This is Part One of our Lessons From Failure Series.

“Failure is instructive. The person who really thinks learns quite as much from his failures as from his successes.” JOHN DEWEY

Several years ago, I changed careers, moving from designer to entrepreneur starting a dot com company. The experience taught me many lessons in the basics of how–and how not–to successfully build an Internet business. But the most valuable lesson I learned–one applicable to any business model, design challenge, technology, or industry–was in the powerful links connecting state of mind, self-definition, and failure. Startlingly, these same links appear no matter what size the group of people or the venture: from design projects and startup teams, to cultures seeding colonies abroad, state of mind and self definition are closely connected to how well a group responds to failure.

In the midst of the exuberant rush to (re)create communities on the Internet for a dizzying array of peoples and purposes, we should understand and respect this underlying pattern, whatever our role: founder, designer, or member. For though the growing wave of technosocial media may change how we conceive of and relate to the Internet by offering abundant opportunities to create and join new societies, these societies will remain driven by fundamental elements of state of mind and self definition.

To illustrate these ideas, I’ll briefly discuss three examples of new societies–the entrepreneurial ventures of their respective cultures–that faced failure: first, the small Internet company I founded, then two cultures facing environmental challenges. Two of these societies failed, and one succeeded.

It Seemed Like the Thing To Do at the Time

In the winter of 1999, I decided to start a business with two partners. I was working as an Internet strategy and design consultant at the time, so moving from designing online businesses for clients to designing one for myself felt like a natural step. We had a talented group of founders with the right mix of experience, and we had a good idea. We needed money in order to build substantial business and technology infrastructure, but capital for a good idea was easy to obtain in early 2000. Becoming an entrepreneur genuinely seemed like the thing to do at the time, since it offered a good opportunity to apply my skills and experience at a new level, and to my own vision.

We worked diligently to build the company for the next twelve months. Our team grew from 3 people to 10 people in the U.S. and China. We recruited a (bad) CEO. We recruited a (good) CTO. We assembled an impressive roster of critical business partners and advisors on both continents. We were fortunate–given the terrible business climate for online companies after the dot com crash–to receive several funding offers from the very beginning. But none of them were sufficient, and some were downright shady (I met a number of “unusual” people during this time ¹).

In March of 2001, after a year of unpaid overtime, I left my regular full-time position to dedicate all of my time to the new company. In this, I was joined by several other team members. Based on our previous successes, we believed proper funding was literally around the corner. Our business plan was exquisite, our financial projections were meticulous, we had customers and staff in place, and our execution strategy was finely honed. Like a Broadway production awaiting the audience on opening night, we were ready to go. All we needed was capital.

By the summer of 2001, despite considerable success during difficult times, we were at a financial breaking point. Lacking strong revenue, we could not continue without help from outside in the form of legitimate funding. The attacks of September 11th, 2001 shut down the New York capital markets, closing the door on any hope of venture funding shortly afterward. We closed up shop, my partners went their various ways, and I took another full-time position.

A Moment for Reflection

After the team disbanded, I reflected on the experience to understand why we had failed.

In retrospect, as Vizzini from the Princess Bride would say, we made a series of classic blunders:

• We had a complex concept
• We sought too much money during a difficult funding climate
• We hired the wrong CEO (beware of business men who dress like Cuban drug smugglers)
• We were not willing to compromise or modify our plans
• We grew the team too quickly
• We relied on unrealistic financial projections
• We underestimated the operational challenges

As a once and future entrepreneur, I interpreted these as straightforward lessons for my next venture: begin with an idea that is easy to understand, be flexible, don’t fear change, involve only trustworthy and talented people, make realistic financial assumptions about revenue and income etc.

In summary, I understood that our failure was driven by the fact that we focused too much effort on securing external funding, and not enough on growing essential day to day operations. Vizzini would say our true blunder was that we did not get involved on the ground in Asia!

The Power of State of Mind

“I have not failed. I’ve just found 10,000 ways that won’t work.” THOMAS ALVA EDISON

People often ask why we made the decisions that took us from our first to our final steps. Why didn’t we change our plans? Why didn’t we put more effort into other ways to build infrastructure? I always answer, “It seemed like the thing to do at the time.” Meaning because of our state of mind and the progress we’d made, this course of action seemed the best way to reach our goal. We certainly didn’t intend to fail!

State of mind is an umbrella term for the common outlooks and framing assumptions that define the ways people perceive and think about situations and themselves. State of mind also sets boundaries for what people can and cannot consider. In practice, individuals and groups interpret the world through a state of mind that defines their understanding of:

• Cultural concepts and ideas
• Their needs and goals
• The situations and environments around them
• Their roles and the roles of others (both groups and individuals)
• Available choices and actions
• The results of those choices and actions

In retrospect, it is clear our team shared a common state of mind that we were unwilling or unable to change. In this state of mind, underlying all the decisions we made from beginning to end was a single goal: seeking external funding was the best thing to do for the business. Based on our shared understanding, we pursued this goal far past the point when a heavily venture-funded model became invalid, because the environmental conditions that sustained it had collapsed.

