Businesses should dare to fail

Stefan Stern
31 March 2015

Sometimes even a ‘doomed’ venture like DeLorean’s famous gull-winged sports car is better for business than immobility, says Stefan Stern.

The Austrian Economist Joseph Schumpeter popularised the ‘creative destruction’ concept, arguing that capitalism worked through an almost Darwinian process with emerging new business ideas ending older ones. This is why innovation matters. Without new ideas businesses and economies grow stale, redundant and vulnerable to attack.

So when we look back at the notorious failure of John DeLorean’s gull-winged sports car, (see page 28) built in Belfast from 1978 to 1982, we shouldn’t be too superior. He tried. It was something new. And after all, the success of the 1985 film Back To The Future was built in part on (admittedly tongue-in-cheek) admiration for the car.

Some readers will be too young to remember the troubled UK economy of the late 1970s and early 80s, or the even more troubled province of Northern Ireland. In principle the project was worth backing. Yes, it was fanciful. But so was Ford’s Model T and the Apollo space programme.

The car wasn’t good enough, and launched into a recessionary market. Quirky good looks were not enough. It lacked oomph, a problem for a sports car. Apocryphal tales of test cars speeding up the road, gull-wings flapping, spread. With hindsight it looked doomed from the start. Worse, John DeLorean ended up getting arrested  – ‘possibly entrapped’ – in an alleged drugs deal, bringing shame upon himself and his brand, even though he was acquitted of any criminal charges. He died 10 years ago at the age of 80.

So, ultimately a failure? Perhaps. But he, and his backers, dared to dream. They went, not back to the future, but into it, headfirst and chaotically. And who secretly wouldn’t fancy a ride in one of his cars, even now? So it was a failure. But in its own way it was also kind of heroic.

“Without new ideas business and economies grow stale, redundant and vulnerable to attack”

There’s a saying in the budget hotels business: “bedrooms look the same when you turn the lights off”. It’s a point. Luxury travel is out of reach for most business people these days, unless you are the boss. And even then it doesn’t do to set a bad example.

This changing nature of business travel (see page 34) is an example of Schumpeter’s ‘creative destruction’. Once airlines could charge high prices for the dream of joining the ‘jet set’. But the industry has seen Pan Am, TWA, British Caledonian, Dan-Air and many other names come and go.

Ryanair and easyJet brought low pricing to air travel in Europe, Southwest Airlines and others did it in the US. The game changed. And is changing again: Michael O’Leary discovered politeness as he realised he had taken blunt cost minimisation as far as he could. easyJet now has a nifty (modest) premium line for business travellers. And only those travelling long haul on ‘important business’ can expect a delightful upgrade.

This is as it should be. You are spending clients’ money. At Brazilian firm Semco employees can pick their hotel and flight, as long as they can justify it to colleagues. They don’t fly business class very often.

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