SPEAKER_02: Free Economics Radio is sponsored by American Express. The enhanced American Express Business Gold Card is designed to take your business further. It's packed with benefits like four times membership rewards points that adapt to your top two eligible spending categories every month on up to $150,000 in purchases per year, and up to $395 in annual statement credits on eligible purchases at select business merchants. The Amex Business Gold Card, now smarter and more flexible. That's the powerful backing of American Express. Terms apply, learn more at AmericanExpress.com slash business gold card. Free Economics Radio is sponsored by Sylvania. Sylvania's lighting experts want you to know that headlights dim over time and can lose up to 50 feet of visibility. That's roughly the length of a tractor trailer. So it's important to change them before they burn out. Sylvania headlights deliver a brighter, whiter light to improve your visibility on the road and help reduce glare distraction. Learn more at Sylvania.com. Hey there, it's Steven Dubner. Before we start, I would like to tell you about our new membership program. It is called Free economics Radio Plus. If you are a member, you get an exclusive bonus episode every week and you can listen to all our shows without ads. To learn more about Freakonomics Radio Plus, search for Freakonomics Radio on Apple Podcasts. If I asked you to name the world's deadliest infectious disease, what would you say? COVID-19? That was the biggest infectious killer for a few years, but not anymore. How about malaria? Influenza? HIV? Those are all deadly, but not the deadliest. So what's number one?
SPEAKER_04: Actually TB for the last 20, 30 years has been the number one infectious disease killer in the world. Babak Javed is a physician scientist
SPEAKER_02: who studies tuberculosis or TB. You may think of TB as a 19th century disease when it was called consumption. It killed John Keats, Anton Chekhov, and at least two of the Bronte sisters. It killed the heroines of both Laboem and La Traviata. And today it still kills around one and a half million people each year, most of them in the developing world. TB is a disease of poverty.
SPEAKER_04: It's really a major problem in India, China, Indonesia, Pakistan, South Africa, Nigeria. TB is a bacterial infection.
SPEAKER_02: There is a vaccine for it, but it's not always effective. It can be treated with antibiotics, but it's a long and fairly complicated course of treatment. And as deadly as TB is, it doesn't draw the attention or the funding that flow to other diseases.
SPEAKER_04: There is no Hollywood star that gets TB that puts it in the public mind in everyday people's thoughts. One of the reasons I was attracted to this field is I felt that infectious diseases in general, and TB in particular, is one of the mechanisms of injustice in our world. And I really wanted to tackle that. Javed runs a tuberculosis research lab
SPEAKER_02: at the University of California, San Francisco. He has also worked at labs in Beijing and at Harvard. His kind of research comes with a lot of failure.
SPEAKER_04: I remember in my graduate school, I went over a year and a half without a single experiment working. And it's very hard to get up in the morning and go back and expect to fail again.
SPEAKER_02: The first drug that was found to successfully fight TB is called streptomycin. It was discovered in 1943. It won a Nobel Prize for Selman-Waksman, the main scientist behind it.
SPEAKER_04: And the way that streptomycin works is that it does two things. It inhibits the process of making new proteins. It's called a protein synthesis inhibitor. But that in itself doesn't kill the bug. What kills the bug is that in addition to that inhibit reaction, it actually causes the bug to make mistakes when it makes these proteins.
SPEAKER_02: What interested Javed was this second function, the drug causing the bacteria to make mistakes as they are creating the proteins that produce the symptoms of TB. So he went looking for other ways to trigger those mistakes and he found some, but it turned out this wasn't enough to thwart the bacteria.
SPEAKER_04: What was really shocking and surprising to me is the bug didn't seem to mind. It just carried on regardless. So I cranked up the error rate and I kept pushing and pushing and really the bugs were kind of fine with it until eventually when I had really cranked up the error rate an awful lot, then the bugs died. It takes a lot of error to kill these bugs. I was reflecting on my results and I was thinking, this just doesn't make any sense to me. The prevailing dogma at the time is that with a small amount of error, you induce what's called error catastrophe where the errors in the new proteins make faulty machinery in the cell that then makes more errors and it just feeds on itself. And these bugs were extremely resilient. And that made me take a step back and I thought, what if actually these errors aren't detrimental after all, at least in a moderate amount? And that was my, I guess, aha moment. I have to be honest, at the beginning, I had no idea why this was. We were coming up with lots of different ideas as to explain it, but after a lot of experimentation and blind alleys and wrong turns, we figured out that what's happening is that this mistranslation is allowing the bacteria to innovate and that was a really exciting moment. And I kind of coined the term adaptive mistranslation, that sometimes these errors in the right context and in the right degree can actually be good for the bug.
SPEAKER_02: Adaptive mistranslation, think about that for a minute. And let's think about it outside the realm of tuberculosis research. It's the idea that errors in the right context and degree can strengthen an organism, can make it more resilient and lead it to innovate. Now, that sounds like a magic trick, doesn't it? But if it can work for TB, can it work for us? Today on Freakonomics Radio, the final episode of our series, How to Succeed at Failing. We will hear about another counterintuitive way to fight off failure.
SPEAKER_05: The pre-mortem is designed to help you do better rather than to shut off innovation.
