From the Exosphere
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From the Exosphere

Grit or quit? Why business owners need to know when to give up

With Kevin Jenkins

This article was first published in The New Zealand Herald on 19 Nov 2018.

My favourite line from The Simpsons was when Homer advised Bart, ‘If at first you don’t succeed, give up and try something else’.

The thing that makes this joke so good is that it’s incongruent with so much of the advice we’re normally given. Family members, random YouTube ads and successful entrepreneurs are constantly encouraging you to be ‘resilient’ and keep going no matter how hard it gets. ‘Nothing gets done without hard work’ the refrain usually goes.

On the other side, you have the school of thought that encourages you to fail fast and often. So how do you know if you’re getting the right combination of smart and stubborn — or whether you’re just throwing good money at a terrible idea? In other words, where do you draw the line between grit and quit?

Where do you draw the line between grit and quit? Image source: Pexels

Sometimes the best lessons come from those who have gone through the process of being knocked down again and again.

Take Nick Mowbray, for example, who with his siblings has grown Asia-based Zuru into a global toy company. Mowbray recently won NZ Entrepreneur of the Year, and he acknowledged that the journey involved being knocked down seven times, and getting up eight. His is an example of ‘grit’ and persistence paying off.

The same week as Mowbray picked up his award, self-confessed ‘creative provocateur’ Michael Sturtz spoke in Wellington. Among other cool things in his resume, Sturtz recently headed up the prototyping lab at Google X — smart guy, in other words. He is clearly a fan of resilience, of toughing it out like Mowbray and Zuru has done. But he’s also a believer in celebrating failure and using it to facilitate what he describes as ‘happy accidents’.

Asked how businessowners can know when the time is right to draw a line and give up, Sturtz couldn’t give a definitive answer. As unsatisfying as it may sound, it really depends on the circumstances.

Every entrepreneur or executive faces a different set of trade-offs, and smart provocateurs like Sturtz and success stories like the Zuru Mowbrays aren’t going to be able to tell you how far to persist in your own particular venture.

That said, we all have a few common psychological forces that we should be cognisant of — because ignoring them can mean pushing too hard for too long.

You’re probably too optimistic

A good starting point for working out whether you’re being the right kind of ‘resilient’, or simply being unrealistic, is being aware of your various cognitive biases.

The thing with these biases is that they aren’t just personal quirks; they’re widespread, affecting most of the people you know.

The Nobel-winning psychologist Daniel Kahneman has spent much of his career showing how humans are often driven by irrational motivations even in the face of hard facts or clear evidence.

One example he has cited in the past is that while only 35 per cent of small businesses in the US survive, 81 per cent of the US entrepreneurs surveyed for that study thought they had a 70 per cent or better chance of succeeding. Those numbers don’t add up.

Entrepreneurs know on a rational level that a high percentage of start-ups will fail to thrive, and yet they remain confident theirs will succeed. ‘Optimism bias’ explains a lot about this phenomenon.

Awareness of optimism bias has become a big part of business thinking since cognitive neuroscientist Tali Sharot’s 2011 book The Optimism Bias: A Tour of the Irrationally Positive Brain.

In a 2012 TED talk, Sharot explained how important it is for us humans to have unrealistic expectations:

‘Optimists are people who expect more kisses in their future, more strolls in the park. And that anticipation enhances their wellbeing. In fact, without the optimism bias, we would all be slightly depressed. People with mild depression, they don’t have a [negative] bias when they look into the future; they’re actually more realistic than healthy individuals.’

So optimists expect more positive events to happen than pessimists — and to happen sooner. Being ever-hopeful does seem like a powerful survival and evolutionary tool. There also seems to be a link between hope on the one hand, and being at ease with ourselves, lower stress and better physical health on the other.

Beware the optimistic business owner

The thing with optimism — or perhaps over-optimism — is that it doesn’t always deliver pretty business results.

In his 2011 book Thinking, Fast and Slow, Kahneman warns against over-optimism by executives who ‘overestimate benefits and underestimate cost’:
‘They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or to deliver the expected returns — or even be completed.’

A first step for entrepreneurs in overcoming optimism bias is to be aware of this and related cognitive biases from the outset. A next step is for boards and CEOs to ask questions about whether they have taken their biases into account, all the time watching out for over-optimistic answers.

But I’m not average

A particular sub-type of optimism bias is the ‘above average’ effect — the idea (or delusion) that we are better than average at most things, like driving, singing in a karaoke bar (or running a business).

David Dunning, a psychologist from Cornell University, says that the ‘above average’ effect may also come down in part to a focusing illusion.

