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The 3 Stages of Failure

The document outlines 3 stages of failure: 1) Failure of tactics, which occurs when plans and visions are not properly executed due to lack of robust systems and measurement. 2) Failure of strategy, which occurs when the chosen strategy does not deliver desired results despite understanding why and how to do the work. 3) Failure of vision, which occurs when a clear direction and fulfilling vision are not set. The first example describes Sam Carpenter, who bought a struggling telephone answering business. Due to lacking systems, he worked 80-100 hours per week and nearly missed payroll (failure of tactics). He created detailed written processes for all operations, reducing his workweek to under 10 hours and allowing 40% profit margins (success through addressing

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33 views

The 3 Stages of Failure

The document outlines 3 stages of failure: 1) Failure of tactics, which occurs when plans and visions are not properly executed due to lack of robust systems and measurement. 2) Failure of strategy, which occurs when the chosen strategy does not deliver desired results despite understanding why and how to do the work. 3) Failure of vision, which occurs when a clear direction and fulfilling vision are not set. The first example describes Sam Carpenter, who bought a struggling telephone answering business. Due to lacking systems, he worked 80-100 hours per week and nearly missed payroll (failure of tactics). He created detailed written processes for all operations, reducing his workweek to under 10 hours and allowing 40% profit margins (success through addressing

Uploaded by

bey lu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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The 3 Stages of Failure

This framework helps clarify things by breaking down challenges into three
stages of failure:

1. Stage 1 is a Failure of Tactics. These are HOW mistakes. They occur


when you fail to build robust systems, forget to measure carefully, and
get lazy with the details. A Failure of Tactics is a failure to execute on a
good plan and a clear vision.

2. Stage 2 is a Failure of Strategy. These are WHAT mistakes. They


occur when you follow a strategy that fails to deliver the results you
want. You can know why you do the things you do and you can
know how to do the work, but still choose the wrong what to make it
happen.

3. Stage 3 is a Failure of Vision. These are WHY mistakes. They occur


when you don't set a clear direction for yourself, follow a vision that
doesn't fulfill you, or otherwise fail to understand why you do the
things you do.

In the rest of this article, I’ll share a story, solution, and summary for each
stage of failure. My hope is that the 3 Stages of Failure framework will help
you navigate the tricky decision of deciding when to quit and when to stick
with it. It's not perfect, but I hope you find it to be useful.
Stage 1: A Failure of Tactics

Sam Carpenter became a small business owner in 1984. Using $5,000 as a


down payment, he purchased a struggling business in Bend, Oregon and
renamed it Centratel.

Centratel provided 24/7 telephone answering service for doctors,


veterinarians, and other businesses that needed the phones to be answered at
all hours, but couldn't afford to pay a staff member to sit at the desk
constantly. When he bought the business, Carpenter hoped that Centratel
“would someday be the highest-quality telephone answering service in the
United States.” 
Things did not go as expected. In a 2012 interview, Carpenter described his
first decade and a half of entrepreneurship by saying,

“I was literally working 80 to 100 hours a week for 15 years. I was a single
parent of two kids, believe it or not. I was very sick. I was on all kinds of
antidepressants and so forth…

I was going to miss a payroll and lose my entire company. If you can just
imagine a nervous wreck, physical wreck, and then multiply that by ten,
that’s what I was. It was a horrible time.”

One night, just before he was about to miss payroll, Carpenter had a
realization. His business was struggling because it completely lacked the
systems it needed to achieve optimal performance. In Carpenter’s words,
“We were having all kinds of problems because everybody was doing it the
way that they thought was best.”

Carpenter reasoned that if he could perfect his systems, then his staff could
spend each day following best practices instead of constantly putting out
fires. He immediately began writing down every process within the business.

“For instance,” he said. “We have a nine-step procedure for answering the
phone at the front desk. Everybody does it that way, it’s 100% the best way
to do it, and we’ve taken an organic system and made it mechanical, and
made it perfect.” 

Over the next two years, Carpenter recorded and revised every process in the
company. How to make a sales presentation. How to deposit a check. How to
pay client invoices. How to process payroll. He created a manual that any
employee could pick up and follow for any procedure within the company—
system by system, step by step.

What happened?

Carpenter’s workweek rapidly decreased from 100 hours per week to less
than 10 hours per week. He was no longer needed to handle every emergency
because there was a procedure to guide employees in each situation. As the
quality of their work improved, Centratel raised their prices and the
company's profit margin exploded to 40 percent.

Today, Centratel has grown to nearly 60 employees and recently celebrated


its 30th year in business. Carpenter now works just two hours per week.

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