Why Entrepreneurs Don’t Learn From Their Mistakes
Francis Greene, Wall Street Journal
Suggested by Philip Salter, founder of The Entrepreneurs Network
'Fail fast, fail often' has been the disputed mantra of a few tech entrepreneurs and their orbiters for a while now. And there is some sense to it. Trial and error, experimenting and iterating, can evolve an unprofitable idea into something with a market. And, more broadly, there are many anecdotes of entrepreneurs succeeding from the ashes of failure.
But we shouldn't romanticise failure. In fact, as Francis Greene's research shows, many 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."
Greene looked at 8,400 German startups to see if the new companies launched by failed entrepreneurs did any better than first-timers. They didn’t, having poorer outcomes the second time around.
For Greene, the shifting complexities of running a business mean that the lessons of failure aren’t gainable or even applicable to future endeavours. If his work replicates, it should be taken seriously by individuals and policy makers.
If at first you don't succeed? Perhaps you should try your hand at something else.
The Lost World of the London Coffeehouse
Dr Matthew Green, The Public Domain Review
Suggested by Sam Dumitriu, research director of The Entrepreneurs Network
Why did the Industrial Revolution start in 18th century Britain, and not at any other time or place? It’s an interesting question and an important one too. In fact, given that the Industrial Revolution was responsible for an increase in real income per head by anywhere 2,500 and 5,000 per cent, it’s probably the most important question out there.
Most of the explanations don’t stack up. To quote Deirdre McCloskey “the modern world was made not by material causes, such as coal or thrift or capital or exports or exploitation or imperialism or good property rights or even good science, all of which have been widespread in other cultures and other times.” The economic historians I find compelling credit ideas: ‘an improving mentality’, ‘trade-tested betterment’, and the enlightenment.
If ideas matter for economic growth, then we should pay attention (and tribute) to the institutions that enabled them to spread. London’s coffeehouses may seem rather sterile today, but in the 17th and 18th century they were rowdy places. As Dr Matthew Green writes “early coffeehouses all followed the same blueprint, maximising the interaction between customers and forging a creative, convivial environment. They emerged as smoky candlelit forums for commercial transactions, spirited debate, and the exchange of information, ideas, and lies.” Green’s short history shows how the debates in London’s coffeehouses helped shape the modern world.
Of course, there’s an alternate explanation for coffeehouses' role in the modern world. “Until the mid-seventeenth century, most people in England were either slightly — or very — drunk all of the time. The arrival of coffee ... triggered a dawn of sobriety that laid the foundations for truly spectacular economic growth in the decades that followed as people thought clearly for the first time.”
Zoe Cullen & Ricardo Perez-Truglia
Suggested by Annabel Denham, associate director of The Entrepreneurs Network
We are closer than ever to gender equality in the workplace yet still so far. Progress is agonisingly slow despite the opportunity cost for companies and the wider economy. Nowhere is this more stark than the investment sphere. Female entrepreneurs receive a small piece of the funding pie and many complain of an “old boys’ club,” where male investors network with and ultimately invest in innovators who are themselves well-connected men.
A new study from Harvard University reinforces the alleged advantage that male employees have over their female counterparts in schmoozing with powerful men within the workplace. The authors find that when male employees are assigned to male managers, they are “promoted faster in the following years than they would have been if they were assigned to female managers. Female employees, on the contrary, have the same career progression regardless of the manager’s gender.” As with venture capital, this mechanism creates a self-perpetuating cycle.
Further, “when male employees who smoke switch to male managers who smoke, they spend more of their breaks with their managers and are promoted faster in the following years. Moreover, the effects of these smoking manager switches are similar in timing and magnitude to the effects of the gender manager switches.”
The research has implications for policies aimed at narrowing the gender gaps in leadership or pay. Companies could change their promotion review systems, the researchers suggest. They could level the opportunities for employees to socialise and connect with their managers. Success isn’t guaranteed, but it certainly sounds simpler, and less archaic than suggesting women take up golf – or cigarettes – to be closer to the nexus of power.
Don’t miss another Big Idea – sign up here!