The following was published on the Latest from Alliance blog on 7 April 2015. The original article can be found here. For more information about Alliance magazine, please visit www.alliancemagazine.org.
By Kurt Peleman
Poor planning, misalignment between investors, sloppy due diligence, failed exits – venture philanthropists and social investors have not met their social or financial objectives on several occasions. In other words, they have seen small and bigger failures.
These failures were often painful – so just as well it is great news that they happened. Because they are signs of experimentation, of leaving the known tracks, of upping ambitions. And we need all of these to create a context conducive to solving society’s most pressing problems.
But it is one thing to take the risk to fail – it is another to go public with these failures. Fortunately, there are examples of courageous organizations that chose transparency. In 2010 UK-based Shell Foundation published a report on their successes and failures in which they openly noted: ’80 per cent of the initiatives we supported failed to achieve scale or sustainability.’ In 2014 the One Foundation reflected on its ten years in operation – what they did wrong, and what they could have done better. Both are members of EVPA – the European Venture Philanthropy Association.
Inspired by these and other examples, in our 10th year of existence we approached several of our members – to talk not about their successes but about their failures. And we bundled the most insightful failures in a publication, which can be found here.
They are bold accounts of strategies that failed and they are certainly open admissions of what they could have done better. Like the story of EVPA member Inspiring Scotland, which explained how it tried to scale some investees that turned out not to have the capacity to deal with this demand internally, creating challenges and tensions. Or in the case of the One Foundation, which relied on exiting its migrant organization investees to the state, a scenario that proved unrealistic when the scale of the economic crisis became clear.
From a learning point of view, the stories show the importance of focus and flexibility, the need to educate investees on what an investor can offer, the importance of piloting high-risk activities and of engaging with stakeholders such as governments that can help grow and scale projects – the list goes on.
Going public with this list is more than offering access to the lessons learned from practitioners. It also has symbolic value – as it moves away from the idea that to be a successful sector we need to talk only about our successes. We need to collectively move beyond that: neglecting our failures or keeping them for ourselves is a luxury we cannot afford any more. The stakes have become too high.
Our sector is focused on solving complex societal challenges: poverty, unemployment, lack of social housing. To do so we need new models for finance and support. But finding and fine-tuning these models will be a matter of trial and error, and so there is risk, and with risk comes failure.
So we need to embrace failure as part of what we do. We should see it as a badge of honour – as an indicator of aiming high, and not going for the easy option. And we should be very ambitious in exploiting our failures, as opportunities to learn, and to allow others to learn.
That’s why we are celebrating failure.
Kurt Peleman is CEO of EVPA. Image via die-stiftung.de.