In Europe these days, a lot of people are talking about “too big to fail”. For example, Denmark’s biggest banks recently asked the government to tell them exactly how far it would go to bail them out of a financial crisis, if one occurred. An analogy would be, roughly, asking one’s parents how much money they would transfer if a child falls too deeply into debt.

But this is bigger than just banks. David Miliband, soon to be President and CEO of the International Rescue Committee, published a piece on 10 May that talks about the chance that the entire concept of the Eurozone could fail: “The EU isn’t too big to fail, but it is too important to”. Imagine the list of countries which now share the euro as a common currency somehow having to go back to the way it was 25 years ago.

Between big banks and geopolitical structures are all those businesses that must worry about surviving. Just in case you think your firm is way, way too big to ever flop, I have a sobering assignment for you. Go to this Wikipedia page and see the names of all the companies that were at the top of their game — till they died. What’s one common link between Motorwagenfabrik Excelsior, Lionel Corporation, All Metal Products Company, Waltham Watch Company and Miranda Camera Company? They all had to learn to publicly say “adios” in their respective home language.

failureAh, but perhaps you are small (or an optimistic startup) and feeling a tad more secure because you are feeling too nimble to fail. Dream on. Brian Solis, author of What’s the Future of Business?, gives an interesting stat on his website: “In the United States alone, over 500,000 new startups emerge every year. Of that, 50% are likely fail within the first year. And, within the first five years, another 56% are expected to fail.”

Melinda Emerson has a short list of good points to consider about “Top Preventable Causes For Small Business Failure”. It was published at the end of April on the Huffington Post. I commend it to you.

In a past post, I wrote about “Success. Failure. Boom. Bust.” I’d like to repeat the advice I gave there. These four points are something I think about on a daily basis:

  • Finding your next is a challenge even for the biggest and most successful companies — and perhaps more so as the challenge of continued growth on a large base is daunting.
  • Today’s advantages (such as Apple’s retail stores) can become tomorrow’s liabilities and “sensing” when to shift organizational priorities is critical. A subtle dimension of finding your next is the ability to know when to redirect investment from waning assets classes (like retail).
  • Foresensing is about identifying possible productive opportunities for the future and not about identifying sure things. The mantra “fail often, fail fast, and fail cheaply” holds true when it comes to nextsensing.
  • Your upending may not come from a big and known competitor. Thus, constantly observing — especially on the periphery — can help you get an “early sense of things” before others. It is not a question of whether a new competitor will emerge but, rather, when and from where. The bigger you are, the farther you have to fall. As one of the comments posted on the blog (by Michael Long) notes, “Apple? Maybe, but are we forgetting just how quickly the world switched from Alta Vista’s search engine to Google? One day AV was — quite literally — at the top of the heap. Google knocked them off in less than a year. All you need is a major disruption in search, one that gives quantitatively better results, and a new search engine is just a click away. And with it go Google’s ad revenues. Boom.”

Whether you are fretting about being too big to fail or too small to fail, I would urge you to think about the best antidote for either: new thinking. In business, many giants and many dwarves have stumbled, fallen and died. Yet, I cannot think of one financial obituary that reported that a business failed because it was too smart.