MT Expert: Conquer your fear of failure

A version of the following article appeared in September’s Management Today.

Robert Kelsey, author of the bestselling What’s Stopping You? argues that fear of failure can disable decision making

I spent five years as an investment banker before giving into my fears and getting out. I was terrible, although I was technically no worse than many others. My problem was fear, or fear of failure to be precise.

Called atychiphobia, fear of failure is a condition driven, not so much by fear of actual failure, but by the fear of public humiliation resulting from failure. And this drives our behaviour. Certainly, my fears didn’t just lead to paralysis. They led me to take crazy risks in volatile markets (such as US energy) because fear had obscured my judgement of risk.

Indeed, I think fear of failure a far bigger driver of our actions in business than greed or ambition. And the psychologists back me up. In the 1940s US psychologist Judson S. Brown said that what people were avoiding was just as important as what people strove to acquire. Rather than making money, for instance, he thought that – due to fear – many people were avoiding not making money.

It wasn’t riches or success we sought but poverty or failure we avoided, and it was this that drove our decision-making – potentially leading to “operant responses” such as holding down a job.

Yet fear can occupy both ends of the behavioural spectrum. At one end is the obvious reaction to fear: paralysis. We delay decisions until the opportunity is lost – perhaps looking (and inevitably finding) that tiny flaw justifying our opt-out. Nothing’s been lost, but – significantly – nothing’s been gained, which can lead to the other end of the behavioural spectrum: impetuous and poorly-judged decision-making.

To explain, we must return to our childhood and the fearful events that generated what the psychologists call “fear conditioning”. When a fearful event occurs – perhaps a fierce-looking dog running towards us – the brain’s amygdala presses the alarm, setting off the classic fear-based reactions (racing heart, adrenalin, the shakes etc). Meanwhile, the hippocampus (next to the amygdala in the limbic system) takes note and makes a deeper impression on our memory. So when tangentially reminded of the incident maybe years later (perhaps by the sight and sound of a similar dog) the amygdala’s triggered and we respond with fear.

Yet this works also for humiliation. Painful childhood incidents of public humiliation – perhaps a parent shouting because we failed to make the loo in time – cause the amygdala and hippocampus to again conspire, triggering a fear response when even tangentially reminded of the event later in life.

So why poor judgement? Because our usual response to such triggering is avoidance. And avoidance can come is several guises, as explained by 1960s experiments by psychologist John Atkinson of Stanford University. He set children a series of reward-based tasks, including a game of hoop-the-peg, and noticed they divided into two groups. One group focused on winning the reward (or being “achievement motivated”), while the other focused on avoiding the humiliation of failure (or having “fear of failure”).

The achievement-motivated kids stood a challenging but realistic distance from the peg – adding concentration and trying again if they failed. The fear of failure kids, meanwhile, focused not on the reward but on the potential humiliation of failing. Many tried to disrupt the experiment while other stood right on top of the peg. Yet others stood so far back that failure was almost certain, which – of course – masked their fear of failure: everyone would fail at such a distance. Indeed, they’d expect praise for being seen as a “trier”.

Ballsy do-or-die decisions, therefore, can be a result of fear-driven avoidance, despite looking like confidence-driven strong judgement. Of course plenty of these high-risk gambits work out, just as the occasional kid managed to hoop the distant peg. Yet this leads to further problematic behaviour, including hubris, which potentially masks our deep-down feelings of undeserved success.

Certainly, fear of failure explains all those “rogue trader” scandals in the City, which usually start with someone trying to cover-up modest losses (and thus avoid the humiliation of failure). Yet I think it explains a lot more besides. It certainly explains my poor decision-making as a banker, which included doing deals in high-risk markets for clients such as Enron.

That said, I was far from alone. Our energy deals were usually of the “structured” variety that involved those complex box-and-arrow diagrams involving swaps and options and hedges. And with them scrawled on a meeting room whiteboard we’d win the occasional visit from a senior banker.

He’d take one look at our diagram before nodding sagely.

“Looks great,” he’d say. “Excellent!”

Of course, he hadn’t a clue. Yet this was Enron, so neither had we. Meanwhile, we’d all masked our fear of failure and the banking industry had taken another small step towards the precipice.

The second edition of What’s Stopping You? Why smart people don’t always reach their potential and how you can by Robert Kelsey is now available HERE.

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