Funders and Apes: Seven Steps for Constructive Failure

Yesterday, I wrote a bit about how funders, like all humans, are programmed by millions of years of evolution to hate failure. But our DNA hasn’t kept pace with the changing times. If our brains were adapted to the modern world instead of the prehistoric reality of the first apes with opposable thumbs, we would have created different neurological and chemical reactions to failure. We would have realized that in these times our survival depends on embracing productive failure. Until that realization occurs, we need to trick our brains into interpreting failure differently.

For philanthropists and funders, embracing failure means creating a culture change. In complex endeavors, failure is a given. Here are seven strategies to help capitalize on the inevitable.

1. Remain focused and strategic, but diversify. Create a grant portfolio. A world in which failure and success aren’t clear-cut is, by definition, a world without silver bullets. We won’t solve a problem with a single successful grant, or by investing in a single area. Smart funders need to create grants portfolios with the full knowledge that some of the initiatives will fail. Naturally, we need to remain focused, but even within a particular field, there’s room for diversification.
2. Ready, fire, aim. If you know that many projects will fail, you need to cut the time and the money that you invest in process. “Perfect” just doesn’t exist. Agility is the key: Even from a failure you can obtain a wealth of information to help you guide your course.
3. Have a mechanism to analyze and create feedback loops. One of the biggest benefits of failure is that it provides excellent feedback. My son is writing a school project on Leonardo da Vinci. Looking at Leonardo’s notebooks, it’s easy to see that creation is not a stroke of genius, but an iterative process of trial and error. You need to be able to analyze both failure and success and incorporate the feedback into your planning. This cannot be left to chance or happenstance. There has to be a well-oiled mechanism to analyze and incorporate lessons from both success and failure.
4. Fail cheap and fail fast. You don’t need to spend many years and many millions to realize you failed. Develop a series of early warning signals. As an Argentinean I’m culturally conditioned to cut corners, but the truth is that shorter processes help you see faster and more cheaply if a project will fail or not. Use pilot projects, or try samples in controlled contexts before investing massive resources.
5. Organizational culture matters. If failure and success are contextual, then the culture of your organization is the key to how people will interpret their success or lack thereof. Let’s eliminate the idea of success and failure from the organizational vocabulary. What if we analyze our grants and projects based on a series of parameters and stop short of labeling them as successes or failures? Take it a step further: An organizational culture is made of many elements, and the way professionals are rewarded is a key component. If you speak about embracing failure but your rewards mechanisms— both monetary and cultural—penalize failure, constructive failure will never be embraced. Instead, do something to celebrate failures! Why not institute an annual prize for the best failure? If you’re not failing, it’s because you‘re not innovating.
6. Let the information flow. One of the keys to learning from failures is to promote the free flow of information. We tend to publicize what we see as successes and be reserved about failures. Instead, by allowing information to flow, we can get more feedback and ultimately make our failures more “profitable.” The more people know about all our projects, the more somebody can see an unintended consequence we may have overlooked.
7. Network. As funders, you may be experiencing similar issues to other funders. Be sure to learn from others by sharing your experiences in regular and formal ways. Often, innovation and creativity come in direct relation to the number of people you are in touch with. The more people you interact with, the more creative you become. In his great book about innovation, Where Good Ideas Come From, Steven Johnson claims that this is the reason why cities are much more creative than villages. Make time for formal networking. You need to use the critical mass of brain power that networks allow and the exponential increase in creative thinking that happens when you break out of your own ivory tower.

It’s a common misunderstanding of Darwin that evolution is about the “survival of the fittest.” That’s oversimplified and not what he said. He claimed that the “most adapted” thrive and survive. Strength per se is nothing, and the lesson for philanthropy is no different than for life generally. Resilience and adaptation are the key to coming out on top in evolution. It’s time for us to jump-start the process and adapt our brains to a world in which failure and success are not what they used to be.

Andrés Spokoiny is president and CEO of the Jewish Funders Network.