'Fail fast, fail often and move on'
The Institute of Public Accountants (IPA) Deakin SME Research Centre hosted a major conference, Small Business: Big Vision, focusing on Australia’s flagging productivity in September, bringing together US and local experts in the small business space.
Among the distinguished guests and presenters at the conference, hosted at Deakin Downtown in Melbourne, were senior adviser to the Office of International Trade at the US Small Business Administration (SBA), Eugene Cornelius jnr, and the International Council for Small Business (ICSB) president elect and president Barack Obama’s chief counsel for advocacy, Dr Winslow Sargeant.
The team at Public Accountant had the pleasure to sit down with Mr Cornelius and Dr Sargeant to discuss small business productivity. They revealed how Australia measures up to the US and why we need to adopt the ‘fail fast’ mentality in order to thrive.
How do you think we rate as a nation when it comes to promoting and supporting small business here in Australia, versus what you see in America?
EC: I think what you’re seeing currently is a really good interest in promoting small business and developing them … They [the government] are beginning to understand the value of small businesses and the impact of small businesses on the GDP and they're taking actions towards breaking down the barriers of entry. They are looking at the access to capital issue. They’re looking at what Australia can do outside of Australia … What could be passed and what could be done is yet to be seen … But one thing I think that is different is that Australia has a reputation of being laid-back. It doesn’t promote just how progressive it is.
I think that when you look at the 80 countries that we deal with in the ICSB and when we look at US, and where we are and what we’re doing, Australia is very progressive and I don’t think Australia has branded themselves well in that regard as far as communicating that progress.
Q. Australians believe in the tall poppy syndrome. They don’t want to put their head up too high for fear of having it cut off…
EC: That’s exactly what I’m getting at and I understand it is cultural, and I understand it is something that is a part of the identity of Australia. But here we’re talking about a global economy. Here we’re talking about the perimeters beyond our home. What we do in our home and what we do when we’re elsewhere should be different. I think that Australians have to embrace the pride of success and they have to embrace the pride of being progressive and they have to demonstrate that in a competitive market.
Q. So, what we’re talking about here is the mechanisms for shaping how SMEs operate and become prosperous versus the psychology of how SMEs run their businesses. How do we shape the mindsets of SME owners in Australia, using the American experience, to help them see the world in a different light?
EC: Australia does not have the philosophy that the rest of the world has, particularly the United States. We have a different value system of failure. You hold failure as a regard and hold it high. We say fail fast, fail often and move on. Take the learning and the best practices out of that and move to the next venture, and we reward that.
That’s not necessarily done here in Australia. It’s not a part of the Australia business ecosystem. If you are going to hold your head high, you’re going to have to have a conversation internally with yourselves about the idea of failing fast and often, and about being a serial entrepreneur. When we look at US entrepreneurs, they’ve failed two or three times before they got it right.
Q. It’s a badge of honour…
EC: It’s a badge of honour and here it’s a weight, it’s an anchor and you’ve got to ﬂip that.
Q. Winslow, what is your view on this? You were able to work with the Obama administration. Does this conversation, around shaping the behaviours and attitudes towards embracing change and failure, happen in the corridors of power in the US? Or is this an inherent part of the American story?
WS: Well, this is something that is discussed a lot and within America. Because if you look at the coast for example, whether in Boston or in Washington, DC, or in Silicon Valley, they tend to embrace this entrepreneurship, this fail fast and let’s take chances.
But there are other parts, the more inward parts, say in some parts of the Midwest, where it’s more conservative. In areas where there’s lots of transition, and especially within the urban areas, there’s that different type of vibe that is more competitive and so it’s incumbent that you move fast. That means that you cannot just wait, that you have to be active. But yes, we are trying to ﬁnd a way to [instil that] in other parts within the country, because America has 350 million people.
It’s a continent and so there are different parts that haven’t embraced the fail fast philosophy or embraced that curiosity. So, those are some of the challenges we have.
