The Mental Challenge of Keeping a Manager Who Has Failed Fast

failure

But is your job on the line when you do?

“If at first you don’t succeed, destroy all evidence that you have tried.”
–Steven Wright

Most entrepreneurs love to embrace new buzzwordy business styles.

Six sigma.

Lean.

Lean six sigma.

Agile.

Flat organizations.

No titles.

Lean six sigma flat org charts with no titles.

Fail fast.

I’ve dealt with all of these types of organizations in my professional career.

Creating an organization that embraced failing fast was the most difficult one.

Why is that?

We hate losses.

Just as we saw in “Why Past Performance Indicates Your Future Investing Actions,” we get more pain out of losing something that we get joy out of winning or earning an equivalent amount. In the book Thinking Fast and Slow, Nobel Prize winner Daniel Kahnemann posits that the ratio of pain to joy is 2 to 1. For example, if you lost $100, you’d feel twice as much pain as you would joy at winning $100.

So, in an organization, no matter how fast you fail, failure is still failure.

As an entrepreneur or a small business owner, you usually only have the capital to make a limited number of small bets to try to make what you’re producing catch on. While ideally, the first thing you go after will catch wildfire and make your organization explode with demand, you probably have a set of opportunities to pursue that you manage much like an investment portfolio.

If one of your efforts is going to fail (which some invariably will), then you want to find out sooner rather than later. You want to save money. You want to reinvest that capital in something else which might work out. You don’t want to starve other projects of funds that could help them reach a tipping point.

Therefore, you want your people to take risks, find out what works, and, just as importantly, find out what does not work.

But, once a project fails, no matter how hard you try, there is a stigma.

The word failure has negative connotations. You’d rather not fail at all. Failing fast is the lesser evil to failing slowly, but it’s still worse than succeeding.

What Happens to the Manager Who Has Failed Fast?

The Psychology of Debt – A Battle Between Your Two Brains

Swordfight at Ren Faire

What happens inside your brain when you’re in debt

“Promises make debt, and debt makes promises.”
–Dutch Proverb

I received my first credit card when I was a plebe at West Point. Perhaps there should have been a hazing ritual to go along with it so that I would have been more scared of it than I was, but, hey, I was a plebe. I wasn’t going anywhere, and there really wasn’t too much to spend money on anyway.

However, as time went on and our freedoms were given back to us one at a time, I discovered the world outside of the grey walls of West Point. By the time I was a senior, I was going away as often as I could. While we had a stipend, it wasn’t much, and since we couldn’t take another job, the flow of income was limited.

But, that didn’t stop me from going out and having a good time. I was going to graduate and become a lieutenant and make the BIG MONEY. At least, that’s what I told myself, which allowed me to rationalize whipping out that credit card and funding my lifestyle with my future earnings.

Actually, what was going on was a battle inside of my head between two parts of my brain. Inside of all of our skulls are two main brain areas constantly battling it out for control of what you do every day. There’s the thinking, sentient, rational part of our brain called the prefrontal cortex. It’s the part that acts like the responsible adult, thinking about the future, and not getting too carried away in the present. It’s usually the section of the brain which sends out the “whoa…maybe that’s not such a bright idea” signals that we altogether too often ignore.

The second part of the brain is the limbic system, what Seth Godin calls the lizard brain and what I call the Monkey Brain, since it’s the same system that we share with monkeys. Monkey Brain wants fun, and he wants it right now. He’s the one that tells you that eating chocolate on vacation doesn’t count because you’re going to start the diet as soon as you get back from vacation, only to come up with another excuse (“DIET CAN’T START ON DAYS THAT END WITH ‘Y’”) when you get back.

Sometimes the prefrontal cortex wins, and sometimes Monkey Brain wins. When I was younger, stationed in Germany, and spending money like there was no tomorrow, Monkey Brain won a lot.

Let’s look at some of the ways in which issuers of debt team up with Monkey Brain to convince you that debt is good:

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