Most managers will pay lip service to the idea that it’s fine to make mistakes, as long as you learn from them. The comedian Peter Cook once satirised the failure fetish: his creation Alan Latchley, a football manager who kidnapped his players’ wives to try to motivate them, taught a week long course titled ‘Dare to Fail’.
Learning from mistakes is no joke; it’s the source of economic growth. Growth largely results from an unplanned evolutionary process of trying out ideas, discarding the bad ones and allowing the good ones to spread. The market plays out this process automatically, but as Peter Cook no doubt realised, as a management tool it is easier said than done.
Yes, we should experiment, expecting to fail and to learn from our failures. But failure simply hurts too much to make this a simple process. Economic psychologists have discovered “loss aversion” — gains feel nice, but losses are disproportionately painful — in many contexts. That is why we try to lump together losses and gains: if you win £100 on the lottery but on your way to collect the winnings, realise that you’ve mislaid a £20 note, better to simply think of yourself as £80 ahead on the day. If you win £100 and find £20, celebrate them separately. Hence: “count your blessings”.
That’s human enough, but what does it do to our ability to process our mistakes? Consider the “praise sandwich”, the instinctive managerial technique for giving feedback. We all know the form: “This is very good work… however, some things could be improved… but to recap, this is excellent.” The use of kid gloves is understandable, but the subordinate may simply hear the message that her work is, broadly, good enough. Better to focus on the failure itself, constructively: “The areas with the most opportunity to improve are…”
Losses can even unhinge our judgement. A recent article in the American Economic Review studied the behaviour of participants in the game show, Deal or No Deal, and found that those who had just made unlucky guesses in the game then showed a tendency to gamble recklessly, while luckier contestants then reinforced that luck with a well-judged attitude to risk. It’s hard to learn from failure if it makes us a little crazy.
Jonah Lehrer, in his new book The Decisive Moment, describes one of the world’s best backgammon players, TD Gammon. TD does nothing, literally nothing, except analyse previous backgammon mistakes. But TD Gammon is a computer program. For human beings, learning from our mistakes is no game.
Tim Harford, a Financial Timescolumnist, is author of Dear Undercover Economist
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