EC: Winslow is right, and you see the disparity in innovation. You see the disparity in employment. You see the disparity in wage growth and quality of life in those places that don’t embrace it.
If we are to take that Silicon Valley example that Winslow just pointed out and we looked at Australia and we look at Queensland, it’s there and we see what’s going on there … You don’t have to look at the US. You can look here internally at Australia and what is being done in Queensland. That is how you start. But the main thing you’re going to have to do is look at your own laws.
One of the laws that you’re going to have to look at is the bankruptcy law and how it’s implemented. If you look at that and you look at the premise of fail fast and fail often, they ﬁ ght each other, they’re contradictive of each other. I think that that would be one of the things that Australia has to look at.
Q. Is there a role for accountants and advisers to start changing that mindset?
WS: I think it has to do with leadership as well. I was just talking to someone. He asked me, “When president John F. Kennedy had the vision to go to the moon by the end of the decade of the ’60s, was that being braggadocious, or did he really think that it could happen?” And I thought about it and it is about setting visions. If you go to the US, it’s always pushing forward.
There are plans for what’s going to happen in 2030, 2050, it is always pushing. But also, because you have these plans to create these big things. You look at Elon Musk, he wants to dig these tunnels, he wants to do a Hyperloop, and he wants to send people to Mars, and he wants to do this.
It’s not just him, it’s the whole mindset of, “I’m not waiting, I’m not asking for permission. I’m going to move ahead and I’m going to make something big and I’m going to solve these problems. But also, there’s a recognition that I might fail,” because when you’re on the forefront, there’s a chance that you’re going to fail.
When I heard what’s going on in the SME community in Australia, it’s more of, “Yes, we’ll do it and we’re teachable”, but it’s not on the forefront, not setting a vision. I did read that there’s the Australia 2030 vision, so the government does have a vision of where prosperity and productivity wants to go, but that needs to ﬁlter down more into working with the entrepreneurs and working with the small business owners and it needs to be embraced by the society to say that we’re going to be on the forefront, not just be part of the pack, but be on the forefront. Yes, some of us may not make it and some companies may not make it, but we’re going to go ahead to see where things will go.
EC: I’m glad Winslow just said that. What I was looking at is with the small businesses having this access to the accountants. You asked about the role of the accountant and that role may be to teach or educate them or guide them to the business acumen. The accountants then themselves have to be the innovators, but they also have to be certified. The accountants can’t all be generalist.
They have to get certified in certain aspects and certain areas, be it finance, be it taxes, be it corporate law or whatever. They need to have that specialisation or certification that would allow them to have more credibility so that when these risk takers come to them, they’re more secure in what they’re hearing and what they can embrace.
Then I think you will find those people on the front line. We call them the unicorns. That culture is embraced in the US, because we know we have those specialties. We will say, “I’m going to be the best hat maker in the world”, and then we will go and get the specialised services, be it free or paid, and find those people. And if these small businesses here in Australia are connected, like I’m hearing, to their accountant, then the accountant is that door for that.
Q. Do you think Americans dream bigger than Australians?
WS: I’m still learning more about what’s going on in Australia, but with the American dream... It permeates, and I watch a lot of different films and series from around the world, but it permeates everything that is produced in America.
Like for shows where you see someone who might be a refugee or someone who might be born into a disadvantaged situation. But by the end of that show, or by the end of that series, they’ve gone to college or they’ve made it somehow. And so, within the American dream, it’s always kind of the rags to riches story, and you will be rewarded. It’s never that you’re stuck within that certain class.
No, it’s always, “You’re going to make it somehow.” And so, you see that in business and that’s why someone... You look at the Zuckerbergs and the Gates and the unicorns. It’s always, “It’s my turn, I’m next, I’m going to hit the lottery somehow. I’m going to hit it big and I just need to keep on keeping on.”
That’s the mentality that is in America, that you are next. You’re going to hit it big. You could become president one day. In many societies it’s like, “No, you are not serious. There is no way that you can make it out of your situation.” But that’s part of the American dream.
