By Daniel Hunter
Three quarters (74%) of global high net worth individuals (HNWIs) agree that viewing failure positively is essential for an economy to grow.
However, respondents from fast-growing emerging markets tend to have a more positive view of setbacks, show greater persistence and better see the benefits of overcoming adversity, according to the latest report in the Barclays Wealth Insights series.
This trend is highlighted by the fact that the overwhelming majority (91%) of Middle Eastern respondents and 80% of those in Asia believe that viewing failure positively is essential for an economy to grow. In contrast, these figures drop to 70% in the UK, 71% in the US and 69% across Europe.
Launched today (12 November 2012) and based on a global survey of more than 2,000 HNWIs comprising entrepreneurs, business leaders and investors, the report, If at First You Don’t Succeed...Mapping Global Attitudes to Adversity, provides an in-depth study into the different ways in which individuals around the world view and respond to setbacks. The report explores how different cultures value traits such as persistence and optimism, the role of luck and how entrepreneurs view setbacks as a stepping stone to future success.
The research also reveals a contrast in the number of people who see themselves as entrepreneurs in Western versus Eastern economies. According to this report, just 29% of respondents in the US and 30% in Europe regard themselves as entrepreneurs, compared to 47% in Asia, 50% in the Middle East and 55% in Central & South America. In the UK, 35% of respondents view themselves as entrepreneurs, 61% of whom say that they learned a great deal from failure, compared with 42% of non-entrepreneurs.
“Traditionally, many regard Europe and North America as entrepreneurial hotbeds, but these findings support the widely held belief that we are seeing a global shift, with a fear of failure perhaps holding these ‘established’ economies back," Richard Phelps, Managing Director, Barclays Wealth & Investment Management said.
"Governments across the globe have highlighted the crucial role that entrepreneurs will play in kick-starting the global economy, so understanding their psyche, their culture of perseverance and how this differs across regions will be critical in making this opportunity become a reality.”
The report reveals some significant findings relating to the mindset of individuals in different regions. In the Middle East, 83% of respondents agree that anyone who works hard enough can become a successful entrepreneur. The corresponding figures from the US and Europe are just 49% and 44% respectively.
Entrepreneurs in emerging markets face a challenging environment when it comes to setting up a business and this would suggest entrepreneurs in these markets require a greater level of persistence. This is reflected in the report findings which show that 88% of respondents in India and 74% in Saudi Arabia agree that if their business is failing, an entrepreneur should persist rather than cut their losses, in contrast to just 35% in the UK — the third lowest of all countries surveyed for the report. In addition, the report reveals that 34% of entrepreneurs globally say that failure encouraged them to try again, compared with 23% among non-entrepreneurs.
The report also explores how optimism can be a feature of how respondents view failure. When it comes to investors, over half (55%) of global respondents who display optimistic characteristics say that they have experienced failure in their personal investments, compared to 66% of those who do not display these optimistic traits.
Learning from and overcoming challenges is an important part of an entrepreneur’s journey and this is reflected in particular among respondents who have experienced failure in Qatar, China and Hong Kong, where 73%, 71% and 65% of respondents cite that they have learnt a great deal from past failures. Just 49% of these respondents in the UK believe they learnt a great deal from past failures.
The importance of failure is further demonstrated when respondents were asked whether they would hire an individual who has experienced entrepreneurial failure. Over nine in 10 (91%) of respondents in India, 89% in Saudi and 86% in Qatar confirmed they would, while in the UK just 42% of respondents would hire someone with a failed enterprise on their CV. This figure drops to 25% in Monaco.
The report reveals that respondents in the UK believe that being successful is significantly reliant on ‘skills/intelligence’ and ‘effort/hard work’. On average, over a third of success is attributed to these factors (37% and 38% respectively). Chance and connections, on the other hand, are seen as much less important factors, each at 14%. These findings are in line with the global average, with the UK ranking fifth for the importance placed on ‘skills/intelligence’ and ‘effort/hard work’.
However, Dr. Greg B Davies, Head of Behavioural Finance at Barclays, warns against being too self-assured, commenting: “Strong belief in skill rather than luck could give you a degree of over-confidence in future decisions. This mindset can be hazardous to the long-term security of a business, or to an investor, as you end up taking more risks on the assumption that your success has been wholly attributed to your own good decisions.”
He adds, “For an investor, losses are merely setbacks unless you react to them as failures. Viewed as setbacks, what you have is a temporary low value of your assets. This may require some temporary scaling back of short and medium term spending plans, but in the long run reflects nothing so much as an opportunity. For both entrepreneurs and investors, a willingness to learn from mistakes and see them as one step in a long process, is important. The tenacity and persistence demonstrated by entrepreneurs is something that investors can learn from, to help them respond to setbacks, learn from the experience and move on.”
The report reveals the personalities of entrepreneurs in different regions of the world, with those in the East determined to overcome setbacks and persevere. In India, 82% of respondents agree that if they have to stop pursuing a goal they find it difficult to stop trying to achieve it, compared to 56% in both the UK and the US.
There is perhaps another element at play though, as the broader economic climate and mindset of governments, regulators and businesses impact on the ability of entrepreneurs to succeed. Paul Ormerod, an economist and author of Why Most Things Fail…And How to Avoid It, suggests that setbacks are inevitable and long-term success relies on having clear risk mitigation policies in place. He comments, “The usual approach is to try to predict potential problems and then put plans in place to stop them happening. But you cannot avoid failure.
"You’ll never get round this fundamental problem, no matter how smart you are. It’s inherent to all evolving systems, which is exactly what human social and economic systems are. Therefore, we come back to the power of persistence, which the East appears to be embracing. The questions are what the West needs to do counter this potential power shift, and what the longer term implications are.”
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