I have another guest post up at Rooted In Prosperity, still examining the idea of failure.
In my first post, we examined the results and challenge of making success more than simply random. The last postexplored the idea that human ignorance is far more pervasive, or radical, than we tend to admit. Ignorance is fundamental. It’s the basic building block of all of our knowledge. If that’s true, what does it imply for our conception of failure?
Consider restaurants. The industry is known for high failure rates, sometimes (erroneously) reported at 90% (it’s actually closer to two-thirds). Even the most optimistic estimates put business failure at 61% within three years. Consider baseball, once the American pastime. In Ted Williams’ best season, he still failed six out of ten times. That was 1941, and no one has come close to his success in seven decades.
The “process” view suggests that the appropriate criterion should be sought in the capacity attributed to the market process, of serving as a “discovery procedure” (the phrase is Hayek’s). What occurs during the market process of interacting individual decisions, Hayek argues, is that participants tend to discover relevant aspects of each other’s abilities and desires. Here, then, we have a relevant conceptual yardstick by which to assess both the operation of a market economy and policy recommendations made to modify its operation. Our question need never be: Are the results of the market process such that there is nothing remaining yet to be discovered, or even reasonably close to such a state? Rather, we must ask: Can the institutional structure (or proposed modifications to it) stimulate a reasonably steady and significant flow of (correct) mutual discoveries?
If we buy the Austrian view of knowledge, in which learning is inescapably imperfect, divorced from perfection or a priori direction, it becomes clear that failure is a feature, not a bug. What does that mean for our view of organizations or risk-taking ventures? A firm, or a team within a firm, acts (or could act) as hyper-specialized market; a discreet discovery process. And yet this market is hardly efficient. We have emotional attachment to our ideas, and an aversion to failure. Could any society operate otherwise?
But individuals, teams, and firms which can master this aversion to failure, and divorce their ideas from their personalities and brands have a distinct advantage. Tyler Durden said “you are not your job”; maybe Hayek agreed? No matter your role, how do you separate your personality and ideas from your role? Isn’t the most damming critique of capitalism that it turns free workers into drones? Is there a difference between ‘divorcing’ and ‘subsuming’ one’s personality?