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Why America's #1 Business Advantage is Being Ravaged by Cultural Shifts and Social Media

In my last post, Why Culture Eats Strat...

In my last post, "Why Culture Eats Strategy for Breakfast" I explored the significant advantage conferred on businesses through their corporate cultures... and how a company's culture trumped "hard" differentiators such as strategy. Today, we expand this theme to look at cultural advantage on a national level. Specifically, I believe that US business culture is the driver behind America's success in building the world's largest economy. American business culture was perhaps more significant for US economic success than the weight of government policy, access to financing/resources, and education etc. Unfortunately, one of the key pillars of this cultural advantage--the acceptance of failure--is being ravaged by rapid changes in society and the advent of social media.

America is not great because their entrepreneurs always got it right -- they are great because their entrepreneurs were allowed to get it wrong.

American business is fast paced, entrepreneurial and built on rugged individualism. While many nations have business cultures that run away from risk and avoid 'breaking new ground' at all costs, US business seeks them out almost like a moth is drawn to light. In my experience, American business people also try to make decisions based on the facts but they combine it with more passion, speed and instinct more than anywhere else in the world. They are generally less afraid to 'jump' and are driven powerfully towards building advantage and leading in their field. For those of you not in business you may be thinking that these sound like 'vanilla traits' commonly shared around the world, but a few meetings with international entrepreneurs would quickly dissuade you. Of course, there are millions of US business people that are exceptions to this rule, but pound for pound there is no more prolific business culture in the world.

A country's business culture is intricately connected to its general or popular culture. And this where the trend lines are not good. American culture in general, and the rise of social media in particular, are gutting some of the core instincts and values that propel American business. These cultural changes supported by the rise of social media is making failing, learning and recovering a declining art form. I believe this sort of sea change will prove to be as devastating to business success as any technological, economic or trade upheaval in history.

Perseverance was always at the core of the US business success. It was a prized attribute that was at the heart of the American dream. The rugged individualism that accompanied that perseverance was a supremely admired cultural trait. Now, American business people have far less patience and tolerance for getting it wrong. Today there are hordes of people eager to pounce on failure and brand it as a personal defect. To support them, we now have a digital record to ensure that the chapter is never fully closed. In contrast, and historically, Americans defined failure not as a verdict or judgement but rather an opportunity to improve. It was less "failure" and more " not quite right yet". Failing fast, correcting course and trying again was the foundation of America business leadership.

In my 24 years of business life post-university, I have always been struck by the differences between American business culture and the culture in my native Canada. Almost 20 years ago, we set up of our first office in the US in Los Angeles and as a young Canadian entrepreneur I was struck by the speed and bravado of business leaders. It was a far cry from the Canadian culture of careful consensus and study.

Back then, as a general purpose software development firm -- I got to meet entrepreneurs looking for IT help in numerous industries. Not only was there a "can-do" spirit prevalent throughout the innovation industries (such as IT, marketing and entertainment), it stretched into very traditional industries as well (construction, retail and transportation). Moreover, as a Canadian used to highly cautious banking, I found meeting with entrepreneurial US banks akin to an out of body experience. Later on I boiled down the difference between US and Canadian business into an observation about what "sells" in each culture. In Los Angeles, what captured a client's interest was "if you act now, you can be first - no one else will have this in the world, you will be a pioneer." By contrast, what resonated to a Canadian business was "if you don't act now, you may get left behind, the train is leaving the station."

American businesses accept the possibility and value the reality of getting it wrong. Meanwhile, Europeans, Canadians and other well established economies are markedly more nervous about making mistakes -- similarly seen as sins which must be forgiven. American entrepreneurs are not only free to fail, many venture capitalists see failure as a necessary step on the path to success. Some venture capitalists will even go as far as to not invest in company founders that have not failed in the past. I find it amusing to compare this to Canadian business where often past failure is not an important validation of experience, but a fat, smelly albatross that entrepreneurs must carry around to warn others of their arrival. This is a particularly limiting mindset since our economies are all driven by the 'creative destruction' exposed by famous economist, Schumpeter. According to Bloomberg, eight out of ten entrepreneurs who start businesses fail within the first 18 months. A staggering 80% crash and burn. Thus, failure is a critical part of the ecosystem that feeds success--like dead trees that provide the nutrients for new seedlings to grow.