SPEAKER_02: We ask if failure should be taught formally in the classroom.
SPEAKER_09: The whole point of the whole semester is gonna be, hey, everybody fails and we fail at everything.
SPEAKER_02: And whether failure needs a museum. We have a Ford Edsel, we have Pepsi Crystal, New Coke.
SPEAKER_02: How to Succeed at Failing, the final chapter starting right now.
SPEAKER_06: This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Steven Dubner.
SPEAKER_02: Gary Klein is a cognitive psychologist who advises organizations on how to respond to failure. His latest research is around what are called wicked problems.
SPEAKER_05: A wicked problem is one where there's not a clear right answer that people would generally agree upon.
SPEAKER_02: And what share of problems in the world are wicked problems?
SPEAKER_05: Most of the major social problems we wrestle with are wicked problems. We have multiple stakeholders and there's no way to please all of them. And so there's all of this potential conflict and resource situations change or pandemics arise, wars arise, things that are unexpected that are gonna upset what you're doing.
SPEAKER_02: In any of those conflicts that Klein is describing, any of those disruptions, let's call them, we suddenly crash into a complex situation that's also fogged in by uncertainty. And now we have to essentially guess what's gonna happen next. And those guesses often turn out to be wrong.
SPEAKER_09: I actually went on Anderson Cooper during the early days of the pandemic to tell everyone how wrong I was.
SPEAKER_02: That is Theresa MacPhail. She is a medical anthropologist at the Stevens Institute of Technology, one of the country's top engineering colleges. And yes, MacPhail is an appropriate name for a professor discussing her own failure in a series about failure, but just wait, it will get even more appropriate later in this episode. Anyway, MacPhail had studied the outbreak of the H1N1 influenza pandemic in 2009. So her expertise was in demand when COVID came along.
SPEAKER_09: I really thought when we heard the first rumblings out of China in 2019 and early 2020, I was like, we have this, like there's mechanisms in place. But what I hadn't really considered was what over a decade of cutting funding had done. And it had basically decimated a lot of public health. I thought we were more prepared and it turns out we were not. And I felt badly because I had done an interview with Vice News in February and I said, calm down. You know, we're not China, we're better equipped. Here's why I had to go to the ER in March because I got very sick on March 1st. I went to the ER and I remember the ER doctor saying to me that he had never seen a situation where they were so ill-equipped with PPE or personal protective equipment. That's when I realized, uh-oh, I was wrong.
SPEAKER_02: Now, what might've happened if Theresa MacPhail, and not just MacPhail, but let's say everyone in the realm of pandemic preparedness, what if they had all thought a bit differently about this wicked problem? What if before the failure happened, they pretended that there had already been a failure? You are probably familiar with the idea of a post-mortem or what the military calls an after action review. By that point, of course, the damage has been done. So what if you flip the order and conduct a pre-mortem? That's what Gary Klein called this strategy when he invented it in the 1980s.
SPEAKER_05: The pre-mortem is designed to help people surface realistic possibilities and threats so that you can improve the plan, improve the product, and increase your chance of success.
SPEAKER_02: At the time, Klein was running an R&D firm that studied decision-making in organizations.
SPEAKER_05: Many of our projects succeeded, but not all of them. And we would occasionally have an after action review. Those weren't exciting things to do because we were pretty disgruntled. At one point I said, why don't we do this at the very beginning? Why don't we imagine that it fails? Often in organizations, if you have like a kickoff meeting, there'll be a part where they say, all right, now does anybody have any concerns? Are there any critiques? Does anybody see any problems? And nobody says anything, either because they don't want to disrupt the harmony of the team or because they're not thinking that anything could go wrong because they're excited to get started. So to break through that mindset, I developed this technique of a pre-mortem. And at the end of a kickoff meeting, we say, all right, imagine that I'm looking at a crystal ball, I'm dialing forward six months, maybe a year, whatever the right timeframe is. And, oh no, this project has failed. It's failed in a big way. We know that, there is no doubt. This crystal ball is infallible. Now, everybody in the room, you've got two minutes. Write down all the reasons why this project failed. And it's amazing the types of issues that people surface that ordinarily they wouldn't say in public or even think about.
SPEAKER_02: Can you explain from a psychological perspective why that works?
SPEAKER_05: Well, after I developed the technique, I read about some research on perspective hindsight. And so I think a big part of it is the certainty that it's failed. And so now that changes my mindset. So I'm not resisting. If I say, here's the plan, are there any problems? There's all kinds of pressure not to think about problems. But by being certain that the plan has failed, by entering into that exercise, it just changes the whole valence, the whole experience.