Q. What do you think we could implement here in Australia without too much pain or angst, politically and also socially, to try to enable SMEs a little more?
EC: There are several things you have to do … What you have to do is really talk on and go on to what Winslow just talked about. You have to go into the universities and the high schools, the pre universities, and you have to change the mindset of what these kids can do coming out.
And not just educate them to take a job, educate them to dream big and to be a boss. Educate them to be an entrepreneur. Make options available to them. Australia is seeing something that is very significant, and you see it already, when you look at your universities and you look at how your universities have become businesses. The Asian community comes here, gets an education, and takes it back to Asia. They are not staying in Australia, because they’re not seeing the opportunity … You produce some of the best aerospace pilots in the world and they all work for us.
Q. It’s a huge issue and this is the brain drain. How do we keep these smart, bright, talented individuals, and give them the mechanism to create these great businesses here in Australia?
WS: One thing that I’ve seen, and I tie it into the United Nations sustainable development goals because these are 17 goals that have been outlined and their target is 2030. And I mention these goals because technically, what you’ll hear from an entrepreneur or someone who is very smart, he or she would say “If I knew this was a problem, I could have solved this a long time ago” … They’ll see a new technology and think “This wasn’t hard to do”, because they didn’t think about it.
But now with the SDGs, the 17 goals, I’d make sure that kids in middle school know that these are the big problems that need to be solved. Have taskforces that say, “OK, if you can solve these problems, you can really make a dent.” Because sometimes young folks ... Some care about money, some don’t. They are starting to live out their values.
But these SDG goals tie back into values. They tie back into commerce. They tie back into the global condition. And so, I would try to get kids to be more aware of what are some of the things that need to be solved.
EC: And particularly here in Australia. That’s a very good point, because Australia is talking about productivity and low productivity. They’re equating to quality of life standards. This is the best time to have that conversation about the 17 sustainable development goals.
That will give a focus to your youth. Because we’ve noticed in the US, that our youth tend to want to be an entrepreneur, they want to have that social impact and so this is a conversation that your guidance teacher should be having with their high school and it’s going to take a generation or two, it’s going to take a decade or two to ﬁlter it in. But that’s the change you want to have, and I think Winslow is absolutely right, you have to set that vision for them.
Q. And lastly, why do you do what you do? You’ve both had successful careers, you’re here in Australia, you’re supporting the ICSB, what gets you up in the morning?
EC: I can tell you in my 20 years with the Small Business Administration, when you are in the US and you work for the government, you make less money than you do in the private sector. But the reward of knowing that you helped put that store on that corner, that that store owner is employing people that probably wouldn’t have been employed, or that it’s providing food in a desert where no one can get food, or it’s giving an afternoon play thing to a child.
You are watching every day. I get up every day and I look at the fact that my agency and our programs and our services have created jobs for people who did not have an opportunity to have jobs. It has increased the quality of life for people and communities. And that trickles down. That comes from leadership … We have to think entrepreneurial and we have to run our agencies as innovatively as possible …
It goes back to what you heard Winslow say. It doesn’t take a mega movement. It’s something simple. It’s something to the point. It resolves an issue.
WS: What motivates me is that entrepreneurship in innovation, it’s like giving birth, right? You’re giving birth to new ideas. You’re giving birth to something that ... I liken it to, for example, I’ve started a number of companies, either being an entrepreneur or being a VC, I just enjoy the conversations we would have.
We would be in a room and we would have to come up with a name for a company, come up with an idea. And I know that in that room there are some who think there’s no way this is going to ever take place.
But somehow a year down the road, the company’s up and running, and everybody’s bought in and drank the Kool-Aid. It’s amazing that things have happened, and now there are those who are using the name that you picked, but they don’t know the history of how that name came to be, because there could have been another name.
So, I think entrepreneurs are like giving birth to something that’s permanent, and so that’s what gets me up in the morning. That building aspect of seeing what can be given birth and what can be sustained and what can grow.