This willingness to accept failure is a cornerstone in the US' appetite for risk and innovation. So, why is the acceptance of failure strongest in the US? I believe it is multi-faceted; rooted in culture, governance, immigration patterns, law and social compacts. On the cultural side of things, there are many unique traits in the US that are not shared globally; for one, it historically welcomed immigrants and incorporated them into their melting pot. Immigrants of course are self-selected to be the biggest risk takers from their home populations. Risk takers innately understand that willingness to fail is the price of admission.

It is said that a British sales person tries to convince the customer the benefit of buying their company's current products; whereas a US salesperson would listen to customers, find out what they need, sell it to them and then go try to build it. However, social media is increasingly frightening the American salesperson from living out their DNA. As countless cautionary tales show, social media is relentless and unforgiving--the mistakes you make can be instantly highlighted, spread and amplified. Now there are fewer second chances. If the product the American salesperson builds is rough around the edges or needs correction, the product and the company might be DOA on social media before they can correct course.

According to Jeff Bezos of Amazon, 'Your brand is what people say about you when you're not in the room.' But what happens when you are (virtually) in the room? You can see negativity and judgement rip into your brand in real time and watch it spread like viral wildfire. Who can fault entrepreneurs for being more cautious? Social media means that mistakes can immediately hurt sales, give competitors leverage and create mistrust. And that record is there for everyone and forever, creating a permanent cyber footprint. There are of course strategies to deal with the new realities. Sadly, one of them is to take less risk.

As I conclude, I want to say a few words about Canada lest I appear ungrateful or unpatriotic. On the contrary, I am a very grateful that my family immigrated here when I was 7 years old and I am in awe of the kindness, openness and meritocracy of my adopted home. Today, I am the CEO of a business that works around the world while headquartered in Canada. In general, Canada has greater social cohesion and less frustration and division than the US, especially right now. To some extent, I believe that cohesion and peace in Canada are the byproducts of less individualism and more collectivism. As a father of two boys - three and fourteen - that suits me fine. Undoubtedly, however, Canada's more collectivist, consultative culture will not produce the turbo-charged, 'take on the world', risk taking entrepreneurialism of the US. But everything in life has its trade-offs and I certainly see the pros and cons of both systems.

For my many American friends, I hope that people realize something great is being lost. For all the fear, frustration and 'bloodletting' going on now in political, social and business discourse, it is important to note that things can actually get worse. Much worse. It is certainly not unusual for people to channel their economic and social anxieties on other countries, politicians and business leaders. And even the most innocent mistakes by leaders make a convenient focal point for that frustration. But some level of mistakes is actually part of any effective leader's job description. It is routine these days to identify and amplify failures and lord it over the unfortunates who dared to take one calculated risk too many. Perhaps this is today's version of valve to release societal angst. Perhaps it is a way to direct attention away from our own vulnerabilities and mistakes. Regardless, it is worth considering one important question. What happens if the result of punishing and vicious judgements makes our leaders lose their nerve and causes them to play it safe? What happens if experimentation and innovation in business (or politics) becomes something to be avoided at all costs? If that happens, I believe the real losers will be us - every single person whose unbridled frustration denies their hope for a better life.

Acknowledgment: This article was written with critical insights from Carl Youngman. Carl is a key mentor, advisor to the Bluedrop board and a valued friend. Carl is a serial entrepreneur who has been the CEO of over 20 companies in his career and sat on numerous public and private company boards. He was an original founder of the Turnaround Management Association in the US. Carl was also cited as the 'Best CEO Educator in the World' by the Young Presidents' Organization.

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