SPEAKER_02: So interesting. I mean, we always hear about how humans perform poorly under uncertainty generally. So you're saying, you're just removing the uncertainty of whether it will work. You're saying it didn't. Now tell me why it didn't, and that provides clarity. So what happens next after people voice these ideas? What happens now? Okay, so let me get,
SPEAKER_05: we never thought about this as a tool outside our company. This was just something we did, but then we had a big project we were doing for the Air Force. It was a software tool for identifying ways of using precision-guided munitions. And I told my prime sponsor, I want to do a pre-mortem. And he said, what's that? And I explained it to him and he said, absolutely no way. We want everybody to be positive. This is such a depressing exercise. I don't want to do it. And I said, this is an important project. We want it to succeed. This is a way to make it succeed. And reluctantly, he agreed to do it. We were doing this pre-mortem and there was this young captain, hadn't said a word. The meeting had gone on for about two days, hadn't said a word. And it was time for him to come up with his, what he had on his list. We go around one at a time around the room and we do one or two or three sweeps. And he looked a little nervous and he said, this tool that we're building, it's for people in the field. And they have these low-powered laptops. The tool we're building runs on a supercomputer that takes 48 hours. I don't see how that's going to work. And there was silence in the room because everybody realized he was right. And then somebody said, now I've got a back of the envelope technique that I use that could be a shortcut. And all of a sudden we were back in business. But if we hadn't done that, we would have failed. And he never would have said that if we didn't give him that space.
SPEAKER_02: And you're saying the person who spoke up was the most junior or among the most junior in the room? Yes, he was. So I've seen this myself many times, not in a pre-mortem, but just in a meeting generally where junior people, they have very little incentive to speak up. It seems like there's more downside than upside. It strikes me that American meeting culture is dominated by noisy people who have a lot of confidence, which is often unearned. And I'm curious if you have any advice for having better ideas come through in meetings. I have a couple of ideas,
SPEAKER_05: but one of them is the pre-mortem because the pre-mortem creates a culture of candor. People learn that they can voice unpopular ideas and not be punished for it. It also creates an environment where I'm surprised at the ideas that you come up with or this young captain comes up with because a pre-mortem really harvests the different experience and ability of the people in the room. I don't know what's in your head, so how can I appreciate your perspective? But in a pre-mortem, I realize, wow, I never thought of it that way. So there's a chance for the people in the room to start to gain more respect for their colleagues.
SPEAKER_02: I would think that anonymity would be a useful tool here. Why do you not use that?
SPEAKER_05: Anonymity could be useful in environments that are usually very punitive, but in terms of creating a culture of candor, it works better if we're all face-to-face.
SPEAKER_02: Does it sometimes get personal, even ugly?
SPEAKER_05: I have never seen that happen, surprisingly enough, no. Because everybody knows that this is a made-up failure, so it's not life or death, although it could be, and everybody knows that the intent is to improve the plan.
SPEAKER_02: Can you talk about how to encourage candid feedback generally? Again, it may be the more junior employees, but whoever it is that might have a valuable insight, how can you best float that insight up to leadership?
SPEAKER_05: I've wrestled with that issue for a while because most organizations say that they want insights, but they don't because insights are gonna mean that we have to change, and if I'm a mid-level manager, now I've got to change my supply lines, I've gotta change my staffing. Can we just continue what we're doing and try to do it better? They'll say we wanna be harmonious, so we're going to make decisions where everybody agrees. A harmonious decision is a terrible idea because that means that everybody has a veto, and so your chance of coming up with an innovation has been severely compromised.
SPEAKER_02: Do you ever have harmonious decisions in your personal life, maybe with your family? I am guilty of the delusion
SPEAKER_05: that we can have harmonious decisions, and despite personal experience, I hold onto this goal. Do you personally, routinely do pre-mortems,
SPEAKER_02: even just a quick in-your-head one when you're about to make a decision? I do not do it when I make lots of decisions,
SPEAKER_05: and so I don't do it automatically.
SPEAKER_02: Did you pre-mortem this interview today, Gary? Ha ha ha ha ha ha ha ha ha. That was a no. After the break, we asked the CEO of a startup if he would like to try Gary Klein's pre-mortem idea. I guess I disagree with Gary. I'm Stephen Dubner. This is Free Economics Radio. We'll be right back. Free Economics Radio is sponsored by Mint Mobile. From billion-dollar ad budgets and arena naming rights to tens of thousands of retail locations, big wireless providers spend big to appear like they are your only option. How do they afford it all? That big bill you get every month. Mint Mobile had a different idea. Instead of brick-and-mortar overhead, Mint Mobile is online only. What's that mean for you? A whole lot of savings, because wireless plans from Mint Mobile start at just $15 a month. All plans come with unlimited talk and text, plus high-speed data delivered on the nation's largest 5G network. Use your own phone with any Mint Mobile plan, and keep your same phone number along with all your existing contacts. To get a new wireless plan for just 15 bucks a month, and get the plan shipped to your door for free, go to mintmobile.com slash freak. That's mintmobile.com slash freak. Free Economics Radio is sponsored by Lenovo and Intel. Looking for a go-anywhere, do-anything laptop with the flexibility you need? Check out the Lenovo Yoga 9i, designed on Intel Evo. You can connect your phone to the laptop even if you've got an iPhone, transfer seamlessly from your phone to your PC, or PC to your phone, with Intel Unison. Make calls, send texts, transfer photos and data, and more. Plus, enjoy the ultimate viewing experience with a 4K resolution and OLED PureSight display. The Lenovo Yoga 9i also comes with one-click function keys, a full-size stylus pen, touchscreen functionality, and plenty of ports. The intelligent collaboration feature even lets you communicate seamlessly across Teams, Zoom, or other apps, and get up to 14 hours of battery life and rapid charging abilities. Lenovo Yoga, an Intel Evo laptop engineered to do it all. Available at bestbuy.com slash yoga. In 2018, Will Coleman left his job as a partner at McKinsey, the consulting firm, in order to launch a rideshare startup called Alto. We spoke with him earlier this year.
