Unlike their English ancestors, Americans used to tolerate failure. After all, a bunch of misfits who could not make it in the old country founded this nation.
In England, Thomas Edison—who failed 2,774 times to invent the light bulb—would have been finished. In America, he is an entrepreneurial hero.
There was even the Camelot Moment when American business celebrated failure as a required platform for building success. Get fired like Steve Jobs. Bill Clinton probably had to lose re-election as governor to learn how to win two presidential campaigns. Have at least one failure on resumes.
That was then.
The High Cost of Getting It Wrong
Currently, business is overwhelmed by uncertainty, inflation, technology and upstart competition. Failure is no longer okay or cool. It can inflict a severe penalty, often quickly.
“Failure” is defined by ChatGPT as “the lack of success to achieve a desired outcome or goal.” It notes that the concept is “subjective.” In a different time, the unsuccessful strategies of CEOs ranging from CNN’s Chris Licht to EY’s Carmine Di Sibio might have damaged their brand—temporarily. But they could have been given the time and the resources to redeem themselves. The odds are against that option now.
The same applies to the rank and file. Professional anonymous networks such as Blind, Reddit and Fishbowl chronicle how the newly hired who do not achieve results rapidly are put on a PIP (Proposal to Improve Performance), then likely axed. They then fret about how to position and package that failure on resumes and during interviews. Failure has become 2023’s Scarlet Letter.
Capital is not patient. The Harvard Law School Forum on Corporate Governance documents the surge in investor activism and that in itself it can boost the stock price. The 2021 SEC rules for universal proxy cards gave new power to proxy campaigns. A perceived failure could be in strategy, cost-efficiency, balance of board membership, executive compensation and/or ESG. Elite law firm Paul Weiss poached Morgan Stanley expert in shareholder activism defense Rob Kindler. Investor Relations is busy.
Venture capitalists are not accepting the failure of startups to produce revenue. That is contributing to the dimming wattage of Silicon Valley.
What to Watch
The darkening attitude toward failure has implications for both organizations and professionals.
This is not new, of course. Some speculate that had Theranos founder Elizabeth Holmes not feared the humiliation of failure she could have thrown in the towel on the technology and not resorted to fraud. In 2015, the Harvard Business Review decried how punishing commercial failure impedes innovation.
What is new is that, despite all the lip service about innovation, backing away from risk represents a majority point of view. In a Deloitte study, only 33 percent of CFOs surveyed in Q2 2023 assessed the current business climate as good for risk-taking. A model for success could become Big Law, often vilified for being risk-averse. Even though demand has slowed in that sector, it remains very profitable.
When it comes to career paths, the payoff for taking the risk of changing jobs is less. Bank of America research puts the average compensation increase at 13 percent, down from pandemic’s 20 percent. The professional services sector is full of cautionary tales of laterals who could not adjust to the new culture and were forced out. The Big Stay may harden into a trend. That could clog the organizational pipelines for upward mobility and entry by young workers.
The concept of “risk,” along with the very terminology, could need a fresh approach by public relations strategists.
No institution is insulated from the accusation that it is not producing the expected results. In this fast-moving era the metrics for those outcomes could be raised or changed. The larger issue is: Who or what gets to do the measuring? That puts power in play. The Financial Times speculates that Disney’s Bob Iger had a power-fail in succession. He selected Bob Chapek. Was it Machiavellian—that is, did he choose someone doomed to fail? The corporation had Iger come back.
So much of this goes to governance, which circles back to investor and other kinds of activism. Korn Ferry found that the average time for a CEO to be in that job is 6.9 years, down from eight years in 2016. For other members of the C-Suite, it is 4.9 years. There is stepped-up scrutiny of board members. At failed WeWork 1.0 and Theranos, they were sized up as passive.
Transparency is the mandated organizational branding and professionals should be authentic. Yes, Goldman Sachs embraces its failure in consumer banking. President of Bard College Leon Botstein regrets the relationship with Jeffrey Epstein. But any communications bravado about failure should be fading.
When I wrote Lee Iacocca’s communications during the turnaround, there was a laundry list of what had gone wrong at the “old” Chrysler. Also Iacocca wanted it made clear he did not “leave” Ford. He had been fired.
Today that could backfire. Even in crisis communications, which requires full disclosure, it is about getting it out there and then moving the narrative to other subjects. Failure scares, not inspires. Notice that in Jimmy Carter’s comeback from being a one-term president he has focused on the current philanthropic mission, not reframing the past.
ChatGPT recommends caution. About sharing your failures, it suggests: “Choose appropriate settings … such as one-on-one … rather than public forums.” Overall, psychologists are campaigning against the regret default. Professionals have to ask themselves: Was A or B in a career really a failure?
Reading Too Much In
In the media and professional networks there is so much chatter about a failure not being the measure of one’s worth. That is because, for example, those losing a job or court trial will do just that. The current reality is the double whammy. Not only is there an external penalty for not meeting expectations. Self-punishment is baked in. It could be a form of magical thinking: Beat yourself up enough, then the universe will forgive and it is onto a Next with new potential. More likely, though, it is counterproductive. The vibes can signal a lack of confidence.
Blip or Trend
If the factors such as massive uncertainty change, will failure return to acceptance as a usual step in achievement? Or will the current negative attitudes evolve into a long-term trend? Much could depend on whether there is a downturn and its severity. Baby Boomer parents who overcame the carnage of The Great Depression tended to shame those who did not.
Jane Genova is a results-getting content-creator and coach. Complimentary consultation (text 203-468-8578, email [email protected]).