Vol 02 02
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Quarterly Journal on Management
From the publishers of THE HINDU BUSINESS LINE

Vol. 2 :: No. 2 :: August 1998


Surviving Failure

Porus P. Munshi

There are few things worse than the feeling of failure. Failure directly attacks our ego, our sense of who we are in relation to the world. We feel impotent, inadequate, depressed, lethargic, destroyed, isolated, betrayed. The structures, pillars, the patterns of our life are shaken.

Failure can be experienced in many ways. A business can fail, you can lose your job, fail at school, underperform at work, get passed over for promotion, fail in love. Although this article deals largely with business failure, it can apply to almost any kind of failure.

Why discuss failure?

Three-fourths of all businesses fail in the first year. Of the remaining, less than half make it through the second year. And yet most entrepreneurs have difficulty accepting that they may fail. They don't want to talk about it. Failure is the `f' word : you don't discuss it, you don't go anywhere near a person infected by it (it may be contagious). You don't even write about it : There are hundreds of books/ articles on success; Hardly any on failure.

Any risk implies the possibility of failure. When we dare new things - changing a job, starting or expanding a business, beginning a relationship - we risk failure. Every time we reach out, we're off balance and poised to fall. But to grow, we have to keep reaching out.

Handling failure is difficult because there is often no guidance on how to cope. When someone dies, people rally around you. When your business dies, you're all alone.

Kinds of Failure

There are two kinds of failure - the sudden death or the outright failure, and the living death or the hidden failure. In the first kind, failure is obvious and visible - there's no hiding the fact that you've gone bankrupt, been fired or passed over for promotion, or failed in a relationship. The second kind is less obvious : It's when a business is not losing enough to shut down but not earning enough to sustain itself. Or you're not performing at your job `temporarily' or a relationship is on the rocks and you're hoping it will work out.

Outright failure brings with it the opportunity for a fresh, clean start. Hidden failure, on the other hand, drags you down and makes a comeback more difficult.

Facts of Hidden Failure

Most entrepreneurs are born optimists, refusing to think about the possibility of failure. They believe ``success is just around the corner" or that "the tide will turn". What reinforces this view is that very often, whenever one does contemplate closing down, an order comes through or there is encouraging feedback from existing customers. This keeps him going. All the while the new order hasn't generated more orders and existing customers though satisfied, are not buying anymore. The entrepreneur dips into his savings, hocks his house, takes loans, dips into his kids' college funds... in short, behaves almost like an inveterate gambler.

Such businesses sometimes drag on for 5-10 years before ultimately closing down. In the process, exacting a very heavy toll in terms of the entrepreneur's time, money and lost opportunities.

Most entrepreneurs who have faced this living death failure, regret not so much the eventual closure as the fact that they didn't close down much earlier.

I thought winning was about persisting

"Every gambler knows the secret to winning is knowing what to throw away and knowing what to keep...You gotta know when to hold, know when to fold 'em."

Reckless persistence enables ordinary people with only a dream and a fistful of rupees, overcome impossible odds. However, it is reckless persistence that also ruins lives, breaks up families and spoils one's chances of future entrepreneurial success.

Running a start-up business is like learning to ride a bicycle. Every time you fall, you pick yourself up; but you have to be careful you don't fall so hard you can't get up again.

The Stages of Failure

Elizabeth Kubler Ross, in her seminal work `On Death and Dying' identifies five stages in the acceptance of death: 1. Denial (refusal to accept the reality of death) 2. Anger (Why me?) 3. Bargaining (If God lets me live, I promise...) 4. Depression (runs out of hope) 5. Ultimate Acceptance (Que Sera Sera).

Failure - another form of death - triggers off similar stages. Hyatt and Gottlieb outline the stages :

i) Shock (Denial)
The first reaction to sudden loss is characterised by shock, numbness and disbelief. The mind denies that it can be happening to you. Later, as it sinks in, we're aware of a terrible blow. As with any terrible blow, you first have to absorb the blow. A lot of us, at this stage, are prone to draw drastic conclusions and behave inappropriately.

The best way to handle this stage is to do nothing: Wait for the pain or shock to pass. Incidentally, most of those who committed suicide during the Wall Street crash were in this stage.

ii) Fear
Fear follows close on the heels of shock. "What will I do? I have nothing left." "Nobody will hire me." "How will I pay the creditors, my bills, my children's fees?"

When focussed on a specific object, fear is a defence mechanism. But when unfocussed, fear is paralysing, rendering us helpless by our imaginings of the terrible things that could follow.

Fear can easily get out of control and turn into pervasive and paralysing panic. Very often, our jobs, business, relationships, provide us with an identity and, a sort of wall that protects us from the `Great Nothing' - the Abyss. Failure destroys that boundary and brings the Abyss closer. (`We look into the Abyss and the Abyss looks back at us'.)

