Failure Capacity in Public Governance Systems

By Chen-Yu Kao, Dara M. Wald and Erik W. Johnston published on CPI website on Feb 17, 2014

To a large extent, our current public governance decision-making system is dominated by an unseen but influential negativity: the fear of failure.

Why Do Decision Makers Fear Failure?

Magnetic resonance imaging (MRI) has revealed that, for most people, our brains wage a battle between the lure of reward/success and a fear of failure. This process influences individual willingness to take risks (Risk and reward Compete in Brain). First identified in the 1960’s, an irrational fear of failure has been classified a phobia “Atychiphobia,” which can occur when an individual is expected to perform an unfamiliar or difficult task with a high risk of failure.

Despite possible individual differences, due to human biological and cognitive factors, fear of failure is strongly influenced by “social norms” which stigmatize or tolerate failure.  These differences in social norms, in terms of stigma of failure or tolerance of failure, strongly determine to what extent people are fearful of failure or willing to take risks. Our current public governance system is dominated by a social norm that stigmatizes failure. Therefore, decision makers in this system generally fear failure.

Consequences of Fear of Failure

As a result of a fear of failure, decision makers tend to act in risk-averse, incremental, and defensive ways to avoid failure. Studies on human risk-taking behaviors have identified that the “loss-aversion” cognitive process is one of the core mechanisms leading to risk-averse behaviors (Kahneman & Tversky, 1979; Tversky & Kahneman, 1991). Risk-aversion makes many “would-be” good ideas get put-off or even cut-off. Decision makers halt to act due to risk-aversion so that the inaction stops achieving the potential that good ideas could bring to our society.

Fear of failure and risk-aversion also lead decision makers to rely on the principle of “incrementalism” to make decisions. According to Lindblom (1959), incrementalism is a past-dependence decision principle, under which decision makers rely on past experience in order to avoid possible future failure. Consequently, incrementalism “continually builds out from the current situation, step-by-step and by small degrees” (p.81). In other words, incrementalism is not simply small changes, but small additions to an existing system. As the system continues to grow, without changing the underlying structure, the rate of change slows and existing problems or cracks in the system continue to grow and widen. The recent chemical spill in West Virginia highlighted problems with incrementalism in government policy. The main law currently regulating chemicals in the U.S., the Toxic Substances Control Act, was passed in 1976. Most of the chemicals on this list were never tested for safety or toxicity (EDF, 2014). Of the 85,000 or so chemicals currently used in the U.S., only 200 have been tested (NY Times, 2014). Therefore, incrementalism not only fails to generate innovation, but it can also delay effective and efficient actions and prevent creative and successful solutions to policy challenges.

What’s more, this fear of failure can contribute to what we call “defensive governance.” The idea of defensive governance comes from the practice of “defensive medicine” in our medical treatment industry. The Congressional Office of Technology Assessment (OTA) defined defensive medicine as: “Defensive medicine occurs when doctors order tests, procedures, or visits, or avoid high-risk patients or procedures, primarily (but not necessarily or solely) to reduce their exposure to malpractice liability. When physicians do extra tests or procedures primarily to reduce malpractice liability, they are practicing positive defensive medicine. When they avoid certain patients or procedures, they are practicing negative defensive medicine.” Just as a physician will order extra tests or procedures, decision makers who practice defensive governance over-react by allocating enormous public resources in unnecessary places in order to prevent an outcome failure if they do not do so. See how public school administrators act defensively.

In addition to over-reaction that can lead to over prescription of public policy, public governance decision makers can also over-react by refusing to acknowledge failure because they are afraid of the consequences of publicly recognizing the failure. Decision makers may support policies, programs, or actions, etc. that reduce their exposure to liability (e.g., negative media, public criticism, etc.). Consequently, public resources can be spent on “fixing” or “covering” the failure situations. The cost of defensive governance is difficult to estimate, but we strongly suspect that it is contributing to unnecessary waste of public resources with little to no benefit to society. Defensive governance also delays information dissemination and hurts governance transparency in the case of failure. Several examples can be seen here. (1) The “Do Not Use” order for water in West Virginia issued 10 hours after the spill started. (2) Target shoppers not notified of credit hack for days. (3)Government accused of using military to hide information.

