“If at first you don’t succeed, destroy all evidence that you have tried.”
Most entrepreneurs love to embrace new buzzwordy business styles.
Lean six sigma.
Lean six sigma flat org charts with no titles.
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.