It is important that we bring fear out of the shadows. Look at the factors / issues you are afraid of, break these up and face them one at a time. Prioritise. Confronting your fears one at a time prevents all-pervasive panic.

iii) Anger (Blame)
"How could they do this to me?" "I trusted them and they stabbed me in the back." "I gave him the best years of my life."

Anger is an appropriate and necessary stage. It acts as a catharsis, often accompanied by a desire for revenge against those perceived as having caused the failure.

If we cannot actually act out our desire for revenge, we can fantasise. The revenge fantasy itself is a very effective catharsis.

Another form of revenge is in doing better/ being more successful than the target of one's anger. I know of a person who left his father's firm after several disagreements with his father. His ambition is to build a company that is bigger than his father's, so that he can feel better about the way he was treated.

Blame is another useful catharsis. We feel better if someone/ something else is the reason for our failure. If we only blame others however, we may not be learning from our experiences. Some people blame only themselves. This again is erroneous. There is very rarely only one person or event that causes all round collapse. For both anger and blame, time is the healer. Don't act when you're angry. Or, like Lincoln, write your angry letter - and put it away in your drawer. With time, comes a better acceptance of the real reasons for failure.

iv) Shame
The more public our failure, the greater the sense of shame. We feel ashamed when we fail at business, lose a job, fail in a relationship.

Shame owes its existence to the importance we give to others' opinions. One senior executive I know, was abruptly terminated after 25 years of service because he didn't see eye to eye with his company president on something. He went through the stages of shock, fear, anger and blame fairly quickly till he came to shame. The incident has embarrassed him so much that he avoids his former colleagues and even his former dealers who offer him consultancies.

Failure is not a matter of shame unless you act ashamed. Most people do not think less of us because we have failed. Very often, we project our own feelings of inferiority.

To overcome this stage, activity is necessary. Any activity. Widen your horizons. Take up a course of study. This is especially useful because a) you're learning something new b) you're active c) you meet new people who know nothing about your past d) new opportunities open up.

v) Depression
Depression occurs when we lose hope. Our days have no meaning, no purpose. We have no ideas, no plans, no energy. We mourn our loss and wallow in self-pity.

The best cure for depression is time and activity. Most of us come out of depression with time. Activity - doing a course, going on a trip, painting the house, anything - helps.

Since men, after failure, usually get more in touch with the feminine or `feeling' side of their nature - the anima, as Jung calls it, it might be a good idea to go in for TM, Reiki or Pranic Healing. Women, on the other hand, tend to tune into the male or animus part of their psyche after a failure. Courses on leadership, assertiveness, sales training, etc would be appropriate and make it easier to come out of depression with a purpose and a plan for the future.

The stages can occur in any order or even simultaneously. The speed at which we go through and come out of these stages determines the time taken to accept our loss and prepare for rebuilding.

The Reasons for Failure

A few recurring reasons for failure are :
i) Poor interpersonal skills
ii) Wrong person in the wrong job / business
iii) Fear of failure
iv) Plain bad luck
v) Fear of success
vi) Poor focus/ concentration
vii) Poor management efficiency, including
- Poor product /services
- Lack of planning and foresight
- Unrealistic assessment of the market
- Inadequate capitalisation
- Leadership/ managerial inexperience
- Poor delegation - either over delegation or under delegation

While there may be any number of external factors leading to success or failure, there are a few internal factors which could also contribute to it - specifically, the achievement motive, locus of control, fear of failure and fear of success.

The Achievement Motive

Harvard psychologist David McClelland's studies point to the achievement motive as possibly the single largest factor in the success of an entrepreneur. People with a high need for achievement are characterised by the desire to do something better, faster, more efficiently and with less effort. More importantly, they are moderate risk takers with a need for constant feedback on performance. These individuals prefer working on moderately difficult tasks in which the probability of success is between 30 per cent and 50 per cent (McClelland). They show great persistence when failing at moderately difficult tasks and low persistence with high difficulty tasks. This combination of characteristics uniquely suits the high achievement oriented individual, to entrepreneurial activity.

The High achievement oriented individual is usually successful at entrepreneurial start-up and generally makes quite a lot of money (money for him is a means of keeping score - a performance feedback). However, this individual is often unable to expand further because he finds it difficult to delegate and to motivate people under him. Start-up firms need a high achievement oriented founder. But as the business grows, ironically, the same qualities that made him a successful entrepreneur now contribute to his downfall. He finds it difficult to expand the business. He may start subsidiaries or new ventures; but because of his difficulties in delegation, these usually lose money and have to be shut down, creating a drain on the resources of the parent company - perhaps leading to the closure of that company. The achievement oriented individual has to learn to delegate and to let go of controls.

