When we are young, we learn that success in life tracks with performance. Later in life, we hear that "it's not what you know, it's whom you know." Most of us, however, must both gain entrance and demonstrate excellence in order to succeed.
To be sure, some have successive doors open to them despite levels of performance that would disqualify others. (Try to imagine, for example, former President George W. Bush getting into Harvard Business School by the usual standards.) Still others claw their way past every obstacle, with little help from anyone, and succeed. For the rest of us, however, someone opens the doors, and then we struggle to perform competitively.
The interplay between talent and access to opportunity has been the stuff of films about up-and-comers since time immemorial, when man first focused his "portable projector" on the cave wall. We recognize the formula from stories about singers, boxers and other strivers: the early failure, the training scene, the big break, the clutch performance, the complication and the comeback. These stories serve to motivate us. They are part of that cultural mixer blade that stirs us to pursue the impossible – as entrepreneurs and inventors, leaders and thinkers, actors and musicians, managers and traders.
When enough of us attempt endeavors for which the script has not been written, some of us succeed. This is essential for economic advancement. However, it is also what many parents, who have struggled to achieve economic stability, fear most. This is why so many, after achieving middle-class success, practically lose it when their children try to become actors, athletes or musicians.
Looking out at the sunny economic climate of 1936, John Maynard Keynes famously wrote that most "decisions to do something positive," at least ones without an immediate payoff, depend upon "animal spirits" overriding our calculation of "quantitative probabilities." Which side is the angel here, and which the devil? In many ways, the imagination of the ambitious is a battleground between two powerful ideas: be conservative and stay on the beaten path, or make your way at your own risk. (There is a third idea, of course – make your way at someone else's risk – that nicely describes the economic regime that led to the Great Recession of 2008.)
In response to my post entitled "What Entrepreneurs Need to Survive," Aleksandra Komara, a technology business analyst who was then one of my students, posted an online comment. In it, she writes:
You forgot to mention what I feel is the most important concept that prevents young profession[als] from becoming entrepreneurs[:] risk. In our society where a "bad" GPA is deemed to be unacceptable, it's not surprising that students avoid difficult courses that might tarnish their grades. Students have such a negative view on risk these days and I don't blame them.
In the movies – and in some real lives – one takes the leap, and grasps the opposite side of the chasm with slipping fingers before finally clambering up. Yet Komara is right: Most of us, if we are to take a leap over a chasm, or venture out on a limb, need to have some confidence that we can afford to slip without breaking our necks. Komara continues:
I feel that I too shy away from starting a business or pursuing a field of study that may be 'unstable' simply from the mere thought of failure. However, it is difficult to blame these fears of risk on students when schools tend to do a poor job in teaching risk properly. How do we expect students to invest time and money into something that contains so much uncertainty when students don't want to risk taking a difficult class? The current pressures on students to do well in school have clouded their vision to be visionary.
When we cannot recover from our failures, it becomes hard to think of them as learning experiences. Attempts that result in irretrievable failure for the individual may have value in the aggregate, but most individuals, understandably, make career decisions with a healthy focus on their own prospects. This is why our perceptions of risk and failure are so important. The American enshrinement of economic mobility has stimulated unprecedented innovation and growth. Our relative willingness to embrace failure as a way station on the road to success has allowed us to attempt many remunerative endeavors. Yet if aspirants begin to learn that there's no room for failure, how many will make the attempt?
Bouncing back need not be easy, it just needs to be attainable through struggle. When it becomes too easy for risk-takers to bounce back, we tend to make the wrong kinds of bets. Yet there is significant distance between too easy and so hard it isn't even worth trying. Small business owners, at least, are hardly in the too-easy zone. If you have worked with people who have been through a small business failure, and made it through the fallout to try again, you know just how difficult this is to do. Fortunately, it remains possible in many cases to fail in a worthy attempt, learn something and try again. It is no stretch to say that this flexibility has been essential to the American economic miracle. More than in most economies throughout history, it is possible to take big leaps without being doomed to fall to one's death if one misses the other side.
