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If aspiring entrepreneurs learn nothing else in school, they should learn how to deal with failure. The reason is simple: most start-ups fail. And every entrepreneur knows that failure is part of the process, whether it is failing to close a sale, raise venture capital, or gain regulatory approval for a new product or service. The question, then, is how to learn from failure within a system where a disciplined approach to identifying and observing failure is not a metric for success?
The most consistently innovative organisations are known for having cultures in which it is alright to fail. If unsuccessful experimentation carries negative consequences, why would anyone ever try anything new? A challenge for educators is to create a similar environment, where trying and failing does not lead to poor grades, but instead one in which the act of trying something is rewarded, irrespective of the result. In a way, this is a closer model to that of pure scientific research where even an experiment that rejects a hypothesis has value. If the only experiments performed were the safe bets, how far would we progress?
Failure can be a badge of honour. An entrepreneur’s record of taking the plunge, irrespective of the eventual outcome, is one of the first things an investor looks for when assessing a potential investment opportunity. Again, there is an implicit belief at work – in this case that the entrepreneur has, in fact, learned from the unsuccessful venture. When that belief is validated, future success is more likely. As politicians have learnt to never waste a good crisis, so too must entrepreneurs never miss the chance to extract lessons when their business goes sideways.
Thomas Edison failed to engage public interest in the phonograph for two decades after its invention because he promoted it as a device for listening to the spoken voice rather than music. But he learnt from that failure and his later, much more successful effort to commercialise electric lighting was due in part to his struggles with the phonograph. In Edison’s words: “I have not failed. I’ve just found 10,000 ways that won’t work”. Persistence, then, is essential and the more one comes back from adversity, the better prepared they will be to deal with the next setback.
Start-up weekends, pitch competitions, hack-a-thons, accelerators and business plan competitions all provide opportunities for students to invest some time and energy, get things wrong (and right) and come away from the experience wiser but with nary a bruise on their GPA if they really swing and miss. And, for those who may be new to the business of failing – and who have a hard time with it – peers and mentors can make all the difference. In The Art of Learning, Josh Waitzkin, chess player and martial arts competitor, describes how some people respond to their first big defeat by shutting down and withdrawing while others draw motivation from the experience and try to get better. Whether in chess, prize fighting or business, the first significant setback will be instrumental in determining what follows. And, unfortunately for some, the later in life that first failure happens, the harder it is to recover.
An entrepreneur must also tread a fine line between self-confidence and humility. Without the belief that one can succeed, new ventures would never be started. Yet without the humility to accept that ideas are imperfect and may need to change, the chances of success are slim. There is nothing like getting things wrong to cultivate humility, which brings us back to the importance of learning to fail as part of an entrepreneurial education.
As the recipient of a Zell-Lurie award for Teaching Entrepreneurship in 1988, visiting professor Dr Jack Matson believed that no concept was more important to the entrepreneur than failure. His MBA class dubbed ‘Failure 101’ was taught to maximise lessons from failure and once his students equated failure with innovation instead of defeat, they felt free to try anything. Perhaps with the flurry of activity in today’s curriculum focused on quickly achieving success it is time to integrate failure back into entrepreneurial education for a new generation of students. Fail fast, fail often and learn from every opportunity.
The author is executive director of the Samuel Zell & Robert H Lurie Institute for Entrepreneurial Studies at Michigan Ross School of Business
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