SPEAKER_01: At Alto, we're elevating rideshare for both drivers and passengers. We offer a really differentiated service through W2 employees and company-owned vehicles. So at Alto, you always know exactly what you're gonna get, a safe, clean, high-quality ride every single time.
SPEAKER_02: A lot of those words sounded as if they were chosen to be Contra, Uber, and Lyft. Is that essentially the case?
SPEAKER_01: That is essentially the case. Uber and Lyft, we think, are the Contra of safe, clean, consistent. Our brand was always built to go head-to-head against the big names and to compete directly against them in every major city.
SPEAKER_02: Are you also, to some degree, a luxury product?
SPEAKER_01: We call it an accessible luxury. We want it to be something that feels luxurious, but that is, for most people, a couple dollars more. It might be because you really value your safety and the type of vehicle that you're in or the type of person that you're in the vehicle with or that you just value the consistency, knowing exactly what you're gonna get. So we see it a lot like a cup of Starbucks coffee. You can get a much cheaper cup of coffee, but most people choose that for that consistency and quality every single time.
SPEAKER_02: How many markets are you in right now?
SPEAKER_01: Yeah, we're in six markets across the US, Los Angeles, San Francisco, Dallas, Houston, Miami, and Washington, DC.
SPEAKER_02: I did not hear New York City there. Why not? That's a big market.
SPEAKER_01: New York is a very expensive market. It's a very competitive market. It's very big and it's a huge opportunity. But as efficient and maybe conservative allocators of capital, we want to perfect the product.
SPEAKER_02: The ride-share market is tough to break into. Uber and Lyft dominate both the drivers and riders in most places. Coleman hopes that Alto's business model can set it apart. Instead of using freelance drivers who have their own cars, which is how Lyft and Uber do it, Alto employs the drivers directly and leases vehicles from manufacturers. Will that work? The history of the ride-share industry is already littered with firms that tried to challenge Uber and Lyft. There's Juno, Sidecar, Fasten, and more. We asked Gary Klein how he might help Alto stay off that list.
SPEAKER_05: Okay, so there's a couple of things that I might do with them. First of all, we would want to run some pre-mortems to inject a healthy dose of reality. Not that I don't think they have that. A second is, are they going to be able to pivot based on what they learn? Or are they going to get locked into a business model and not be resilient or flexible as things develop? Because things will develop. Their plan is not going to continue as they've originally designed it, simply because nobody is smart enough to come up with a perfect plan right off the bat. So you do want to make discoveries and you do want to be able to pivot and maybe even make massive changes in your business model. I mean, if you do some sort of pre-mortem, you might say, what are the things that we might have to adapt for, in part, to build a more resilient organization?
SPEAKER_02: We went back to Will Coleman to ask what he thinks of Gary Klein's suggestion. Yeah, we're not going to be running
SPEAKER_01: any pre-mortems at all. No. Because why? I guess I disagree with Gary. I mean, if you're constantly focused on the downside, then I think you're probably not focused enough on the upside. I often tell my team, the money-making machine hasn't been built yet. And if you're in a company like Google or Apple or Amazon, the money-making machine has been built and you're just there to make it better. Here, you're really building something from scratch. And so honestly, the proposition of failure is almost, I mean, startups fail every day, probably what, 99% of them. So you're already going into this with an understanding that failure is the most likely outcome. So we could sit around and talk about that for hours, days, but we'll never make any progress. It's paralyzing. Instead, what we talk about and what I focus on is, how do we just get to the next decision point? How do we just get to tomorrow? How do we just make this incrementally better now? I hate to keep leading you down the road
SPEAKER_02: of potential failure, but I do want to ask, let's say this doesn't work. And a couple of years from now, you need to close up shop. Can you envision what that would feel like for you?
SPEAKER_01: It would be devastating. Yeah, I mean, because we've been on the brink of that before. In COVID, I mean, I'm not kidding. We lost 95% of our revenue in a day. We were more agile during that period of time than we had ever been. And the impact of that was that many of those products that we built that were the ones that succeeded, which was maybe a 10th of them, but the ones that did are now 20, 30% of our revenue, incremental things that we didn't have before the pandemic have made our business more robust, more resilient.
SPEAKER_02: A couple months after we spoke with Coleman, we learned that Alto shut down service in San Francisco after just a year. They also made some significant layoffs and they paused their plans to expand beyond their current cities. Does this mean they will join the 90 some percent of failed startups that Coleman mentioned? I of course have no way of knowing, but if they do fail and fail spectacularly, they might end up with this man.
SPEAKER_10: My name is Samuel West. I'm a psychologist and I'm a curator. He is a curator and founder of the Museum of Failure.
SPEAKER_02: And how did that come to be?