A glance at the headlines provides abundant examples of similar responses to failure driven by state of mind, such as the heated debate between the U.S. Congress and the Bush administration over different approaches to the ongoing U.S. involvement in Iraq. President Bush’s state of mind is epitomized by his dictum to “stay the course,” a view that substantially determines the choices considered possible by his administration.

Waiting for Rescue: Self vs. Other

Some time ago, I came upon a quotation from an 8th century Buddhist philosopher named Shantideva that changed my perspective on my experience as an entrepreneur. In “Entering the Path of Enlightenment,” ² Shantideva writes, “Whoever longs to rescue quickly both himself and others should practice the supreme mystery: exchange of self and other.” When Shantideva says, “exchange of self and other,” he is advising us to change our self-definition, one of the most basic components underlying state of mind.

So I came to see that my team of entrepreneurs had set out on the wrong path from the beginning, and never wavered, because our state of mind rested on defining ourselves as venture funded entrepreneurs. We never considered changing our self-definition. Obtaining funding became part of our identity, rather than a pragmatic business activity. There is a second parallel with Shantideva’s words: we were unable to consider other courses of action even after we recognized that we were in danger of failing, because we were waiting for rescue from outside. We believed outside funding would save us.

We never considered how our self-definition was leading us to failure. Nor did we consider that we might find another way to succeed if we changed our self-definition. President Bush would be proud: we managed to stay the course!

Easter Island: A Machine for Making Statues

My experience as an entrepreneur shows the power of state of mind in societies on the small scale of a closely focused startup team. The Easter Island society that collapsed in the 18th century clearly demonstrates the strong connections between self-definition and failure on the much larger scale of a complex society of approximately 15,000 people. (The discussion that follows draws upon the work of Jared Diamond in Collapse. ³)

Easter Island was settled approximately 1200 A.D. by Polynesians from islands further to the west. ⁴ The small (64 miles square) island remained essentially self-contained due to its remote location in the Pacific Ocean. ⁵ The population increased quickly as settlers rapidly cleared forests for farming. Based on common Polynesian religious practices, the Easter Islanders began carving the immense volcanic stone statues (Moai) that make the island famous, mysterious, and photogenic.

Over the next 500 years, in a remarkable demonstration of the power of a common state of mind and self-definition, Easter Island’s religious and ceremonial practices effectively turned the entire society into a machine for the construction of statues. ⁶ The Easter Islanders built their social and political system around the creation of statues. Reward mechanisms offered prestige and power to chiefs who competed to carve and erect ever larger statues, on ever larger platforms. Driven by this institutionalized self-definition, the population collectively invested massive effort into carving and transporting thousands of tons of stone for each burial platform and for the hundreds of giant Moai placed upon them. ⁷

Wood from the island’s forests was literally the fuel that kept this statue-making machine running. Farming to produce the food needed to feed large groups of workers required ever increasing amounts of cleared land. Moving statues required large wooden carriers and hundreds of miles of rope. Funerary rites mandated cremation and burial in the gigantic stone platforms. As Easter Island’s human and statue populations grew rapidly, estimates of the island’s forest coverage declined precipitously, as this comparison chart shows.

This self-reinforcing cycle of statue creation, deforestation, and population growth created a recipe for environmental collapse that lead to comprehensive social failure. ⁹ Conservationist Rhett A. Butler summarizes the findings of Terry Hunt, an anthropologist who studied Easter Island’s history of habitation:

“With the loss of their forest, the quality of life for Islanders plummeted. Streams and drinking water supplies dried up. Crop yields declined as wind, rain, and sunlight eroded topsoil. Fires became a luxury since no wood could be found on the island, and grasses had to be used for fuel. No longer could rope by [sic] manufactured to move the stone statues and they were abandoned. The Easter Islanders began to starve, lacking their access to porpoise meat and having depleted the island of birds. As life worsened, the orderly society disappeared and chaos and disarray prevailed. Survivors formed bands and bitter fighting erupted. By the arrival of Europeans in 1722, there was almost no sign of the great civilization that once ruled the island other than the legacy of the strange statues. However, soon these too fell victim to the bands who desecrated the statues of rivals.” ¹⁰

Lessons from Easter Island

The tragic pattern is clear to see: though institutionalized practices and goals based on a narrow self-definition were leading to comprehensive failure, the Easter Islanders refused (or were unable) to change their state of mind and goals, and their entire society collapsed. To this day, Easter Island is almost totally deforested, with the exception of small patches of trees from recent plantings, and the ~400 stone statues that remain. In a potent instance of irony, the Easter Islanders succeeded in constructing dramatic and enduring stone testaments to those things their society valued, even as the act of constructing those monuments consumed their society. President Bush would be proud of the Easter Islanders, too–they stayed the course.

A Tikopial Paradise

It is on our failures that we base a new and different and better success. – HAVELOCK ELLIS

The Pacific island society of Tikopia is a good example of a culture that successfully responded to failure, by changing how its members define themselves. Tikopia differs from Easter Island in ways that make the challenges its inhabitants faced more pressing. Tikopia has been inhabited far longer (since ~900 B.C.), is much smaller (only 1.8 miles square), has fewer natural resources, and supports a much higher population density than Easter Island. ¹¹ Yet photographs of Tikopia today show a lush, green landscape that is well-forested, while the island is populated by closely spaced communities of villages, supported by well-tended gardens and farm fields.

