Monday, December 02, 2019

Why Entrepreneurs Don't Learn From Their Mistakes

Source: Flickr
Edinburgh University Business School Francis Greene has written a terrific, research-based article for the Wall Street Journal titled, "Why Entrepreneurs Don't Learn From Their Mistakes."   Greene challenges the fail fast philosophy espoused by many in the the start-up community, by arguing that the credo only works if we actually learn effectively from our mistakes.  However, Greene's research shows that entrepreneurs don't actually learn very well over time.   Greene explains:

While second-chance stories are comforting, my research shows that entrepreneurs don’t learn from their mistakes. In fact, it’s the opposite: Fail once and you’re most likely to fail again. Believing in the myth only sets entrepreneurs up for more failure—and leads to disappointment and frustration.

There are many reasons why this is so, but the most important is basic psychology: Learning is a complex process that usually doesn’t proceed as simply and obviously as we hope. We struggle to take away lessons about what went wrong and then apply those insights to new situations. Or we simplify our experiences and leave out key details that would help us get a complete picture of why things went wrong.

I should note that Greene's research focuses on whether entrepreneurs who experienced a failed startup are more likely to be successful at their next start-up than first-time founders.   The "fail fast" philosophy, of course, does not simply talk about learning from complete failures.  It describes an iterative, experimental, prototype-based approach to building a startup.   You hopefully don't fail completely, thus going out of business.   You encounter small experiments that fail, and you hopefully learn from their to improve your business model. 

Still, Greene's research resonates with me and is consistent with plenty of other research showing that humans are constrained in their ability to learn from failure.  We like to believe that failure is a wonderful professor, but we often don't derive the right lessons and make the correct changes in the aftermath of an unsuccessful event.   I highly recommend reading the article for more detail on why we struggle so badly to learn from our mistakes.  

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