payment per period (PMT).

Much like taking advantage of the miracle of compound interest, when you fail during your life determines the economic and personal development value, positively or negatively. When you are young, time is on your side to recover. Failing later in life, while not necessarily catastrophic, means you have less wiggle room.

The main costs of failure are the direct, indirect, and opportunity costs. Opportunity cost represents the potential benefits that a business, an investor, or an individual consumer misses out on when choosing one alternative over another. While opportunity costs can't be predicted with total certainty, taking them into consideration can lead to better decision making. The earlier you experiment, either your business ideas or your personal career track, the sooner you can avoid the costs and take advantage of the benefits.?

In a recent study of European start-ups, one technique consistently boosted performance: the scientific method, a centuries-old discipline of formulating, testing, and tweaking hypotheses. Ventures employing it generated more revenues than those that didn’t and were also more likely to pivot away from unviable ideas, a necessity for early-stage firms.

The key to pivoting is focusing not on your ideas but on the answers to your experiments, which should provide insight into customer demand and industry pain points. That approach helped Osense, a start-up focused on technology for tracking carbon emissions, find its successful model. Its first idea was for peer-to-peer product rentals, and its second was for a platform for renting e-vehicles. If it hadn’t applied the scientific method, “we would have ended up with a product that wasn’t viable,” says cofounder Cosimo Cecchini.

That's why doctors and scientists and engineers make great entrepreneurs and businesspeople. They have been trained in the scientific method and know how to test their ideas. No, they are not lousy businesspeople. On the other hand, many businesspeople are lousy doctors.

Fail it, nail it, scale it, sale it as soon as possible.

The same applies to your career planning and transitioning strategy. Experiment and accelerate your speed to value.

Take advantage of the costs and benefits of the time value of failure. Fail early, fail often, and don't hurt too many people or patients or break too many things in the process. That said, it is never too late to fail and learn.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack.