‘Fail Fast, Fail Often’

The New York Times finds cultural differences explain the U.S.-European tech innovation gap:

There are institutional and structural barriers to innovation in Europe, like smaller pools of venture capital and rigid employment laws that restrict growth. But both Mr. Kirkegaard and Professor Moser, while noting that there are always individual exceptions to sweeping generalities about Europeans and Americans, said that the major barriers were cultural.

Often overlooked in the success of American start-ups is the even greater number of failures. “Fail fast, fail often” is a Silicon Valley mantra, and the freedom to innovate is inextricably linked to the freedom to fail. In Europe, failure carries a much greater stigma than it does in the United States. Bankruptcy codes are far more punitive, in contrast to the United States, where bankruptcy is simply a rite of passage for many successful entrepreneurs.

Professor Moser recalled that a businessman who had to declare bankruptcy in her hometown in Germany committed suicide. “In Europe, failure is regarded as a personal tragedy,” she said. “Here it’s something of a badge of honor. An environment like that doesn’t encourage as much risk-taking and entrepreneurship.”

There is also little or no stigma in Silicon Valley to being fired; Steve Jobs himself was forced out of Apple. “American companies allow their employees to leave and try something else,” Professor Moser said. “Then, if it works, great, the mother company acquires the start-up. If it doesn’t, they hire them back. It’s a great system. It allows people to experiment and try things. In Germany, you can’t do that. People would hold it against you. They’d see it as disloyal. It’s a very different ethic.”

Europeans are also much less receptive to the kind of truly disruptive innovation represented by a Google or a Facebook, Mr. Kirkegaard said.

He cited the example of Uber, the ride-hailing service that despite its German-sounding name is a thoroughly American upstart. Uber has been greeted in Europe like the arrival of a virus, and its reception says a lot about the power of incumbent taxi operators.

“But it goes deeper than that,” Mr. Kirkegaard said. “New Yorkers don’t get all nostalgic about yellow cabs. In London, the black cab is seen as something that makes London what it is. People like it that way. Americans tend to act in a more rational and less emotional way about the goods and services they consume, because it’s not tied up with their national and regional identities.”

None of this will be easy to change, even assuming Europeans want change. “In Europe, stability is prized,” Professor Moser said. “Inequality is much less tolerated. There’s a culture of sharing. People aren’t so cutthroat. Money isn’t the only thing that matters. These may be good things.” But Europeans can’t have it both ways. She said that successful innovators quickly discover it’s hard to break through these cultural norms.

Mr. Kirkegaard agreed. “Europeans are conservative with a small ‘c,’” he said. “They pretty much like things the way they are.”

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