Locus of Control

Another factor that often determines a person's success or failure is his locus of control - whether he believes that he controls his own life (internal locus of control) or that his life is controlled by others or by fate (external locus of control).

The figure shows Attribution of Success and Failure with relation to locus of control.

Variable factors are those that can change easily and often, while Stable factors do not change easily.

If a person attributes his failure to stable factors like ability (lack of it) or task difficulty, he is likely to get disheartened and give up because ability does not change easily and nor does task difficulty. On the other hand if he attributes his failure to variable factors like effort (lack of it) and luck, he is likely to show high persistence in the face of difficulty because both effort and luck can, and do, change.

In general, achievement oriented people attribute success to ability and effort, and failure, to luck and lack of effort. People low in achievement motivation attribute success to luck (getting the right break) and failure to lack of ability or high task difficulty.

Fear of Failure

People with a high fear of failure tend to have low achievement motivation. These people have very often had negative reinforcement in childhood. Parents typically punished (verbally or physically) for failure and were neutral for success, thus leading to high test or competition anxiety in the child. In contrast, the parents of those with high achievement drives (and low test anxiety), rewarded success and were neutral for failure.

Parents of those with fear of failure typically set higher standards of achievement for their children and at the same time took a less than favourable view of their ability to achieve those standards than other parents. In effect saying ``you must do better but I don't think you can''.

Typically these people then adopt internalised, unrealistic standards or they compete internally with unreachable goals all the time. They then expect failure and therefore avoid beginning anything so as to avoid the negative feelings accompanying the expected failure.

The characteristics of the person with high fear of failure are, in most cases, the opposite of the person with high achievement motivation. They tend to attempt either very difficult tasks - so that if they fail it is no reflection on themselves, or very easy tasks where failure is virtually impossible. They avoid the tasks of moderate difficulty that the achievement oriented people focus on.

The Fear of Success

Also called the Macbeth complex, individuals with this complex experience guilt whenever they achieve success or come close to it. As a result of this feeling of guilt, they have an urge to undo or to reverse the behaviour that led to the success.

Collins, Moore and Unwalla in their book `The Enterprising Man' suggest that most entrepreneurs characteristically have unresolved conflicts with their fathers. According to them, most entrepreneurs have a combination of an emotionally close and rewarding mother and an absent or distant and passive father. The child feels that he has `won' his mother's love through his own achievement and has therefore displaced his father. This sometimes brings on strong guilt feelings in the boy, causing him to fear revenge from the father.

Success on the job may then bring about anxiety produced by the subconscious fear of the father's revenge. To avoid this anxiety and to assuage guilt when successful, the person seeks punishment and often brings about his own failure. Financial losses lead to relief from this anxiety and produce magnificent behaviour in the face of reversals.

Such an individual's career is often marked by a series of ups and downs. A frequent pattern is his striving hard to achieve a goal, but just as the goal is within reach, the person sabotages himself. His inability to tolerate success brings on deficient behaviour.

One entrepreneur - the one discussed earlier who left his father's company to start his own business, has clear unresolved issues with his father. Although a person of considerable ability, he has twice failed when success was within reach. Both times, just when it seemed that nothing could stop him, he made blunders that produced great losses. In the face of these financial losses he behaves magnificently, covering all his creditors who continue to have faith in him. However, to capitalise on his own ability and to justify his creditors' faith in him, he has to first acknowledge and then resolve these subconscious, self-defeating impulses. He chooses to sabotage himself because of his inability to deal with success - for that might mean displacing his father.

Both fear of success and fear of failure are causes of self-inflicted failure. Coping with these, as with most inner conflicts, requires primarily, a self-awareness or insight. Insights - real, genuine glimpses of who we really are and why we behave in the ways we do, are reached only with difficulty and sometimes with real psychic pain.

As Carl Rogers, the famed psychologist says in `Encounter Groups'', ``...we expect the (awareness) process to be painful if it leads towards growth - in fact, believe all growth is turbulent and disturbing as well as satisfying''. Insights, although painful, are the building blocks of growth. Only when we are aware of what holds us back can we do something about overcoming those restrictions.

In general, the fear of failure manifests in starting difficulties - beginning something. People with fear of failure tend to postpone, put off or otherwise avoid doing something until it reaches crisis proportions and then do too little, too late. Fear of success manifests in ending difficulties. These people start strong and pick up strength as they go along and then near the end, just when success is around the corner, make unpressurised, impulsive decisions that negate all the earlier hard work. Your pattern of behaviour can tell you whether you have either of these `fears' and to what extent.

