The following story appeared in Brisbane’s Courier Mail Newspaper on April 2nd 2012. Written by Rob Kidd, the article was based on a seminar that Dean Shepherd presented for ACE on March 28th, and a subsequent interview.
FAILURE in some aspect of business is as inevitable as the taxman making his monthly mark on your payslip.
But, according to one expert, it needn’t be as depressing.
Dean Shepherd, an Australian who is professor of entrepreneurship at Indiana University in the US and an adjunct professor at QUT Business School, believes valuable lessons should be learned from failed ventures and even individual projects.
“Entrepreneurship is about the pursuit of opportunity. Opportunity only exists in environments of uncertainty, so if we’re pursuing opportunities there’s a high likelihood we’re going to get it wrong and fail,” he said.
“The assumption has always been that you can learn from failure and it will be automatic and instantaneous. (But) that negative emotional element impacts our ability to learn.”
Research from QUT’s The Comprehensive Australian Study of Entrepreneurial Emergence research project (CAUSEE), focusing on about 800 emerging business start-ups, found about half failed within two years.
However, only 12.9 per cent of those involved considered the failure a “negative” experience.
Mr Shepherd, whose own research was inspired by seeing his father’s family business collapse, sees failure as an “integral part of innovation”, and says people should be encouraged to have a go.
“Being wrong is just part of being an entrepreneur. You can’t be an entrepreneur or an innovative company and only hit winners,” he said.
A more extreme method companies used for analysing a failed project was holding a “funeral” or “post-mortem”, Mr Shepherd said.
“They’ll send out an invitation to the wake – it’s a chance for people to get together to say the project is dead, to reminisce about the good times, perhaps to console each other but perhaps also to send the message that it’s time to move on.”
Organisations, he said, would benefit from adopting an “anti-failure bias”.
“In other words, they pursue many projects realising that some are going to fail. But by doing that their mean performance actually increases, so the organisation as a whole performs well,” Mr Shepherd said.
“It’s not a bad thing for a society if we have a lot of failed businesses. What’s bad is if we penalise or stigmatise them so even if they’re in the best position to learn, they never try again.”