Topic 1: Defining failure
Failure is defined as “the lack of success in doing or achieving something”, according to the Oxford Dictionary. The actual word “failure” has acquired a strong meaning in our societies. This is because contemporary society cherishes success. Success defines the person, the organization, and the culture. It is a clear goal for every initiative that has an outcome (Loscalzo, 2014). Failure is considered as the negative outcome of an entrepreneurial activity, something that needs to be avoided because it does not bring success.
Failure is inherent to entrepreneurship. The concept of entrepreneurship is often stigmatized and seen as something ‘too risky’ or ‘too unstable’ precisely because of failure. However, creative disruption and unexpected consequences are always related to the launch of new innovative products/services (Jenkins Mckelvie, 2016). In the market, adversity is everywhere. Yates et al. (2015) define adversity as the negative contexts and experiences that have the potential to disrupt or challenge adaptive functioning and development. It can be chronic (poverty, racism) or acute (specific context). Thus, an entrepreneur from an underrepresented community would not only face acute adversities, like all entrepreneurs but is more likely to suffer chronic adversities (Yates et al, 2015). Therefore, failure in entrepreneurship, particularly for marginal entrepreneurs, is a persistent challenge that requires constant resilience and coping mechanisms.
Failure, however, may be perceived differently depending on the context and culture of the individual that faces it. Not all failures are equal in terms of impact, intensity, perception, and nature.
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However, failure is seen as something that brings unhappiness and negative mechanisms. Learning from failure has been the outcome, it is the base for much learning.
This module will teach you precisely that. You can learn from failure. Failure represents one of the best learning sources, with a proven ability to enhance personal development, technical skills and soft skills, and bring about many positive outcomes. Learning from failure, however, is a process – not something automatic, and greatly depends on the behaviour of the person who failed when affronting failure.
The definition of the learning process is simple:
The ‘process of updating an objective stock of knowledge based on experiences’ (Lattacher Wdowiak, 2020). It is not a cyclic process, but rather a sequential one.
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- Concrete experience: The learning process begins with a deep experience, a highly critical event that affects both personal and business life. Failure is the trigger for entrepreneurial learning, and it is not automatic, but rather a learning process. There are 3 types of entrepreneurial failure:
- Existential (disappearance from the market, forcing the entrepreneurial activity to stop)
- Organisational (bankruptcy, financial losses, poor economic performance)
- Individual (depending on how the individual perceives it, normally attached to higher expectations)
- Reflective observation: The stage of reflecting on what happened. Although academia lacks sufficient studies on the immediate reaction to failure, the existing research has focused on the general framework of this phase. In this phase, many factors affect the outcome.
Stock of knowledge: If the individual has sufficient stock of knowledge about failure, they may use it for identifying similar traits.
Opportunity prototype: If the individual has sufficient stock of knowledge, they may use it to design a prototype for solving that specific failure
Narcissism: Having strong narcissistic traits may abject the individual from this phase and avoid reflecting. The individual then may attribute failure to external factors. In this case, they will not engage in an internal behavioural change but will instead focus on changing the way they relate to the entrepreneurial network.
- Abstract conceptualisation: It consists of the process of translating the previous phase to concrete solutions. The entrepreneur develops their conclusions about the failure experience and engages in a process of conceptualising and organising the main results from reflective observations. The conceptualisation is then framed under 2 main spheres:
- Personal sphere: realization of own weaknesses, need to follow one’s passion etc.
- Network sphere: Acknowledging venture opportunities, economic capabilities, management of social and business relations, assessment of the state of clients, suppliers, employees etc.
Active implementation: This is the last phase. Here, the individual implements the tangible outcome of previous phases. The learning phase is completed as this phase is expected to produce results. These results are neither positive, nor negative; they are just the outcomes. There are two main actions the individual could engage in:
Entrepreneurial re-engagement: Studies show that entrepreneurial re-engagement is a common trait of the failed entrepreneur.
Abjection from the market: The individual decides not to engage in any sort of new capital-related adventure for some time.