“Success consists of going from failure to failure without loss of enthusiasm.” — Winston Churchill
In Startupville, where I live, failure is an inherent part of the game. Like professional athletes, who have to deal with “triumph and disaster and treat both those imposters the same” – founders, and early-stage investors, inherently run into failure most of the time. There are close to 10,000 technology startups in India, of which only about 30 (0.03%) have crossed a $1B valuation. And 9 out of 10 startups fail if we go by global comparables. And so, the odds are stacked against success, making failure par for the course. But, let us explore the nature of failure and, more importantly, how to channelize the fear of failure to attain success.
“We suffer more often in imagination than in reality.” — Seneca
If we dive deep into the psychology of fear, one of the leading causes of fear is our inherent need to win and natural loss aversion. It could be a real loss in business, or loss of ego, or even loss against internal standards we set for ourselves. For those familiar with Behavioural Economics, this is Prospect Theory in real life. Let us face it, whether we like it or not, we as humans prefer not to lose, much more than we play to win – the core of prospect theory.
But, to attain success in any area, it is imperative to train our mind to focus on how much we can gain from a risk, rather than obsessing over what we will lose. It is definitely true in the startup and venture capital (VC) investment worlds. There is this famous saying in the early stage VC world “We can only lose 1x” – in other words, when we invest in a risky technology startup, there is a high chance of losing that money where the loss is at most the amount invested. The important flip side of this is when a company does well, it returns 10x, 100x, or even higher sometimes.
At the same time, it is also important not to lose our natural sense of fear that has been core to survival. Especially in times of chaos, like the one we live in, a healthy level of paranoia can help us not only survive, but also thrive. One of the CEOs who is universally revered is Andy Grove. He is known for his healthy paranoia which he captured beautifully in “Only the Paranoid Survive” the first business book I ever read and cherish to date.
“Bad companies are destroyed by crisis, Good companies survive them, Great companies are improved by them.” – Andy Grove (1994)
Let us explore a few strategies we can use to channel our paranoia to work for us rather than crippling us:
- Designing for Anti-fragility: It is essential to acknowledge that many things in our lives and the business world are outside our control and could lead to failure. And hence, it is crucial to create strategies and practices for robustness and anti-fragility, as explained in this thoughtful article. Taleb’s book Antifragile is outstanding. Top five takeaways:
- Resist the urge to suppress randomness
- Identify failure points and build in redundancies
- Experiment a lot – take a lot of small risks
- Avoid risks that can wipe you out
- Keep your options open
- Avoiding Stupidity vs. Seeking Brilliance: This seems counter-intuitive to taking risks. But, the key is to take smart risks. Entrepreneurship is all about risk-minimization for value-maximization. And hence, it becomes crucial to avoid making the same known mistakes that others have done in the past. The journey is not about how smart we look in front of others. It is about how to minimize risks to get to our goals in a lot more efficient way.
- Approach Goals vs Avoidance goals: When we set goals, it is good to try and stay away from Avoidance goals (e.g., do not want to let go of CEO role) and re-frame them as Approach Goals that we aspire to hit and will feel good about (e.g., wanting to be the best CEO possible)
Pre-Mortem: One practical and powerful method to avoid failures is the concept of a Pre-Mortem. It has saved me from many mistakes in the past. We have to picture ourselves a period of time from the moment of a decision that could lead to success or failure, and work back from there and make a case for both outstanding success and abject failure. It is a powerful tool when used well to identify potential mistakes way ahead of time and plan on how to mitigate them.
Learning from mistakes: We already met Nobel Laureate Kahneman when we discussed his concept Prospect theory earlier. In this short video, hear him talk about some great ways to learn from our mistakes and the power of deliberate practice discussed in Grit. He also recommends to focus on ‘process’ rather than ‘outcome’ and learn from mistakes in the process.
Fear Setting: We have all worked on goal-setting, but in this powerful TED Talk, Tim Ferris talks about the importance of taking on our fears head-on by a methodology called fear setting to “Define”, “Prevent” and “Repair” our worst-held fears.
J.K.Rowling: Listen to her fantastic talk about failing and how to deal with it, drawing from her own life stories.
“It is impossible to live without failing at something unless you live so cautiously that you might as well not have lived at all, in which case you have failed by default.” — J.K. Rowling
And finally, closer to home, check out this tweet by Krish on the link between ego and failure, CEO of ChargeBee:
“To give yourself permission to fail, you have to untangle your ego from your work. Having your ego tied up in your work is a handicap. You can’t think strategically or take risks when you and your personal well-being are on the line.”
Permission to fail — Michelle Wetzler https://t.co/sqDQlea6Sn
— Krish Subramanian (@cbkrish) June 13, 2020
As we reflect on this topic, let us think of fears that hold us back from taking those calculated risks in life that are crucial to achieving greatness. It is essential to recognize our concerns and channel the paranoia to prepare ourselves for the struggles that life throws at us. It is not about winning or losing a single turn, but learning from it and moving with enthusiasm from failure to failure with our head held high knowing that with these learnings, we will surely win, in the long run, this game called life.