Home Depot's China Fail

MSNBC is reporting today about the embarrassing closure of Home Depot's last store in Beijing. Instead of rapidly penetrating the vast Chinese market, Home Depot now barely has a foothold on the mainland.

It's not that Home Depot should never have tried to enter China. With a rapidly growing population of homeowners, it's a market the company simply cannot afford to ignore, but their market entry strategy was obviously flawed. Their initial focus was on establishing their brand presence throughout the country rather than first understanding Chinese consumers. They discovered the hard way that Chinese buyers are extremely price sensitive and that few homeowners are comfortable tackling repairs on their own. In short, the business model Home Depot has relied on for decades to fuel its growth led it down the wrong path in China.

Fail Fast, Fail Cheap

We all hate failure. As a nation, we loathe and fear it. General Patton famously quipped, "America loves a winner, and will not tolerate a loser." And yet, failure remains as much a part of entrepreneurship as success. If you look at the careers of serial entrepreneurs, you will usually run across one or more flameouts before they hit it big. Henry Ford, Walt Disney, and Thomas Watson (the founder of IBM) all struggled early on. Watson famously had the following to say about the relationship of failure to success:

It's quite simple, really. Double your rate of failure. You’re thinking of failure as the enemy of success. But it isn’t at all. It is better to aim at perfection and miss it than to aim at imperfection and hit it. You can be discouraged by failure or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that's where you’ll find success. On the far side.

For entrepreneurs, the important lesson is to learn how to manage failure. If you do it well, it will get you that much closer to your objective. Here's how:

1. Don't get discouraged by the inevitable setbacks and dead ends. It's part of the game. Get used to it.
2. Treat failures as teachable moments for you and your team. Don't repeat the same mistakes twice.
3. Fail quickly and cheaply to preserve the option to try again. (Know when to hold 'em and when to fold 'em.)
4. Keep your reputation intact at all times. Always play it straight with employees, partners, and investors.

If you follow these four pieces of advice, you'll get plenty of bites at the apple. Remember, it's not how many times you get knocked down. It's how many times you get back up that counts.