In 2009, I went from being named one of the 1,000 most influential British businesspeople to hungry and effectively homeless after my third business collapsed. I was shamed, pitied and too proud to ask for help.
The advice I was given was vague and the spiritual heights it aspired to hard to reach from business rock bottom. ‘Find your inner strength’, ‘Love yourself’ and ‘It will pass’ only go so far when you are struggling at the bottom of the Maslow pyramid. I was told I would once think this was the best thing that ever happened to me. I don’t. But I understand why some might feel that way.
There is little training for failure, although it is inherent in life and business. It is mystified and stigmatised, mostly out of fear and a lack of distance and perspective. In the relative comfort of the Western middle class hierarchy of disasters, a business failure might well be one of the worst. But few people who’ve survived war, exile or natural disasters would see it as a catastrophic event. While painful, it is at the end of the day only money and pride we are dealing with.
And even in business failure is often just a step on the way to success. Jamie Dimon, now the celebrated CEO of JP Morgan, was famously fired from his job in the nineties. The highest paid actor in Hollywood, Robert Downey Jr., was in jail a good decade ago, with a drug habit. When did we stop understanding that life is usually a sine curve, that success and confidence are like bank accounts, sometimes fuller than others?
Through experience I have become an unwitting expert on failure. I’ve not lost my risk appetite and I would take the leap all over again. But, should it go wrong again, I would do it (slightly) differently, before - and during and after. Here’s what I learned on my trip to the abyss and back.
BEFORE YOU EVEN FAIL
1. Be realistic
It is scientifically proven that in order to make a realistic assessment of your own situation, you have to be mildly depressed. Healthy people have an ‘optimism bias’, which can be useful. But do take a moment to draw up your worst case scenario and a plan for it. Then put it away.
The plans I see in companies present projects in a favorable light, and that includes the obligatory ‘pessimistic’ scenarios. The downsides are downplayed and there is rarely a true indication of what the fallout will be should things go wrong. It takes courage to own up to the possibility of failure.
Speaking openly about the possibility of failure, drawing up as detailed a negative case scenario as the positive one, (i) destigmatises the possibility of failure and hence removes the team’s fear, and (ii) creates an atmosphere of creativity and healthy risk rather than blame.
2. Part with certainty
People fear failure because it’s unpredictable and uncontrollable. They like the comfort of believing that if you don’t take a risk you will eliminate the possibility of negative events.
The reality is that even if you never take a risk things can go wrong. If you seek certainty, you will waste a power plant worth of energy rationalising the irrational, with no business results to show for it. Do you enjoy uncertainty? Great, you are made for risk. If you don’t, make peace with it. Focus on what you can tangibly fix. Resist the temptation to postrationalise a gut decision by stretching and sexing up data.
According to Harvard Business Review, 45% of leaders in top roles say they rely on their instinct to make key decisions. There is a case to be made for both intuitive calls, as well as analysis driven decisions and combinations of the two.
3. Practice resilience
There’s nothing like experience to teach you how to bounce back from failure, but you can learn without the crash. If intelligence is holding two conflicting thoughts simultaneously, resilience entails carrying two conflicting emotions simultaneously - hope and fear. There is no such thing as healthy fearlessness, but fear can be managed.
IF DISASTER HITS
4. Know when to quit
Persistence is a great trait, as long as it’s reasonable. The trouble is, when negativity spirals, reasonable leaves the room. It ain’t over until the fat lady sings, but make sure you hear her singing. Take out that worst case scenario and the benchmark you have set for cutting your losses. Then cut them.
5. Keep decisions simple
When things get overwhelming, it helps to break life down to binary decisions. They may be the most complicated thing you can deal with at that point.
IN THE IMMEDIATE AFTERMATH
6. Take a break
It is human nature to do more of the same. When things go wrong, the fighter’s instinct is to keep fighting at all costs. But just as success breeds success, failure can breed failure. So cut your old ways for a while and review them. This is possibly the hardest step to take.
Taking a break is also hard, because you may be faced with a financially threatening situation. In that case, it may be you can only take a break from your old mindset.
7. Enjoy the freedom
Failure is liberating. For some people, the luxury of having nothing left to lose means doing what they actually want to do. For others it’s not caring what people think any more. Starting from scratch is a privilege and the unencumbered decisions you can make then are priceless.
8. It’s a fight, not a war
It feels like the failure is bigger than you. It’s not. It’s like a childhood illness - everyone has them, but they are not catastrophic, even if you experience them late in life. You weren’t in war, you’re not a refugee, no one died – even if it feels like all of that. You’ve ticked the failure box - you’re now free to succeed again. That’s all.
BACK TO SUCCESS
9. Accept your failure
The reason failure is valued in some cultures, Silicon Valley in particular, is pure business pragmatism. It is assumed that having bounced back from failure you’ll have learned resilience – and possibly some humility – and you won’t repeat your mistakes. This is convenient for every new investor, so they can say to themselves, ‘Someone else has paid for your learning, so we don’t have to.’
The thing with failure, though, is you have to own up to it - own it, in fact - in order to absorb what it can teach you. For as long as you reject what happened, the positive parts won’t sink in. And it’s hard to do that in an environment that’s not as accepting of failure as Silicon Valley – i.e. almost everywhere else. Because people fear failure, they don’t want to hear that it happened near them. So they will make up all sorts of excuses for you to avoid the issue.
But nothing is as liberating as talking about the fact that you have failed. You take ownership of your fate, rise above victimhood and, as intimidating as it can be to people without the experience, feel empowered. The more we speak about it, the easier it will become for everyone to deal with, the more healthy risks we will take and the more success we will see.
10. Think differently
Many of us started with a binary approach to risk and failure: it doesn’t apply to me; I will not be the one who fails. It is typical of youth and typical of entrepreneurial personalities to believe the rules of risk don’t apply to them. Arrogance is one way of overcoming fear, but definitely not the best.
I’ve seen the binary attitude repeated in corporates, at a macro and micro level. And for as long as that persists, there are no balanced and healthy approaches to growth and innovation and taking risks will continue to be considered gambles - and effectively will be.
Companies who have a risk assessment process at every level, attribute responsibility for decisions and make sure there is leeway to fail at every level are few and far between. But they are the ones who win at the innovation game.
Katarina Skoberne is a management consultant and former CEO of OpenAd, a global crowdsourcing venture she co-founded that ultimately failed.
Get advice from Katarina, and hear other speakers including Newsnight presenter Kirsty Wark and Isuzu Truck UK chairwoman Nikki King at the Inspiring Women Edinburgh conference at the Balmoral Hotel on March 5th 2015 - book now and get 25% off.