China has lately enjoyed an economic miracle of its own. As Chinese business educators work to make this growth sustainable, many of them are striving to expand the role of innovation in the economy. In so doing, they are running up against the fact that, for most Chinese university students, failure truly is not an option. This was one of the points raised emphatically by university leaders and faculty at this year's U.S. - China Innovation & Entrepreneurship Education Summit (which my firm helped develop). After decades of the one-child policy, to be an only child is the norm in China, and the pressure on young people to avoid failure at all costs can be intense. However, as Komara's point emphasizes, such pressure can be powerful in the U.S. as well.
In a recent interview in the Wall Street Journal, legendary entrepreneur and investor Mark Andreessen highlights the tension between this and the flexibility to fail. Andreessen emphasizes both his resistance to making allowances for failure, and the value that making such allowances can release:
The Midwestern Protestant in me is very strongly on the side of failure is terrible and horrible and awful and the goal of every entrepreneur should be to not fail. […]
The other side of it that I can argue equally enthusiastically, is that an enormous cultural positive for the Valley and more broadly the U.S. is that failure does not end your career. Failure is not a mark of shame that means you are done in your field — which is true in a lot of the rest of the world. In the Valley, it means you have valuable experience. One of the things I always tell our entrepreneurs is, don't just hire people out of successful companies, because the people out of successful companies didn't learn anything.
Think of a video game that requires players to face powerful adversaries or leap virtual chasms in order to advance to a higher level. Many of these games feature multiple "lives," that players can bring into play after they make a mistake and the character they are playing dies. These lives are typically limited in number, and in classic games, at least, using another life frequently means starting over at the beginning of the game. This combination of consequences and forgiveness can be highly motivating. If there were no disadvantage to dying, how intensely would you focus as you made those leaps and faced those adversaries? By the same token, if you did not have more than one life (or if you could not play the game again), would you ever get good enough to make it to the highest levels? To put this in economic terms, it is essential that we face downside risk when it comes to our investments of capital and effort, because this gives us the incentive to make smart bets. Yet we need to keep the downside from being so irrevocable that we would hesitate to make the bets that generate the upside in the first place.
In the real world, powerful connections, strong networks, and other advantages can be particularly important in enabling one to survive errant leaps. The little-discussed truth about opportunity in America is that the flexibility to take risks in pursuit of the upside, with some reasonable confidence that one can bounce back if things go south, is often the prerogative of the advantaged. To sustain the healthy risk-taking that is essential for economic growth, we need to make sure such advantages are extended broadly throughout the ranks of the talented and the ambitious.
Is Komara right that ambitious strivers are losing the flexibility required for them to take constructive risks without hanging their careers in the balance? Worse still, is this inflexibility the price of allowing a privileged few to take wild economic gambles without having to face the downside? It is fashionable in some circles to quote the adage, popularized by Robert Heinlein and Milton Friedman, that "there's no such thing as a free lunch." A benefit conferred in one way is paid for in another. Where is this more important than for how we allocate the capacity to bounce back from risk? While we have been arguing over pieces of the pie in America, busy either attacking or protecting wealth, we have lost our focus on broad-based opportunity and growth. Our collective economic prospects depend on ensuring that the capacity to take risks and bounce back is less myth and more reality, across the broad pool of talent and ambition.
Two recent television shows have featured a recurring scene where a character stands at the edge of a multi-story building looking down onto a city street. In NBC's "Heroes," when the character finally leaps, he survives because, it turns out, certain members of his family can fly. In the BBC's new "Sherlock," Holmes too survives his leap. In this case, however, only powers of planning and execution are at play.
There's a crucial distinction between the ideas behind surviving these two fictional leaps. There is all the difference in the world between, on the one hand, believing you can survive a dangerous fall by flying, and, on the other, having confidence that you will bounce back based on smart strategy, careful planning, cutting edge resources, safe test-environments and powerful networks. This distinction is pivotal when it comes to the kinds of leaps individuals must make in their careers. We need to make sure our risk-takers know what it means to succeed in bouncing back, and have a reasonable chance of doing so – without having to place their faith in superpowers.
Alejandro Crawford is a senior consultant at Acceleration Group. He also teaches courses in entrepreneurship and growth strategy. He graduated from the Tuck School of Business in 2003.