Failure Isn’t Always a Bad Thing

January 28, 2008 · No Comments

The New York Times

Successful entrepreneurs invariably say that they have learned as much from their failures as their successes.

Counterintuitive as that may sound, there is something to it, Jeff Wuorio writes.

Among the advantages, he contends, are these:

¶ Failure underscores the need to take chances. The cliché is right: If you take no risks, there will be no rewards. And if you are taking risks, almost by definition, you are going to fail at some point.

¶ “Success can breed complacency.” If everything goes right all the time, you are less likely to try something new.

¶ Failure can force you to rethink every assumption. “When something goes wrong, not only do you consider the various means of fixing that particular problem, you notch up your thinking to identify those broader elements that may have led to the snafu and others like it. And down the line, that can mean solutions and adjustments before any further problems even crop up.”

OFF-THE-SHELF It can be difficult to convince yourself that failure is all right. If you need to remind yourself that it is, pick up the book “Whoever Makes the Most Mistakes Wins: The Paradox of Innovation,” by Richard Farson and Ralph Keyes. (Free Press, $22.)

Their basic argument is that if you are not making mistakes, you are not trying hard enough and if you think that winning is all that matters, you are bound to be too cautious.

“Stressing winning inhibits daring,” they write. “Those who take genuine risks know that failure is the norm, success the exception.”

SEE NO EVIL Why is it so hard for us to learn from our mistakes? In a “working knowledge” paper prepared for the Harvard Business School Amy C. Edmondson, a professor of leadership and management at the school, and Mark D. Cannon, an assistant professor of leadership at Vanderbilt University, offer three reasons.

“Social systems tend to discourage this kind of analysis,” they write. “First, individuals experience negative emotions when examining their own failures, and this can chip away at self-confidence and self-esteem. Most people prefer to put past mistakes behind them rather than revisit and unpack them for greater understanding.

“Second, conducting an analysis of a failure requires a spirit of inquiry and openness, patience, and a tolerance for ambiguity,” they add. “However, most managers admire and are rewarded for decisiveness, efficiency, and action rather than for deep reflection and painstaking analysis.”

And finally people may not like the answers they come up.

“People tend to be more comfortable attending to evidence that enables them to believe what they want to believe, denying responsibility for failures and attributing the problem to others or to ‘the system.’ We would prefer to move on to something more pleasant. Rigorous analysis of failure requires that people, at least temporarily, put aside these tendencies to explore unpleasant truths and take personal responsibility.”

A FORMULA FOR SUCCESS David Silver, a venture capitalist and the author of “Smart Start-ups,” has come up with a formula to predict whether a new company will succeed, Mark Henricks writes in Entrepreneur.

The equation: V = P x S x E

V stands for valuation, or the worth of the start-up. P is the problem the business is trying to solve. S stands for the “elegance of the solution” and E the experience of the management team. The maximum value for any of the three is three — meaning the maximum a start-up can be “worth” is 27. The higher the score the better.

If “V” is zero, or a small number, presumably the business is doomed.

Who knew it was this simple?

LAST CALL Fortune Small Business asked Saul Griffith, co-founder of several start-ups, including Makani Power, which harnesses high-altitude wind energy, what advice he would give fellow entrepreneurs.

This is the answer from Mr. Griffith, the winner of a MacArthur Fellowship “genius grant,” which may make dealing with failure more tolerable (if no more appealing):

“Learn to live cheaply. Learn to live like an animal. One thing we had going for us is we all spent a lot of time in grad school, and long periods of grad school teach you how to live well on a low budget. That’s good training for becoming entrepreneurs. It’s easier to have a high-risk tolerance when you know where the Dumpsters with free food are.”

Categories: Business

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~ by dirtyjeenius on May 17, 2008.

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