SPEAKER_10: So I was in Croatia in Zagreb, the capital, just on holiday with my family. And I stumbled into a museum called the Museum of Broken Relationships. So I'd been thinking about ways to sort of spread the ideas of accepting failure and how much room for improvement there is on learning from failure. And then I was in Zagreb and I just got this, what do you call it? Hallelujah moment. And so it was that Samuel West
SPEAKER_02: invented the Museum of Failure. It is a pop-up museum that's been traveling the world since 2017. Helsingborg, Sweden, Paris, Los Angeles. As of this recording, it's in Washington, DC. We caught up with West this past spring when his museum was in Brooklyn.
SPEAKER_10: It's a sunny, nice day. And we're about to open in a few minutes.
SPEAKER_02: As it turns out, running a traveling museum is not easy.
SPEAKER_10: So here we have an example of failure at Museum of Failure. Our wall panels are falling off the wall. I'm gonna kill somebody.
SPEAKER_02: The museum includes more than 150 failures, most of them inventions and commercial products. They range from trivial to fraudulent.
SPEAKER_10: Elizabeth Holmes, do I need to say anything about her? No, come on. Gerber, back in the 70s, they launched a product of adult food in a baby food jar. This is the Euro Club from 2008.
SPEAKER_02: In case you couldn't hear that, it's called the Euro Club, not Euro, E-U-R-O, just U-R-O.
SPEAKER_10: It's a golf club with, yeah, it's for us men when we're out golfing and need to urinate. So what you do is you unscrew the top of it, you clip it onto your belt, and then you fiddle under the belt, and you urinate into this canister, camouflaged as a golf club. And then you screw it back up, and you continue on with your golf. I mean, the criteria is that to be in a museum, it has to be an innovation, and it has to be a failure, obviously. And then I have to find it interesting.
SPEAKER_02: The Museum of Failure will make you laugh, but West hopes that people walk away with more than that.
SPEAKER_10: So the focus at the museum is on innovations, which is products and services, but in our personal lives, we fail also, and the same principle applies there. We're very bad at learning from our own failures because it's uncomfortable. So if we're willing to have those uncomfortable feelings and thoughts for a while, we can actually learn from them. I want people to feel liberated that failing isn't as bad as you think it is, usually.
SPEAKER_02: We also got Samuel West into a studio to talk about failure more generally.
SPEAKER_10: I think failure is far more interesting than success. Because why? Because success is often sort of curated by whatever story the sender wants to present, whereas failure feels much more authentic, much more human.
SPEAKER_02: Do you think it's easier to learn from failure or from success?
SPEAKER_10: I think it maybe feels better to learn from success, but I think we can learn much more from failure. It's a more natural way of learning. That's how we learn how to eat, how to walk, how to do anything is through a repeated trial and error.
SPEAKER_02: So here's the thing, I agree with you, but it seems as though most of the world, certainly the business world, thinks the opposite. We are addicted to success porn. People read the books written by successful entrepreneurs and they say, okay, that's what I'm going to do. People listen to popular music or watch popular films and emulate that. It seems that there's pretty much consensus that the best way to succeed is to copy success. What's wrong with that idea?
SPEAKER_10: There's nothing wrong with it. It's just really difficult to do. And the thing is it's really low effort learning because sometimes listening to that successful entrepreneur or listening to that successful artist, you think you're just going to absorb the success by listening to the story. Just because something works for someone else doesn't mean it's going to work for you.
SPEAKER_02: So if someone is interested in learning from failure, what are some mechanisms to help with that? Throughout this series, we have spoken with Amy Edmondson, a scholar of failure at the Harvard Business School. She argues that for starters, we should not be hiding our failures.
SPEAKER_03: One way to think about this is we will be failing. So let's do it joyfully. Let's do it thoughtfully and celebrate them appropriately.
SPEAKER_02: Talk to me for a moment about the ways in which failure is a good teacher, but we ignore its lessons. And I'm particularly thinking about the lack of publishing of null results and things like that.
SPEAKER_03: We don't, in academia, we don't publish our null results. So that means not only do we not spend enough time on them to really learn what they're teaching us, but even more importantly, our colleagues near and far don't get to see them. So then they're at risk of trying the same thing, which to me is the most wasteful of the wasteful failures is when we already had that knowledge, but somehow we aren't able to share it.
SPEAKER_02: Should there be a journal of failed results somewhere?
SPEAKER_03: Yes, and you know, it's not as strange as it sounds. You could still have very high standards because you wouldn't publish things that were just nonsensical or didn't have thoughtful hypotheses or theories that led you to spend that time studying them.
SPEAKER_02: You wanna be the editor-in-chief and I'll be your amanuensis or something?
SPEAKER_03: Let's do it the other way around.
SPEAKER_02: Oh, I failed in my request to Tom Sawyer you into painting the fence there.
SPEAKER_03: I like the idea though.
SPEAKER_02: Okay, so that's one vote for a journal of failure, but Edmondson doesn't wanna run it. Maybe we can persuade this person.
SPEAKER_11: My name is Roy Shalem. I have a PhD in economics.
SPEAKER_02: Shalem teaches at Tel Aviv University and he studies the economics of competition and regulation. He once published a paper called The Market for R&D Failures.
SPEAKER_11: So what I'm trying to analyze is a situation in which firms are competing head to head in kind of a patent race. Patent races are quite common.
SPEAKER_02: Think about when pharmaceutical firms are competing to find a disease treatment, but this goes way beyond pharma companies.