Overcoming the internal factors

Enhancement of the achievement motive seems to reduce the fear of failure as well as internalise the locus of control (attribution of success and failure). Most workshops on entrepreneurial development are generally aimed at enhancing the achievement motive.

If it is not possible to attend one of these workshops, one can often enhance the achievement motive by reducing the fear of failure. This can be done by first understanding that the root of the problem lies in the negative feelings associated with failure. This fear may be diminished by reacting to small, daily failures either neutrally or as if it were normal under the circumstances; and more importantly, persisting in the face of these failures - especially when failing at tasks that `anybody' can do.

Secondly, most people with fear of failure seem unable to break down a task. They see only the whole task and get intimidated by it. For instance, if one plans a target or is required to do something - say make 50 sales calls, the fear of failure individual typically sees the figure 50, gets intimidated and procrastinates, waiting for a `suitable' time when he can complete this figure. The achievement oriented individual on the other hand, breaks this down into, say five sets of 10 calls each - a much more realistic and reasonable target - and goes about achieving those 10 calls.

The fear of failure individual seems unable to break down the task into bite-sized chunks. The difficulty is really one of perception. The fear of failure individual perceives in terms of all or nothing and very often ends up doing nothing. He needs to learn to break down a large task into smaller do-able tasks and succeed at those tasks. The feelings of success, associated with these small do-able wins, go a long way toward enabling completion of the larger task. The greater the number of tasks he completes successfully, the lower his fear of failure becomes.

Thirdly, failure may not be something to fear if we are doing something we like - something we know we are good at - as when we make our hobby/interest our career.

Internal factors contributing to failure have to be tackled on the interest plane. With self awareness and insight, one can overcome these limiting factors.

Handling Current Failure

1) Keep your family informed. Most families are the last to know. It's not fair to them because they bear the brunt of your failure. The chances of your family breaking up after a failure are also less if they've been involved throughout.

2) Establish a time-table. You had expansion plans, growth plans, diversification plans when you started. Now plan your turnaround time and fund requirements. Give yourself say, six months or a year; and a budget. Quit after the period is over or when you've exhausted your budget. QUIT. Don't extend or dip into your finances further. You'll need money for your next venture.

Most entrepreneurs are emotionally involved with their business, and erroneously identify themselves with their business. "I am my business and my business is me." This makes it almost impossible to close down when necessary. Learn to separate yourself from your business.

3) Work through your loss. Consciously try to experience all the stages and come out of them. It doesn't matter in which order you experience them or even if you don't experience all the stages. For instance, many people may not experience Anger. What is important is that you don't get bogged down in any one stage. Move on.

4) Activity helps. Take up a course, learn something new. Catch up on your hobbies and interests. Very often, the second time around, people make their hobbies pay : Your avocation could become your vocation.

5) See the options and the opportunities. They're always there. Very often, all you have to do is look - and ask, "Why not?"

6) Face the truth. What went wrong? What did you do or not do that made the difference? if you don't face the truth, you'll never know what really happened.

7) Relabel yourself. Failure has made you a different person. Accept the difference and work with the new you. If you think you're still the same, you may not have learnt from your experience. You could be setting yourself up to fail again.

Relabelling is not changing your identity. It is updating it.

Learning From Failure

"Your pain is the breaking of the shell that encloses your understanding..." - Kahlil Gibran

i) Every failure brings with it, a lesson. It is upto us to learn from the lesson and move on.

ii) Very often, failure is the best thing that can happen to you. Most entrepreneurs learn caution, the importance of planning and risk more carefully after failure. Failure is the breaking of the shell.

Henry Ford failed twice before he succeeded with the Ford Motor Car Co. Konosuke Matsushita faced many early failures before National Panasonic came about. If you're failing, you're in good company !

The Philosophy of Failure

"If you can meet with Triumph and Disaster and treat those two impostors just the same...Yours is the world and everything in it." - Rudyard Kipling

The world is an integration of opposites. There can be no day without night; without evil, we wouldn't be able to differentiate the good. If you're successful somewhere, you could be failing elsewhere. Very often, people successful at work fail in their home lives and vice-versa.

This really raises the question : Does failure at one kind of business/ job mean that we will be successful at another and it's just a matter of finding the right activity?

Very possible. If we have the capacity for both good and evil, and both, the male and the female in our psyche are equally accessible, may we not also have the capacity for both success and failure - and both equally accessible?

Perhaps like a transistor radio, we have to search the waves till we are able to tune into a station. Do you give up on the radio if you don't find a station the moment you switch it on? No! Why give up on ourselves then? Failure, like static on the radio, is part of the tuning process. Keep turning the knob.


Porus P. Munshi is a Chennai-based HR consultant.


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