Drivers often over-estimate their abilities on the road. Image source: Pexels

Positive traits may be defined so broadly that there’s ample ‘wiggle room’ for most people to fit themselves in. So when different people are answering those survey questions asking them to rate their driving ability, they may be focusing on different things — one that they haven’t had any accidents, one on their formal defensive driving training, another that they’re good at handling their car at speed.

That kind of focusing issue may be faced by entrepreneurs when assessing their chances of success — some may think success is ensured because ‘I have the best product’, or ‘I know my customers’ wants and needs’.

Focusing is important for setting goals and identifying key measures of success. At the outset, business owners should set a primary KPI, defining what success looks like. This will guard against ‘p hacking’ — or looking at enough different variables until you find something that went well. It may also be a good idea for businesses to define a ‘pull the plug’ point — for example, ‘We need to break even by X date’.

Optimism doesn’t equal resilience

For Rob Asghar, another business writer, some key elements of resilience involve how we prepare for and respond to surprises and failures.
Resilient people are not in fact surprised by surprises, which means they can focus on responding without getting disoriented or despondent.

To me, the lesson here is to be aware there will always be surprises. In fact, when things finally seem stable is the time to keep a good look-out (think of the stock thriller moment: ‘It’s very quiet … it’s too quiet’).

There’s also a link here with another important cognitive bias — a difficulty we often have in predicting and anticipating change.

Thinking linearly and imagining that next year’s growth rate will be the same as last year’s growth rate is a trap the disruption specialists at the Singularity University warn us about.

Innovations — like railways, antibiotics or social media — often grow exponentially, and we humans can find that kind of discontinuous change particularly hard to grasp. By contrast, successfully resilient people should be able to fit that kind of change into their worldview and into their planning more readily.

Another key element of resilience according to Rob Asghar is that you need to be good at experimenting and learning when things go wrong. When we fail, it’s easy to blame circumstances outside our control, and often that will be a reasonable assessment. But do that too much and you can build ‘learned helplessness’ in yourself and your organisation — ‘There’s nothing I could have done anyway’.

Resilient people feed off mistakes and failures, and keep on experimenting and learning — like design-led thinkers, or great jazz players like Ornette Coleman.

Grit = Strategic focus and flexibility

What Rob Asghar is talking about is an optimism of sorts, and one that’s in part dependent on personality. But it’s an analytical and focused kind of optimism, rather than the reptilian-brain kind.

Behavioural scientist Renee Jaine said Asghar’s ideas on responsive, flexible resilience reminded her of Angela Duckworth’s concept of ‘grit’.

Overly optimistic leaders can be bad for a business. Image source: Pexels

Duckworth tells us that grit is about holding the same top-level goal for sustained periods. We should formulate — and adjust if needed — our short and medium-level goals with the journey towards that top-most goal in mind. If the steps you’re taking towards your top goal aren’t working, then reconsider them.

So while ‘passion’ is at the heart of Duckworth’s idea of grit, it’s also in large part about strategic clarity, coupled with appropriate flexibility around the non-strategic. On this approach, a lack of ‘grit’ might simply come down to having unclear goal structures.

Duckworth says that, when you’re setting and prioritising goals, ask yourself ‘to what extent do these goals serve a common purpose?’:

‘When you see your goals organised in a hierarchy, you realise that grit is not at all about stubbornly pursuing — at all costs and ad infinitum — every single low-level goal on your list. In fact, you can expect to abandon a few of the things you’re working very hard on at this moment.

‘Sure, you should try hard — even a little longer than you might think necessary. But don’t beat your head against the wall attempting to follow through on something that is, merely, a means to a more important end.’

Duckworth’s conception of true grit is also about seeking plenty of opportunities for feedback, and learning from mistakes and experiments — she calls this ‘deliberate practice’. But we should remember this in turn requires avoiding a ‘blame’ culture in your organisation: you need to allow mistakes to come to the fore in the first place and be discussed constructively.

Mistakes, mishaps and derailments don’t always signal an end game, but sometimes it pays to take a step out of bias-filled, somewhat irrational world of running a business, to really consider whether things are working or whether your over-zealous optimism is leading you astray.

About the author

Kevin Jenkins a Co-Founder of the professional services firm MartinJenkins together with Doug Martin in 1993.

Kevin has undertaken a wide range of assignments in the science and innovation, economic development, and tertiary education sectors — for example, work on the establishment of Callaghan Innovation (New Zealand’s advanced technology institute). He has worked a lot in the justice sector, including leading a major programme targeted at leveling off the increase in the prison muster, and another at ensuring that the cost of the sector is stabilised.

Kevin is a regular contributor to the New Zealand Herald.

Kevin Jenkins

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From the Exosphere is a platform for sharing thoughts from the team at MartinJenkins. The exosphere is the last layer of atmosphere before space, offering an unrivalled view of our blue planet and where we might go next.

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