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A Smarter Way To Fail

Why do we let success make us more risk averse?

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by Sarah Mahoney

Well-Being
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When Sim Sitkin, Ph.D., a professor at Duke University’s Fuqua School of Business, set out to study “stretch goals”—those seemingly impossible tasks that make organizations better—what he learned surprised him: Successful people are chicken. His research has shown that the go-getters who would seem most likely to benefit from taking risks are the most risk-averse. 

He tells Life Reimagined why success makes us too timid. 

     See also: Dilbert's Creator At Failing Smart

Tell us about this surprising aspect of stretch goals.

There’s a paradox. We’re not ambitious enough. When you look at individuals or organizations that should be able to take the risk of pursuing these stretch goals, they’re risk-averse. Success makes them conservative. The ones who are more likely to take risks are those least able to afford it—poorer people, for example, or smaller and more entrepreneurial firms with fewer resources. It's one of the problems in today’s world.

Why are successful people afraid to fail?

We underestimate how resilient we are and we overestimate how fragile we are. So we tend to avoid even the smallest failures. For people in midlife, that risk-averse mindset has consequences. In the past, the model was that you could make mistakes when you were young, and that you could start learning again in retirement, but not in between. But today, with so many of us planning to be productive into our eighties, we can’t afford to shorten the learning period so much.

You’ve written a lot about the concept of intelligent failure. Can you explain?

People either don't push the edge enough, or they take too much risk, and essentially go for broke. In looking for intelligent failure, you’re trying to build on your strengths while working on your weaknesses. It means not risking more than you can afford to lose, and having a plan B. In thinking about a career change, for example, an intelligent approach might be to keep your day job for a year, then work really hard in your off hours to test the new career’s viability. 

So should people try and fail?

Failure isn't the goal. It’s just the inevitable side effect of pursing things when you don’t already know the answer. In some ways, this is the scientific method of life. If you’re going to do something new—and most people have three or four careers—you are going to have to experiment. That means you don’t know how things will turn out.

     See also Fail Fast, Learn Fast

Then a foolish failure might be mortgaging your home and putting your retirement funds into a new restaurant. Would an intelligent approach mean not risking more than you could earn back if the business fails?

Yes. But what’s interesting is the way our culture romanticizes risk takers. We all love the story of someone pouring everything they have into a business idea and making it work, but it’s very unlikely. Those stories are the aberrations, the outliers.

How can you be sure the risk you’re considering is intelligent? 

Ask yourself what financial resources you’re willing to risk, and how stable your career is. Find other people who can give you honest feedback about your actual strengths and weaknesses. And set limits, saying, “I will devote this much time and this much money” to an idea. If it’s a good one, at a certain point you should be able to raise capital to support the venture.

So these are careful risks, even though to some people, that sounds like an oxymoron? 

Yes. People who do this say they take calculated risks. They’re not gamblers. They’re not just throwing the dice.

Lots of companies, especially in tech, give the idea of failure lots of lip service these days, organizing “Failure Fairs,” for example. Is it sincere?

Lots of times it isn’t. And even if the company is well intentioned, all it takes is for one supervisor to be negative about it to defeat the whole idea. 

     See also:  You Can't Change Your Career Without Risk

So do you wish people and organizations would risk more?

Yes, the ones who can afford it. In fact, I sometimes say “shame on you” to the ones who don't commit to taking risks. It’s a little like a school with a closet full of unused audio-visual equipment that it won’t lend it out because it might get broken. If you’ve got the resources, you should be trying new things.

Are people becoming more open to failure?

In some ways. In business schools, we are seeing a lot more interest in entrepreneurship. But we need to be seeing more of that thinking within big companies and by big companies. And we are starting to see people, a little later in their careers, more interested in things that require risks. It’s a broader approach to the bucket list. People aren't just saying, `I want to see Kilimanjaro,’ but also, `I’d like to try starting this kind of business.”