As a Storyteller, you're not writing stories that your players are allowed to touch, you're creating scenarios that bloom with their input. One important part of this is allowing for failure in both soft and hard states.
A soft failure is a setback or other player-committed complication. Soft failures make failure engaging because they add new interaction possibilities and enrich the narrative.
Soft failures: You breach the Masquerade, you're attacked by goons, the Sabbat learns you're in town, Harpies strip your prestige, your anonymity is compromised, your haven is inaccessible, you contract a blood-borne disease from your Herd, a rival blood bonds your ghoul, etc.
A hard failure can effectively end a scene or even a chapter of a chronicle. It means a full-on course of action or long-term strategy simply will not work. It probably comes at a significant cost, as well.
Hard failures: A Blood Hunt is You, the Prince exiles you, you're added to the Red List, the elders learn of your meddling and disband your pack, a rival not only thwarts your effort but gains power over you as a result, Final Death of a coterie member.
The onus is on the Storyteller to make failures opportunities for action rather than dead ends. A failure simply rules out one particular approach, often with consequences. And since games are about making decisions...
...failures are good narrative and structural devices for introducing players to new choices they must make. They're setbacks that create new challenges to overcome and dramas to satisfy.
(Of course, remember that stories have beginnings, middles, and ends, and it's entirely possible that a story ends as a result of a hard failure -- but that may well frame the beginning of a new story.)
