Academy of Management

By Daniel Butcher

Most people’s reaction to the failure of their own business going under is like grief after the loss of a loved one. For many entrepreneurs, the best way to cope with failure is switching between talking about it and reflecting on it, according to Academy of Management Scholar Dean Shepherd of the University of Notre Dame.

Shepherd said that for some people, the more they talk about it, the worse their emotional reaction to the painful event gets. But for others, talking about their business failing can be cathartic.

“For some people, talking about failure helps them process it, but for others, dwelling on it causes the negative emotions to worsen, and that people actually need to have some periods where they can recharge their emotional batteries,” Shepherd said.

“The most recent research in that area said people actually have to oscillate between these two, a loss orientation, where you’re focusing on it, and a restoration orientation, where you’re deliberately ignoring it, not thinking about it, and start addressing secondary causes of stress, like selling the house, moving the kids from one school to another, these types of things,” he said.

“The important part is oscillating between the two, which I thought this was the weirdest thing, but I wrote a paper that ended up getting accepted in the Academy of Management Review, and then that set off quite a stream of related research.”

Shepherd then asked himself, “What happens if the organization doesn’t disappear, but the project that I’m working on does?” He worked on a paper with two coauthors about the negative emotional reactions that scientists working in Germany have when their projects fail.

“Those who are able to learn the most from the failure and those who were motivated to try again were the ones who were engaged in this oscillation process—they used both loss orientation and also restoration orientation,” Shepherd said. “They were able to learn the most and remain committed to the organization.”

Author

  • Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, Crain Communications’s InvestmentNews and Crain’s Wealth, eFinancialCareers, and Arizent’s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor’s degree from the University of Colorado Boulder and his master’s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.

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