Learning From Failure
How Systematically Analyzing Setbacks Helps Us Increase The Likelihood Of Future Success
No one plans to fail, but sometimes it happens nonetheless. Behind every startup that becomes an “overnight success,” there is a series of mistakes, learnings, and improvements. No one gets things right on the first try. The best product teams recognize that their failures can be a rich source of insight. They figure out how to leverage what they learn to build better products and better businesses. Resilience teams don’t merely persist despite setbacks. They deliberately and continuously refine their strategy based on new information, so they can stay in the game long enough to win.
Some Reasons Why Product Businesses Fail
While many reasons contribute to startup failures, some have a stronger influence on how people think and make decisions. They have ripple effects on how product teams target customers, identify problems, set goals, define priorities, develop solutions, execute ideas, etc. These issues can be less obvious when examining specific failures but they connect to many challenges that eventually cause a product business to fail.
They Don’t Figure Out the Economics
Every problem that a product solves needs to have a strong business case. The revenue generated must be enough to allow the company to keep delivering solutions. Product teams must understand their unit economics: the cost to acquire and serve a customer vs. the lifetime value the customer delivers. If the math just doesn’t work, they risk burning through cash without ever achieving profitability. Many businesses have failed in pursuit of “growth at all costs.” In the absence of a sustainable business model, they become increasingly dependent on external capital to keep their business running. However, no amount of iteration and execution can make a fundamentally unprofitable product successful. Therefore, businesses must figure out the economics of building, delivering, and scaling their product.
They Don’t Pivot When Necessary
Recognizing the need to pivot the core product strategy is critical to a product business’ survival. Too many teams cling to failing ideas for too long. If what they are currently building is just not resonating with customers, they have to make a serious change, even if it means deviating from their initial vision. When businesses find themselves at this crossroads, they have to make the challenging decision of abandoning or significantly reshaping their current strategy. A strategic pivot can help a team position themselves to succeed by playing to their strengths and choosing the games they are most likely to win. While it can introduce a lot of uncertainty, sometimes drastic change is necessary to remain competitive, and even survive.
They Solve the Wrong Problems
Every business idea starts from an insight into a meaningful need that is not being met. Its success often hinges on its ability to identify, understand, and solve the underlying problem. However, many product failures can be attributed to focusing on the wrong problems. This can take many forms: solving problems that customers don’t care (enough) about, solving problems that are inherently unprofitable, and solving problems that are just too hard. Problems represent opportunities to create value for customers and the business. Product teams need to focus on meaningful ones they are uniquely equipped to solve (and ideally solve profitably).
They Lack a Strong Vision
A company’s vision defines the overall goal and the path to get there. It clarifies what the team needs to do, why they are doing it, and why they will succeed. The “how” can and will continue to evolve. The vision acts as a north star, guiding decisions at every level (prioritization, trade-offs, targets, etc.). When the vision is unclear, everyone ends up pursuing diverging (even conflicting) objectives, which only disrupts productivity and progress. Without a clear vision, people can’t see how their efforts meaningfully connect to the larger business goals. However, a strong vision keeps them focused and motivated even when success feels uncertain, or even unlikely.
Tactics For Effectively Learning From Failure
Pre-Mortems
A pre-mortem is a forward-looking exercise where a team imagines a potential failure and works backward to uncover the root causes. It’s about anticipating things that might go wrong and developing strategies to prevent or manage them. Teams determine red flags and warning signs and define specific response actions (reassess, pivot, stop, etc.). Often, teams stick with doomed projects for too long, wasting more time, effort, and resources, because of the sunk cost. By the time they actually consider quitting, it's likely too late. When teams can identify potential issues and risks earlier, they reduce the likelihood and the consequences of failures.
Blameless Post-Mortems
A blameless post-mortem is a structured review that focuses on the what, how, and why behind a failure, not who. Its purpose is to examine what happened, how it happened, and why it happened, rather than identify who should be blamed. It’s simply more productive to focus on learning from failure than punishing people. This helps people prioritize problem-solving over finger-pointing. Teams follow the incentives that are put in place. If they see people getting punished for taking risks, they simply won’t take risks, which hurts innovation. When they feel comfortable discussing their mistakes, they can honestly evaluate them, so they can learn how to prevent them from happening again.
Failure Workshops
A failure workshop is a structured, facilitated exercise where teams focus on exploring potential failure scenarios, not on “fixing” them. This helps them deeply understand where, how, and why things might go wrong. Each participant visualizes how a major project might fail. Then, they present their ideas in a simple three-slide format: Situation, Approach, and Possible Failure Scenarios. Then, the rest of the group discusses these failure scenarios without allowing the presenter to defend their thinking. A moderator keeps the group focused on the problem, instead of problem-solving, encouraging imaginative, even extreme, failure scenarios to surface. This format helps the presented absorb feedback and understand risks they had not considered, and it helps the groups identify ways their own projects could potentially fail.
Feedback Loops
A feedback loop helps teams understand what to keep doing, stop doing, and do differently. Products need mechanisms (surveys, feedback forms, ratings, etc.) to collect customer feedback. The more opportunities customers have to provide product feedback, the greater insight teams get into where, how, and why their efforts are failing. This helps them make more informed decisions and refine future iterations. Good feedback can also put insights from product analytics in context, helping teams understand what’s behind the patterns observed in the data. Over time, feedback sharpens the team’s understanding of what does and does not resonate, helping them build a better product.
Embracing Failure
We need to accept our failures before we can learn from them.
Failure feels very personal and isolating, but it’s important to remember that everyone has made mistakes. We have all had to overcome big, disastrous failures at some point. However, failure doesn’t define who we are. Once we accept our failures, we can start adapting our approach to fail more intelligently. This means aiming to improve with each attempt, incrementally building up knowledge, experience, and intuition. We should not be trying to eliminate the possibility of failure because that’s just not realistic. Instead, our goal should be to minimize the cost of failure by running experiments and making smarter bets. We underestimate how long our career is. There will be more opportunities to succeed in the future. We just need to keep trying, keep learning, and keep improving. Each iteration informs the next one. Over time, we get better at making decisions, boosting the likelihood of future success.
Failure can be something that happens to you, or it can be something you learn from. But that doesn’t happen through osmosis, it takes a lot of concentrated effort and dedication to unearth the takeaways
— Jeff Wald, Serial Entrepreneur
Conclusion
Embracing failure as a stepping stone transforms each setback into a strategic advantage.
When product teams see failures as opportunities to learn, they shift their focus from simply fixing problems to building something that’s truly better. Every setback offers some actionable intelligence if teams are willing to dig deep to uncover it: What did we learn from this? What will we do differently in the future? Why will we be successful? Over months and years, these small course corrections stack up, ultimately creating a more valuable product and a more resilient business.