Over the history of human habitation on Tikopia, three different economic and social models governed the production of food and management of the island’s environment. For the first 100 years of habitation, the Tikopians relied on a slash and burn style agricultural model that severely damaged their environment through deforestation. They also mined the nearby shellfish and bird colonies for needed protein.

Recognizing that this model was unsustainable on a tiny island, the Tikopians changed agriculture and food production practices to a mix of forest orchards and pig farming, wherein livestock made up ~50% of their protein sources. This new model retained a two-tiered social structure, allocating scarce protein to a ruling class of chiefs. Under the forest garden model, Tikopia’s environment continued to degrade, albeit more slowly than before.

Such a quick and comprehensive shift in economic and agricultural approaches across a whole culture–even a small one–is rare. By around 1600 A.D., the Tikopians again faced environmental and social breakdown driven by resource use. They again deliberately changed all aspects of their sustenance model and social structure in a single, closely coordinated effort:

• Switched from unsustainable agriculture to a sustainable permaculture model ¹²
• Completely eliminated expensive and inefficient livestock (pigs)
• Substituted fish for large land animals
• Removed social and economic distinctions–no more chiefs
• Adopted stringent population management practices

Lessons from Tikopia

The dramatic changes in Tikopia’s social and economic model dating from ~1600 equate to a concerted shift of identity (self-definition) and state of mind for all of Tikopian society, a moment they commemorate to this day through oral storytelling. Unlike Easter Island, Tikopia’s society makes no distinction between the resources allocated to leaders and to the populace. Tikopian society does not reward environmentally destructive activity. The result is a stable population, kept carefully in balance for approximately 400 years by a range of practices that limit growth. All of these decisions were driven by a state of mind based on matching human impact with the island’s limited resources for the entire society.

Shantideva would surely say the Tikopians are remarkably flexible and resilient: instead of waiting for rescue, they averted failure (through environmental and social collapse) by redefining themselves not once, but twice.

Heed Shantideva

As an entrepreneur, I was one member of a small group making decisions about a single business venture which affected only our own lives. But as designers, architects, technologists, business owners, or anyone involved in building the new virtual societies emerging under the banner of social media, we have the power to affect many lives, by shaping self-definition and state of mind in a community from the very beginning.

We can’t predict every situation a starting society will face. But we can assume that potential failure is one challenge that may arise. And so–based on these three examples of societies facing failure–it seems wise to heed Shantideva’s advice about the exchange of self and other, thereby making our efforts now a part of the solution to future unknown problems. We can do this by allowing for changes to self definition, and by encouraging awareness of, and reflection on, state of mind, whether in our own venture or when we design a society for others.

Footnotes and References

¹ They ran the gamut from debased expatriate executives, to corrupt former politicians (with gout), to alcoholic ex-CIA operatives, to the founder of a major mainframe computer maker, to veterans of anti-communist coups in Africa during the 70’s. Or so they said…

² Bodhicaryavatara, ch. 8, v. 120

³ Diamond, Jared. Collapse: How Societies Choose to Fail or Succeed. Penguin Books: 2005.

⁴ Terry L. Hunt; Rethinking the Fall of Easter Island.

⁵ Easter Island is 1,400 miles from its nearest neighbor (tiny Pitcairn Island), and 2,500 miles from the nearest large land mass, Chile.

⁶ Competing clans and chiefs received social status and rewards, such as farmland and food resources, from the successful construction of more and larger statues, giving them clear incentives to continue carving and erecting Moai. In effect, Easter Island’s cultural / political / economic system was built around an unusual positive feedback loop, in which more statues for a clan meant more people and more power, which meant more statues, which meant more people and more power… Similar carving traditions exist among other societies elsewhere in Polynesia, but on much smaller scales.

⁷ A recent count shows 300 platform and burial sites (ahu) around the island, with approximately 400 statues. There are 300 tons of stone in a small ahu, and 10,000 tons of stone in the largest. The average moai is 13 feet tall and weighs 10 tons, the larger moai reach up to 32 feet tall and weigh 75 tons. Another 400 moai sit partly completed in quarries, reaching heights of up to 75 feet tall, and weighing 270 tons.

⁸ Simon G. Haberle, “Can climate shape cultural development?: A view through time,” Resource Management in Asia-Pacific Working Paper No. 18. Resource Management in Asia-Pacific Project, The Australian National University: Canberra, 1998 Working version obtained at http://coombs.anu.edu.au/Depts/RSPAS/RMAP/haberle.htm

⁹ Diamond writes, “The overall picture for Easter is the most extreme example of forest destruction in the Pacific, and among the most extreme in the world: the whole forest gone, and all of its tree species extinct.”

¹⁰ Rhett A. Butler, Easter Island settled around 1200, later than originally believed

¹¹ Tikopia; Tikopia.

¹² Permaculture Permaculture.

This entry was posted on Friday, June 29th, 2007 at 12:06 am and is filed under usability. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.