The trick is not so much to avoid failure, as to harness it. Nearly all of the world’s leading entrepreneurs have overseen failed projects, but by understanding the failure and applying the lessons from it, they were able to make a success of their subsequent ventures.
Entrepreneurial risk-taking is an important factor for innovation and economic growth. Vibrant economies enjoy a high level of “creative destruction”, which is the regenerative process of new businesses entering the market and disrupting existing businesses.
For this to happen you need an environment that supports entrepreneurship and is tolerant of risk and failure.
There are policies that hinder or enable this. In the US, for example, Chapter 11 provisions give businesses the opportunity to reorganise their business rather than face automatic liquidation, giving entrepreneurs a second chance that is often not available in other countries. In the EU, the Second Chance policy has been introduced to reduce the negative effects of the stigma of failure.
But cultural attitudes to failure are just as important as policy settings for creating an environment where risk-taking is acceptable and failure is seen as a normal part of the innovation process.
Part of Callaghan Innovation’s role is ‘building New Zealand’s innovation capability’. This includes looking at how we can make our business culture more conducive to innovation.
Last year, we commissioned interviews with a number of successful New Zealand entrepreneurs to learn about their setbacks, how they felt and what they learnt.
This inspired us to start a public conversation about attitudes to failure in New Zealand. Do we have a fear of failure and, if we do, is this a barrier to innovation? Is it a reason why our investment in research and development is low in global terms?
This Idealog series [ed: it was published in the just-released Technology Issue and will be rolled out online over the coming weeks in the F Word Topic hub] is the opening gambit in what we hope will be a long and fruitful national conversation about understanding, and learning from, business failure. Read on and let the debate begin!
- Dr Mary Quin is the departing chief executive of Callaghan Innovation.