SPEAKER_11: One of the most famous examples is when Alexander Graham Bell and Alicia Gray both filed the patent for the telephone on the same day in 1876. Bell won the patent, started the successful company now synonymous with telephone, while far fewer people remember Gray. A typical patent race is winner take all.
SPEAKER_02: The competitors work hard, invest a lot of resources, but only the winner reaps the rewards and the loser or losers are left with pretty much nothing. Roy Shalem, based on his research around corporate innovation, thinks this model is due for an upgrade. He thinks the losers should also have a way to monetize their efforts. My paper proves that theoretically there is a potential
SPEAKER_11: for a market for R&D failure. When you sell knowledge of past failures, you are expected both to reduce the cost of R&D because you're not doing the same mistakes over and over again. And you also reduce the time until a discovery is made. So that's also worth money. If Shalem had his way, there would be,
SPEAKER_02: as he titled his paper, a true market for R&D failures.
SPEAKER_11: Basically, when you're doing something which is very hard, you mostly produce failures. And this is a very, very important part of the stock of knowledge. And so I think that it is possible to take all that knowledge and find the right price for a competitor to buy that knowledge. So far, at least, such a market does not exist.
SPEAKER_02: So what else can we do if we want to seriously consider the idea of learning from failure? Maybe we learn from failure in the old fashioned way, in a classroom.
SPEAKER_09: I mean, I'm old school, I'm talking about Hobbes.
SPEAKER_02: After the break, failure 101. I'm Stephen Dubner, and this is Freakonomics Radio. Freakin' Homage Radio is sponsored by Netflix. In sports, the scoreboard doesn't tell the full story, but Netflix does. Stories about dads who happen to be world-class quarterbacks or untold tales of the athletes you thought you knew. So whether you are a diehard fan or you're brand new, with shows like F1 Drive to Survive, quarterback games, and more, you can find the full story at freakonomics.com. And if you're interested in the full story, you can find it on our website, F1 Drive to Survive, quarterback, full swing, untold, break point, Beckham, and so many more. Netflix has the stories for every kind of fan. Netflix Sports turns us all into fans. Freakonomics Radio is sponsored by BetterHelp. Whether you're looking forward to the holidays or you struggle with seasonal depression, this time of year can be a lot. It's natural to feel some anxiety or stress. It's the perfect moment to bring something positive into your life. It could be a new boundary, a new self-care routine, or support from a therapist. Therapy can give you the tools to find your peace in the chaos and a chance to take a deep breath. BetterHelp is convenient and makes it easy to get started. Just fill out a brief questionnaire to match with a licensed therapist. Talk by chat, phone, or video call, and switch therapists anytime. Give yourself a moment of peace with BetterHelp. Visit BetterHelp.com slash Freakonomics today to get 10% off your first month. That's BetterHelp, H-E-L-P.com slash Freakonomics. Do you remember Theresa MacPhail? She is the medical anthropologist who initially thought that COVID-19 wouldn't be a big deal.
SPEAKER_09: I said, calm down. You know, we're not China. We're better equipped. Here's why.
SPEAKER_02: MacPhail's day job is teaching undergraduate engineering students at Stevens Institute of Technology.
SPEAKER_09: Right. They're all science and technology nerds and geeks. And I mean that in the best possible sense. My people. Very driven, very type A personalities. I mean, you don't get into science and tech lightly. It's not an easy subject. And the course load is quite hefty. At some point in their lives, probably the majority, like say 70% will probably go on to get some sort of master's or PhD.
SPEAKER_02: And then in terms of careers, what's typical? What sort of careers?
SPEAKER_09: Engineers, engineers, engineers. And research scientists.
SPEAKER_02: And within engineering, is it software, mechanical, electrical, everything?
SPEAKER_09: The whole gamut. They're building your bridges. They're putting up your buildings. They're designing your sewage pipes.
SPEAKER_02: All things I don't want to fail.
SPEAKER_09: Exactly, exactly. They're designing your airplane engines, everything.
SPEAKER_02: Now for someone studying engineering who sees a future designing things where the stakes are high, an airplane, a bridge, whatever, how do they think about failure generally in their work?
SPEAKER_09: It's the worst thing that can happen. It's the worst thing that can happen. They're all very high achieving students. So they're used to getting straight A's or close to it. They come in thinking that failure is bad and it needs to be avoided at all costs. And they have imbibed the cultural narrative of, oh, you must learn from your failures and fail better and fail faster. But they kind of don't buy it.
SPEAKER_02: Why do you think that is?
SPEAKER_09: I did a research project where a psychology professor and I designed a survey and just wanted to get a sense of how they define failure for themselves and what they think about it and what they think the American culture thinks about it. And they're all really aware. When we ask them what Americans think about failure, some of their answers are, you're not doing a good job. You must be lazy, weak, incapable, stupid. They say that if you fail, it's gonna lead you to poverty, perhaps, a lack of social status. One person, this is a direct quote that I wrote down, if you fail, you suck.
SPEAKER_02: So McPhail got to thinking about whether there was a better way to talk to her students about failure, a more direct way.
SPEAKER_09: I know that business schools already teach case studies and failures, like they'll teach, oh, what happened to Enron, what happened to WeWork. And that's great for business students, but that's not what I wanted to do. I wanted to really get them familiar with the concept of failure and introduce it as a necessary and natural part of life and as a crucial component of a well-lived life.
