Realizing your venture is not going to be successful, shutting down with integrity needs not be a dramatic, messy affair.
Failure is part of success. An industry as risky as drug development will naturally see more failures than successes. High rewards are available for those who spot winners early. However, spotting a loser is often a less prestigious affair.
We believe that best chances for success shall be awarded to the (hopefully) excellent science that underlies a biotech. How so? By actively managing all other stumbling blocks – organisational dynamics, personal egos, lack of information, missing skill, to name a few. Now when a biotech is about to fail, the cause may not always be the science not working, but individuals involved will be asking themselves all the hard questions about what they could have done differently at the various stages of development that created the pathway to what may be an inescapable fate.
Thomas R. Eisenmann, Professor of Business Administration at Harvard, recently shared his thoughts on accepting defeat. We highlight:
“Failing well starts with admitting defeat early enough to make sound decisions.” Knowing the difference between “slowly moving forward” (maybe we should hang on…) as opposed to “going sideways” is not always obvious. A biotech may have placed bets on studies that will not recruit, have generated data in a suboptimal setting and be now left without further capital, or people on the team simply are unable to cooperate well enough whilst others are hard to attract. These are hard to appreciate for leadership and investors when they may be in the middle of the circle.
Eisenmann goes on to discuss the myth of persistence, the “never give up” trope that has fooled entrepreneurs for decades, saying “if the entrepreneur reaches the Kubler-Ross fifth stage of acceptance, it is then that they can truly reflect on what went wrong, acknowledge their role in that outcome and realize they are not stigmatized for life.” In our experience, handling personal as well as institutional relationships well in the precursory time to a failure, goes far in preventing such stigmatization.
- Be nice – not the first to defect
- Be provocable – return actions consciously, both retaliation and forgiveness
- Don‘t envy – don‘t focus competition but on maximizing your own score
- Don‘t be tricky – which will provoke revenge
This brings us to cooperation versus competition and rationality versus altruism, acknowledging the ‘games’ in a failure are often not zero-sum, but rather cooperative efforts can enhance outcomes for all involved.
Professor of Political Science Robert Axelrod ran a tournament (spanning the 1980s) inviting strategies from collaborators all over the world, to find that the winning strategy performing best overall (not in every game, but on average), was “Tit-for-Tat” – also called look-back strategy or reciprocal altruism. Simply start the first iteration with Cooperation, then look back at the other’s last move and copy that in the next iteration.
We are amazed to observe how these findings still hold true today.