At the end of the last segment in series, I opined that our industry needed to respond in creative and imaginative ways to the new market landscape, and that it would take "unswerving resolve" to do so effectively and successfuly. 

But I also warned that I don’t have confidence in our ability to do that and promised to address why that’s so in this, the final installment.

Also in the last installment I spent some time discussing A. O. Lafley’s tenure as CEO of Procter & Gamble, and that was no coincidence. To be sure, I applauded Lafley’s embrace of innovation in an industry assumed to be mature and technologically placid—consumer packaged goods—but the fundamental reason I dwelt on P&G was that they compete in bruising consumer products categories where it’s almost impossible to eke out growth above that of the population.  (This is also true of Colgate-Palmolive, Kraft, General Foods and General Mills, Anheuser-Busch, etc., etc.)

All these firms—which are as sophisticated and resourceful as they come in marketing—are in a ceaseless battle for market share. If you talk to people in the trenches at these firms and their marketing and advertising agencies (I have), you know that they track market share with the intensity of a day trader watching the price of an options position.  If that’s a slight exaggeration, it is no exaggeration to say that market share matters as much as revenue or profits.  And the reason is simple: To generate growth well above population trend, all these firms need to take market share away from their competitors.  If Pampers (P&G) are to win, Huggies (Kimberly-Clark) must lose; it’s a zero-sum game.

Sound like heavy weather? Well, we had best get used to it.

More importantly, these firms have had decades to hone and fine-tune their strategy, and they have been immersed in market-share wrestling matches for decades and decades—the entire lives of most brand managers and product development specialists.  They’re as good at this as it gets.

We don’t even think this way; we don’t want to think this way; and we have little clue where to begin if think this way we must.

Our problem is we don’t have decades to figure it out.

But that’s not our only problem, or even our biggest problem.

Not to channel Shakespeare, but our biggest fault lies within ourselves.  In order to succeed in this new environment:

• We must fundamentally change the way we do things: we must, in other words, innovate;
• Innovation requires delving into the unknown;
• Exploring the unknown requires experimentation;
• Experimentation involves failure;
• And we cannot tolerate failure.

The last point—that we, being lawyers, cannot tolerate failure—is critical.  All else is prelude.

Attend to exactly what I mean. I don’t mean we would prefer not to fail; or that all else being equal success beats failure; or that too long a string of failures marks a loser.

No, I mean something far stronger: We are built to critique, to second-guess, to demand accountability and assign culpability.  If the gas can or the tires on the Concorde or the securities offering blows up, someone is responsible and someone is going to pay.  They should have known better (because we certainly do).  It’s their fault and they will be made to pay; justice will be done.

There’s a further dimension.

Alone among the professions—I submit—we are statistically innumerate and implacable in our refusal to entertain probabilities, odds, reasoned judgments, and cost/benefit tradeoffs.  Doctors know when heroic measures will be unavailing; engineers stress-test models of everything from bridges to airplane wings to calculate acceptable failure modes; architects can guess which roofs will blow off in Category 5 hurricanes; even dentists, for heaven’s sake, know that fillings, caps, and crowns will eventually fail.

And entrepreneurs, of course, know that failure comes with the territory.

Much has been written about Silicon Valley’s tolerance for, even celebration of, failure. Now that people have actually studied it, they’ve found it makes sense.  Here’s why, as explained a few months ago in Inc.:

"In the start-up world, failure is almost synonymous with learning experience. Being a founder who has failed before signals to the community that, one, you’ve done this before, and, two, you’ve gathered information on what doesn’t work and are better armed to create something that does."

Daniel Isenberg, the founding executive director of the Babson Entrepreneurship Ecosystem Project, says to truly understand failure, it’s necessary to look beyond the individual blip of a single start-up failing to gain wide user traction and going belly-up. It’s also necessary to look past a given entrepreneur’s track record.

In Isenberg’s eyes, it’s a much broader picture. When geographies and their governments embrace start-up failures, they catalyze economic growth.  

"If you look at really entrepreneurial countries or regions, you see very high failure rates," he says. "Lots of businesses opening and closing. That churn is failure." 

In other words, not punishing failure leads to stronger long-term growth. 

Other industries, and companies, learn through failure. We bury our failures.

But this fault – and make no mistake, it’s a categorical fault – is in our nature as lawyers.

We cannot willingly enter into situations where failure comes with the territory. We can’t weather the criticism, can’t risk the second-guessing, don’t have the emotional fortitude or resilience to explain why what we did was a thoughtfully calculated risk and one we’d do again.

I submit that our rigid intolerance for failure is so extreme and ultimately perverse that it disables us from being capable of sound decisionmaking.

Going forward will require a different mindset.

Are we capable of it?

As it turns out, I lied. There will be another installment in this series.