Fail better : entrepreneurialism and failure

Is one of the factors determining how entrepreneurial a culture is its attitude to failure?
Can risk-taking flourish in a culture which stigmatises failure more than it celebrates success?

I. Bankruptcy

“The ability to walk away unscathed from unsustainable debt and start again has been a defining characteristic of American capitalism.” 

So says professor Niall Ferguson in “The Ascent of Money” when visiting Memphis, Tennessee, “a town famous for Blue Suede Shoes, barbecued ribs … and bankruptcies”: 

Comprehension questions

In Europe, on the other hand, according to The Economist, “many countries treat honest insolvent entrepreneurs more or less like fraudsters”, and it can take years to discharge a bankrupt of his or her debts:

 

Things may however be changing: advocacy groups are campaigning to “end the cultural stigma of failure in Europe when it comes to startups and entrepreneurs”, and the French government is trying to change attitudes to failure by sponsoring “Le Portail du Rebond”, which aims to help some of the 60,000 entrepreneurs who declare bankruptcy each year to bounce back.

II. Honour

Not only is failure said to be less of a stigma in America, a recent New York Times article entitled “Wearing Your Failures on Your Sleeve” goes as far as saying:

Failure is emerging as a badge of honor among some Silicon Valley start-ups, as entrepreneurs publicly trumpet how they have faced adversity head-on.

The article cites FailCon conferences organised to “celebrate failure” and entrepreneurs writing confessional blog posts in “101 Startup failure post-mortems”. It quotes psychologist and entrepreneur, Michael Freeman:

If you fail, some investors believe that you’ve got the guts to take it to the mat.
That you’re not personally going to be so damaged by adversity as to lose your persistence in business. That you’ll fight.

One “fail fest” is Postmortem HK, Hong Kong’s first “start-up confessional,” bringing together failed entrepreneurs to talk about what they’ve learned, as the Wall Street Journal reports:

Comprehension question

III. Resilience

Commentator Rob Asghar sounds a more sceptical note:

No one should ever set out to fail.
The key, really, shouldn’t be to embrace failure, but to embrace resilience and the ability to bounce back
.

But what do such resilient attitudes to failure consist in? Can “bouncebackability” be learnt?

Psychologist Martin Seligman argues that failure is often a traumatic experience leading people from “sadness to depression to a paralyzing fear of the future.” Resilience however can be taught : its key is optimism :

People who don’t give up have a habit of interpreting setbacks as temporary, local, and changeable.
(“It’s going away quickly; it’s just this one situation, and I can do something about it.”)
We might immunize people against giving up after failure by teaching them to think like optimists.

Seligman describes a program developed to help soldiers suffering from post-traumatic stress disorder and adapted for business executives facing failure. Actions known to contribute to post-traumatic growth include:

  • Engaging in constructive self-disclosure.
    Bottling up trauma can worsen physical and psychological symptoms.
  • Creating a narrative in which the trauma is seen as a fork in the road.
    The narrative specifies what personal strengths were called upon, how some relationships improved, how spiritual life strengthened, how life itself was better appreciated, or what new doors opened.
  • Articulating life principles.
    These encompass new ways to be altruistic, crafting a new identity, and taking seriously the idea of the Greek hero who returns from Hades to tell the world an important truth about how to live.

IV. Mantra

“Fail fast, fail often” has been called Silicon Valley’s most striking mantra. But just as striking is “Fail Better” adopted from Irish playwright Samuel Beckett:

Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.

Please prepare the following activities for the next class

  1. Think back to a failure you experienced. Prepare to describe it to the class in “constructive self-disclosure”.
  2. Choose one of the 101 Startup Failure Post-Mortems, in order to present it to the class.
    How do you analyse the entrepreneur’s account of, and reaction to, his or her failure?

Ten key words (verbs) from the article to remember and re-use

(to) flourish, (to) stigmatise, (to) walk away, (to) be/feel entitled, (to) file for/declare bankruptcy, (to) wipe out, (to) bounce back, (to) take it to the mat, (to) trumpet, (to) bottle up