Success and failure are quite similar. Just as there is only a fine line between genius and madness there are a few striking similarities between failure and success. In general people think that success is a matter of having a good idea and working hard. In reality there are 5 components of any success and failure story.
Heinrich’s Domino Model of Accident Causation is a theory that is being used in Risk Management. It explains that any accident can be broken down in 5 components that follow each other as falling dominos that lead to an accident. Here are those components:
Social Environment:
Those conditions which make us take or accept risks.
Undesirable Human Traits:
Anger, carelessness, tiredness, lack of understanding, inattention.
Unsafe Acts or Conditions:
Poor planning, unsafe equipment, hazardous environment.
The Accident:
The accident occurs when the above events conspire to cause something to go wrong.
The Injury:
Injury occurs when the person sustains damage.
Social Environment, Undesirable Human Traits, Unsafe Acts or Conditions, The Accident, The Injury.
If you want to examine an accident (from Plain crash to Dropped Ice-cream) you can start with looking at the different factors that caused the accident and use the Domino Theory to find out what actually happened.
My theory is that you can also apply Heinrich’s Domino Model of Accident Causation to success. So here is my Domino Model of Success Causation:
Social Environment:
Those conditions which make us try a new service and accept change.
Desirable Human Traits:
Frustration, readiness, understanding, attention, the desire to try something new.
The right Acts or Conditions:
Good planning, good equipment, adaptable environment.
The Success:
The success occurs when the above events cause something to go right and grow virally.
The Exit:
The exit occurs when the entrepreneur sustains wealth through a liquidity event.
If you want to know if a certain (your?) new internet company is going to be successful or if you want to know why a company failed it might be helpful to look at these 5 factors.
An example:
In 1996 I downloaded a software package that would enable me to make free Voice over IP telephone calls to other people using the same software with my Mac and an internet connection.
In fact, VOIP has been around since the Network Voice Protocol was first described in 1973 and there have been dozens of companies that did what Skype does.
So why was Skype a success and why did all the other similar products fail? The other companies were first to market, had similar technology and their elevator pitch must have been indistinguishable from Skype.
It wasn’t just the timing was it? Or maybe it was the team? The answer is that Skype scored well on all the 5 factors. Just as with any accident it was a collection of factors and components that led to the eventual success.
In Skypes case the social environment was ready for change. We were all increasingly frustrated with the telephone companies and ready to adopt something new. They planned the process extremely well and were able to keep innovating as they grew. There was a critical mass of people with broadband access and the interface of the product was just easy enough.
And the final factor that makes this a success: they had their liquidity event. You can have millions of users, be famous and very innovative but your company is not a true success until there is some kind of liquidity event.
So based on this knowledge you could conclude that all you have to do is make sure you score well on each factor to build a successful company. This is true but also impossible to predict in advance. You can only hope that your timing is right, that the market is ready, that people are willing to try something new.
In Risk Management if you understand the components of an accident you might be able to prevent one in the future. Hopefully, now that you understand the components of a success you might be able to predict one better.
Just remember to apply the Domino Model of Success Causation.
My house is located in the center of Amsterdam and I’m surrounded by Wi-Fi signals. I used to have my own network too but I’m picking up stronger signals with more bandwith from neighbours I don’t even know so I switched of my own equipment.
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I’ll be flying to Nice, France on august 2 and will be back in Amsterdam about two weeks later. My parents have rented a small house in the maintains above Antibes and my sister and her family will be there too.