SPEAKER_02: And she felt the stakes were high, higher than most of us are willing to admit.
SPEAKER_09: Around 2017, 2018, we had a year that had several suicides. And we're not alone, you pick up the newspaper and you're reading constantly about Penn, Yale, Cornell, I mean, you name a school and they're having a suicide problem. And one of the students who committed suicide in 2018 was my student, one of my students in a class that I had. She was active, she was involved heavily in Amnesty International, which is how she came to me because she took my global health class. She was very interested in helping others. She was cheery, she was a pleasure to be around. There were none of these signs when she was in my classroom, at least, of outward struggle. So I really felt blindsided when I heard that she had committed suicide. And I had heard from friends of multiple students who had committed suicide in that same timeframe that one of the things they were all worried about is that they were somehow gonna screw up, that they had screwed up, that college was the last good years and then everything else was just gonna be a series of failure. And I thought, my God, what is happening? And so as a professor, I'm teaching, and I teach depressing classes. Let me just be honest about this. I teach about things that can hurt us. I teach about pandemics, I teach about illnesses, I teach medicine, which is all about disease and death. And so my classes are pretty depressing.
SPEAKER_09: And I thought, what can I do to make a difference or just provide a different perspective to try to help all of this anxiety?
SPEAKER_02: And that's when Theresa MacPhail started teaching a course she calls Failure 101.
SPEAKER_09: So I start off the class with the ultimate failure, which is death. I really think I'm an intellectual granddaughter of Ernest Becker, who famously wrote The Denial of Death. He was an anthropologist as well. And his take was that society everywhere is a living myth of the significance of human life, that we defiantly create meaning where none exists because we do not wanna deal with the terror that the ultimate mistake is one that's gonna get us killed. I start off the class saying, listen, life is terrifying because death is terrifying. And I think evolutionarily mistakes meant catastrophe. And that's probably why we don't like them because if you make a wrong move in the savanna, when you're hunting, you're dead.
SPEAKER_02: When I read your course description and you describe teaching about failures in all realms of science, and then you write that death is the ultimate failure, my response was, well, that's not fair. My reasoning would be that failure implies at least some small level of un-inevitability, whereas death has a perfect record as far as I know.
SPEAKER_09: Yes, but if you look at biology, death is your systems all failing. See what I'm saying? But that's the perfect example to try to get them to accept that failure is necessary because the example of something that doesn't die is cancer. And that's not what we want. And so there's that tension that yes, death is, if you think about it from that perspective, it's all your system shutting down one by one in a cascade. And you can see that as the ultimate failure, but then I try to get them to embrace that because, and again, I'm just Becker's granddaughter because his argument was if we distract ourselves and we try to push down our fears of failing, ultimately that's about our fear of dying, that ironically trying to push all of that down and not talking openly about it creates more problems. So that's my take is that, yeah, you have to embrace failure because you can't have a successful life without it. I basically tell them at the start of my classes that I need you to get comfortable being uncomfortable. And I need you to be comfortable with uncertainty. And I really think embracing the idea that you're going to fail is the antidote to that anxiety.
SPEAKER_02: Okay, but Professor McPhail, I've gotten nothing but A's the last 13 years of my life, and I'm not going to stop now. So would you please not say things like that and get out of the way and start lecturing and give me an A?
SPEAKER_09: No. I'm trying to take failure and put it on the table and look at it as a social object. From an economic perspective, what does it look like? From a business perspective, from a science perspective, because failure is a changeable object. Like one failure in one arena doesn't necessarily have any of the components of the same label in another. And I mean, I'm old school, I'm talking about Hobbes and we're going over things like what is the social contract and what does the social good look like and what does Hobbes think failure will be?
SPEAKER_02: Give me an example of a culture that dealt with or deals with failure very differently than 21st century American.
SPEAKER_09: I mean, it's never good. I mean, here's the thing. So anthropologists often ask, what are the things that all cultures everywhere struggle with? And failure is definitely something that all cultures grapple with on some level. That surprises me.
SPEAKER_02: I would have thought there have been many cultures and societies through time where-
SPEAKER_09: Where it's fine? I don't know about fine. It's great?
SPEAKER_02: I definitely don't think great, but I mean, here's the way I'm thinking. If you look at our track record, humans, we're pretty darn fallible. We screw up all the time in so many ways. Right. And so it's surprising to me that we haven't developed a philosophy or science of failure that would be fairly timeless and robust and so on.
SPEAKER_09: You would think so, but not in my, I mean, maybe someone will listen to this and say, here's the book that answers it all. But the truth is there's something about the time you're living in that it's either hard to see what it is you're doing wrong, or it's hard to admit where that buck stops.
SPEAKER_02: I know that the researchers, Lauren S. Grice Winkler and Ayelet Fischbach have done work looking at why we hate failure so much. And it comes down to a pretty obvious point, which is that ego is real and failure threatens our ego. And universally, it feels bad. So if we were to reduce it to that finite and concrete psychological response and emotional response, have you encountered any way to sort of take the sting out of that response?
