The Midwest is the most optimistic region in the country in regards to business failure, according to a new report from Barclays Wealth Insights series. Forty-nine percent of Midwest respondents say they have learned from business failure and 77 percent say that viewing failure in a positive manner is critical for economic growth.
While tolerance of failure is reasonably high in the US, it is considerably greater in faster-growing regions of the world, according to the latest report in the Barclays Wealth Insights series, “If at First You Don’t Succeed…Mapping Global Attitudes to Adversity,” 71% of US high net worth individuals (HNWIs) agree that viewing failure positively is essential for an economy to grow, significantly fewer than in the Middle East (91%) and Asia (80%). Overall, approximately three quarters (74%) of global HNWIs agree that viewing failure positively is essential for an economy to grow.
The Barclays report, which explores how different cultures value traits such as persistence and optimism, and how entrepreneurs view setbacks as a stepping stone to future success, found the US also trails the Middle East and Asia on other notable cultural attitudes toward failure. Only 37% of US respondents agree that past failure in entrepreneurial endeavors increases the chance that a new business will succeed, compared with 81% of HNWIs in the Middle East and 67% in Asia. Approximately half (49%) of US HNWIs believe that if you work hard enough, anyone can learn to become a successful entrepreneur, while 83% of respondents in the Middle East report the same belief.
Global HNWIs also report different experiences with the recent global financial crisis: 44% of US respondents say it provided them with opportunities compared with 53% of Asian respondents. Additionally, respondents in the Middle East and Asia are more persistent in the face of failure with 55% and 53% respectively agreeing that if an entrepreneur’s business is failing, the entrepreneur should persist instead of cutting losses, while only 41% of US respondents said the same.
“The US and Europe may have historically dominated entrepreneurship, but the survey findings suggest that the global landscape has shifted. Today, dynamic and fast-growing economies are catching up,” says Steve Alper, Managing Director, Head of Market Development, Barclays Wealth and Investment Management, Americas. “A culture that tolerates risk and experimentation is crucial to supporting entrepreneurship. As governments across the globe look to grow their economies, understanding the psychology of failure and embracing the ability to learn from setbacks are important factors in creating a vibrant entrepreneurial culture and increasing the chances of a sustainable economic performance.”
Rebounding from Setbacks: Entrepreneurs v. Non-entrepreneurs
Beyond cultural views of failure, the report reveals a contrast in the way entrepreneurs and non-entrepreneurs think about risk, opportunity and failure. Respondents who classify themselves as entrepreneurs find recovery from setbacks easier than those who say they are non-entrepreneurs. Among the entrepreneurs, 34% say that failure encouraged them to try again and 29% report being able to bounce back quickly, compared with 19% and 17% of non-entrepreneurs.
Entrepreneurs are also more likely to see opportunity where others see adversity, with 55% agreeing that the global financial crisis has provided opportunities, while only 42% of non-entrepreneurs agree. Persistence is more prevalent among entrepreneurs as well. Sixty-seven percent of entrepreneurs say that they find it difficult to stop trying to achieve a goal if they have to stop pursuing it compared to 59% of non-entrepreneurs.
Perhaps most significantly, respondents who identify themselves as entrepreneurs are more able to learn from failure than non-entrepreneurs – 56% vs. 41%. They are also more likely to say that failure helped to strengthen their character (39% vs. 21%).
Framing failure as a learning opportunity has implications beyond entrepreneurial ventures and business investments, as the report reveals. The Barclays survey found that people who are persistent, optimistic or both, are less likely to have experienced failure in their personal investments than those who do not possess these traits. It also found that investors who have either experienced severe investment failure or no investment failure at all see the value of diversification.
“Optimism and persistence are valuable traits for financial investors, making them more likely to stay the course and respond wisely to short-term portfolio fluctuations,” notes Greg Davies, Managing Director, Head of Behavioral Finance at Barclays. “As with entrepreneurial ventures, losses are only setbacks if you react to them as failures. The lesson for all investors is to maintain a long-term investing mindset, learn from mistakes and know when to cede control and let diversification work for you.”
US Regional Differences
Notable differences in attitudes toward failure emerged between regions in the US:
- Only 29% of respondents in the West think past failure increases the chance of future success, the lowest percentage across regions.
- The Northeast sees the most opportunity in tough times, with 48% reporting that the recent global financial crisis has provided them with opportunities.
- The Midwest is the most optimistic region, with 49% of respondents agreeing that they have learned a great deal from business failures and 77% saying that viewing failure positively is essential for an economy to grow.