Why Does a Reflection on the “Fear of Failure” Matter in the Public Governance System?

Outside of the field of public governance, a diverse group of experts from business, entrepreneurship, leadershipsports, and psychology have suggested that a fear of failure can prevent “big success” in personal and professional arenas. (See from failure to success: What Steve Jobs, J. K. Rowling and Jack Bogle all have in common). However, in the field of public governance, when “failure” is addressed, it is only discussed as “policy failure”, a possible outcome of policy making and an unwelcome outcome that should be avoided at all costs and that is subject to public accountability. This has created a strong norm of “stigma of failure” that makes “fear of failure” a dominant driving force behind public governance decisions. As we mentioned above, the visible and invisible social costs of the consequences of “fear of failure” are enormous. We believe it is time to reflect and question this dominant norm in the current public governance system.

We believe that “fear of failure” should not be the dominant motivator in the public governance decision-making system. A much healthier and beneficial view on “failure” is needed to promote a public governance system, which embraces “the capacity of failure.” We believe that it is time to question what the “capacity of failure” is for effective governance and what a system designed to promote the capacity of failure would mean for public governance?

What is the Capacity of Failure?

“Failure capacity” signifies that failure can be a valuable source of self-awareness and enhance individual learning (Politis & Gabrielsson, 2009). Failure can provide us the opportunity to adjust our future decisions to avoid repeated mistakes (McGrath, 1999). The experience of failure allows us to learn specific knowledge and gain insights that promote future success. As Robert F. Kennedy said, “Only those who dare to fail greatly can ever achieve greatly.” A good example of a system that embraces this paradigm is business entrepreneurship.

What Could be the Positive Potential of Failure Capacity for Public Governance?

A system that embraces failure capacity would treat failure as a path to success. By doing so, this system would encourage individuals to acknowledge the positive potential of failure capacity for public governance.

Embracing the capacity of failure would mean that decision makers would be more willing to take risks. This risk-taking propensity could encourage good “would be” ideas be realized and could create the best conditions that incubate creativity and innovation in our society. Of course, we are arguing for careful and purposeful risk-taking rather than blind gambling. For gambling, the odds of success and failure are pure chance and uncontrollable. However, for good risk taking, risks can be modified and managed through a variety of strategies rather than simply “playing the odds” (March & Shapira, 1987). This will not be easy to accomplish. When compared to private sector employees, public sector employees were significantly more risk-averse (Buurman, Dur, Bossche 2009). Therefore, this systemic shift will require a shift in both the individuals, procedures and organizations in the existing public governance system.

Moreover, a norm that embraces the capacity of failure could encourage decision makers to free themselves from the limitations of incrementalism. Audacious attempts to de-construct current structure and re-construct a fundamental different structure would not be as inhibited as they are currently and could lead to a foundational/paradigm shift in public policy.

Finally, failure capacity allows public decision makers to build proactive governance instead of defensive governance. In proactive governance, decision makers actively put public resources in places that could bring future opportunities and prosperities to our society rather than spend excessive energy on obscuring or fixing failures.

Rethink Public Governance Accountability

Ultimately, we need to reflect on how to redesign the public governance system to promote the norm of failure capacity. We propose that we measure the success of public decision makers by measuring to what extent they take good risks that lead to an overall portfolio of success, despite individual failures or challenges along the way. We would ask decision makers, “What is the biggest risk you have taken this week/month?” Moreover, in this new system, small success (incrementalism) or status quo would be regarded as failure. In this regard, public governance decision makers should be evaluated by and be accountable for their efforts to unleash the efficiency, effectiveness, creativity, and innovation of our society, rather than maintaining the status quo, pursuing small successes, or warding off outcome failure.