SPEAKER_09: Not really, except for embracing it. So I would, I guess-
SPEAKER_02: Man, I came in thinking you were gonna have all sorts of-
SPEAKER_09: All the answers? I went back to Amy Edmondson,
SPEAKER_02: the failure expert at Harvard, to ask what she would like to see taught in a failure 101 class.
SPEAKER_03: Number one, distinguishing different kinds of failure. A failure is not a failure is not a failure. You know, we could be talking about a little mistake. We could be talking about a catastrophic accident. We could be talking about a scientific hypothesis that didn't get supported. So providing the students that useful terminology and that useful clarity. And then I think a second element that I'd love to see in the course is experimentation best practices. You know, how do you think about good experiments versus not good experiments?
SPEAKER_02: Here's what Theresa MacPhail writes in her failure 101 syllabus. Some assignments will intentionally be set up for you to fail to complete them in full, but I expect you to cope with this as best you can and turn in something. I will not warn you which weeks are impossible to complete. MacPhail has now taught the course four times. The only grades she gives are an A for passing or an F for failing. I asked how many students have gotten an F.
SPEAKER_09: Only one person. They stopped doing the reflections entirely. And I had no evidence that they were still engaged. I was more concerned about that person's mental health, to be honest.
SPEAKER_02: MacPhail says she has gotten positive feedback from students, their parents, and according to some students, their therapists. She would like to see her course taught at other schools.
SPEAKER_09: I think they should offer a failure 101 course because it works. It changes the students' perspectives on failure. It makes them embrace it. It completely alters their understanding of themselves in relationship to the norm. And I think that's worth it.
SPEAKER_02: I'm looking at your Rate My Professor rankings. Oh God. And you have a perfect score. I've never seen that before. Here's one review. Quite possibly the best professor I have ever had, confident and knows what she's talking about. She's enthusiastic about her lectures, and that enthusiasm is truly contagious to students. She just loves what she does. Also, she is so cool. She's had such an interesting life, low-key want to be her. All right, so what's your review of that review?
SPEAKER_09: Oh my God, if they could only see me behind the scenes. You know what though? I think they feel like that because I do show them my failures.
SPEAKER_02: For instance?
SPEAKER_09: Well, I mean, we're all human beings. There are gonna be days where I'm not entirely prepped for class.
SPEAKER_02: Ah, what do you do then?
SPEAKER_09: I announce it. I say, hey, guess what? I forgot my notes at home, so we're off the books. Let's do this. Or I also will, I mean, we live in the age of lightning Googling. So, you know, if I say something, feel free to fact check me. And if I'm not right, raise your hand. Because I want them to get the idea that you can be an expert, you can be highly knowledgeable, but there's no way I know everything.
SPEAKER_02: What is the upside of embracing or at least processing failure in the way that you're describing?
SPEAKER_09: Freedom, freedom, and a lightness of moving through the world.
SPEAKER_02: Okay, but the people designing our airplanes and bridges, I don't care if they feel free and light.
SPEAKER_09: So here's the thing. Before any of us step on a plane, there's been so many prototypes and there's been so many tests. And the thing I'd like to see more is letting people fail. There has to be a space for people to accept abject failure, failure that doesn't teach you anything.
SPEAKER_02: And in that space, what does one do? Does one grieve, for instance?
SPEAKER_09: I think, yes. I think one learns acceptance and out of acceptance comes resilience. I've had about a hundred students over four classes. I asked them to reflect at the end of every class. And the answers I get back is that they've totally changed their definition of what failure is. Most of them will say, it's not the end of the world, it's a setback that you learn from. And all of them understand that it's subjective and a social construct. Simply having a class where you come in once a week for three hours and talk about failure just blatantly somehow made it okay for them to accept their own personal failures. And one of the things that shifts throughout the classes, I asked them, what do you think the rate of other people's failures is compared to your own? And before they take the class, they say, I definitely fail more than other people. And then at the end of the class, they go, everyone is failing every day at everything. And I'm like, yes, that's right, correct. You've passed this class.
SPEAKER_02: I'd like to thank Teresa McPhail for teaching all of us a new way to think about failure. And thanks to everyone who's been speaking with us these past four episodes about how to succeed at failing. I'm curious to know how you think we did with this series. One key ingredient of learning from failure is getting good feedback and I want yours. Our email is radio at freakonomics.com. You can also leave a rating or review on your podcast app. We'll be back next week. Until then, take care of yourself. And if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app also at freakonomics.com, where we publish transcripts and show notes. This episode and this whole series was produced by Zach Lipinski. Today's episode is mixed by Greg Rippon with help from Jeremy Johnston. Our staff also includes Alina Cullman, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Jasmine Klinger, Julie Canfer, Lyrick Bowditch, Morgan Levy, Daniel Carruth, Rebecca Lee Douglas, Ryan Kelly and Sarah Lilly. Our theme song is Mr. Fortune by the Hitchhikers. The rest of our music is composed by Luis Guerra. As always, thank you for listening.
SPEAKER_09: I am a professor, so if I'm talking too long, feel free to nudge me. Will do. I try to keep track of it, but sometimes, you know, I get enthusiastic as you'll see.
SPEAKER_02: Should we have a safe word? Pineapple.
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SPEAKER_09: Stitcher.
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