{"id":3606,"date":"2025-07-08T15:59:06","date_gmt":"2025-07-08T15:59:06","guid":{"rendered":"https:\/\/aomtodayprod.wpenginepowered.com\/?p=3606"},"modified":"2025-07-08T15:59:06","modified_gmt":"2025-07-08T15:59:06","slug":"when-entrepreneurs-cant-acknowledge-failure-disaster-strikes","status":"publish","type":"post","link":"https:\/\/www.aom.org\/today\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\/","title":{"rendered":"When Entrepreneurs Can\u2019t Acknowledge Failure, Disaster Strikes"},"content":{"rendered":"<p>By <a href=\"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/\" target=\"_blank\" rel=\"noopener\">Daniel Butcher<\/a><\/p>\n<p>Elizabeth Holmes, who was convicted of fraud for lying about the effectiveness of the blood-testing product of her biotechnology company, Theranos, is a cautionary tale illustrating a potential downside of entrepreneurship. Unable to deal with the failure of her company\u2019s blood-testing methods, she just plowed ahead, refusing to acknowledge the disappointing results or telling any of the investors\u2014or anyone else\u2014that the tests weren\u2019t working. She pretended like everything was okay, continued to collect investor money, and built up the biotech startup to a $9 billion valuation.<\/p>\n<p>Academy of Management Scholar <a href=\"https:\/\/www.aom.org\/today\/dean-shepherd\/\" target=\"_blank\" rel=\"noopener\">Dean Shepherd<\/a> of the University of Notre Dame said that it\u2019s common for entrepreneurs to deal with failure poorly, but investors failed to effectively scrutinize Theranos.<\/p>\n<p>\u201cA lot of the stakeholders there were maybe willfully ignorant\u2014they wanted to believe her,\u201d Shepherd said. \u201cThey didn\u2019t ask probing questions; they ignored the negative signals, which is what we call a confirmation device.<\/p>\n<p>\u201cThey look for information that confirms their opinions, and they discount or ignore information that disconfirms them, and so in many ways, she was negligent, but they were also negligent,\u201d he said.<\/p>\n<p>Sometimes entrepreneurs can\u2019t even acknowledge failure to themselves, much less publicly, because their entire identity is wrapped up in success. One major failure could crack that self-image.<\/p>\n<p>Shepherd said that job loss\u2014or the failure of one\u2019s business\u2014can devastate a person\u2019s sense of identity. He wrote about his research findings related to such phenomena in <em>Hitting Rock Bottom After Job Loss: Bouncing Back to Create a New Positive Work Identity<\/em>.<\/p>\n<p>\u201cFailure can have a huge impact on you psychologically, because your identity is quite often highly related to the things that you do for work, and when you lose that identity, you go into a crisis or a freefall, because you don\u2019t know who you are anymore,\u201d Shepherd said. \u201cAnd if you don\u2019t know who you are, you don&#8217;t know how to socially act, and it can be a very dangerous situation.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Daniel Butcher Elizabeth Holmes, who was convicted of fraud for lying about the effectiveness of the blood-testing product of her biotechnology company, Theranos, is a cautionary tale illustrating a potential downside of entrepreneurship. Unable to deal with the failure of her company\u2019s blood-testing methods, she just plowed ahead, refusing to acknowledge the disappointing results [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":3608,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[29,22,72,21],"tags":[],"sp_smart_badges":[],"ppma_author":[70],"class_list":["post-3606","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-emotions","category-entrepreneurship","category-ethics","category-innovation"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>When Entrepreneurs Can\u2019t Acknowledge Failure, Disaster Strikes - Academy of Management Today<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aom.org\/today\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Daniel Butcher\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/\"},\"author\":{\"name\":\"Daniel Butcher\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/d1297a59039d9ca7bac9d9f0952e508c\"},\"headline\":\"When Entrepreneurs Can\u2019t Acknowledge Failure, Disaster Strikes\",\"datePublished\":\"2025-07-08T15:59:06+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/\"},\"wordCount\":348,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/03\\\/Elizabeth-Holmes-Theran.webp\",\"articleSection\":[\"EMOTIONS\",\"ENTREPRENEURSHIP\",\"ETHICS\",\"INNOVATION\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/when-entrepreneurs-cant-acknowledge-failure-disaster-strikes\\\/\",\"name\":\"When Entrepreneurs Can\u2019t Acknowledge Failure, Disaster Strikes - 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Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer\/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications\u2019s InvestmentNews and Crain\u2019s Wealth, eFinancialCareers, and Arizent\u2019s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor\u2019s degree, Cum Laude, from the University of Colorado Boulder and his master\u2019s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.","sameAs":["https:\/\/aomtodayprod.wpenginepowered.com","https:\/\/www.linkedin.com\/in\/danielbutcher\/"],"url":"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/"}]}},"authors":[{"term_id":70,"user_id":4,"is_guest":0,"slug":"daniel-butcher","display_name":"Daniel Butcher","avatar_url":{"url":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/01\/DanButcher_Academy-of-Management.webp","url2x":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/01\/DanButcher_Academy-of-Management.webp"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"rttpg_featured_image_url":{"full":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran.webp",1000,720,false],"landscape":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran.webp",1000,720,false],"portraits":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran.webp",1000,720,false],"thumbnail":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran-150x150.webp",150,150,true],"medium":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran-300x216.webp",300,216,true],"large":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran.webp",800,576,false],"1536x1536":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran.webp",1000,720,false],"2048x2048":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran.webp",1000,720,false],"owl_elementor_thumbnail":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran-600x432.webp",600,432,true],"owl_elementor_team":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran-350x450.webp",350,450,true],"owl_elementor_testimonial":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/03\/Elizabeth-Holmes-Theran-100x100.webp",100,100,true]},"rttpg_author":{"display_name":"Daniel Butcher","author_link":"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/"},"rttpg_comment":2,"rttpg_category":"<a href=\"https:\/\/www.aom.org\/today\/category\/emotions\/\" rel=\"category tag\">EMOTIONS<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/entrepreneurship\/\" rel=\"category tag\">ENTREPRENEURSHIP<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/ethics\/\" rel=\"category tag\">ETHICS<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/innovation\/\" rel=\"category tag\">INNOVATION<\/a>","rttpg_excerpt":"By Daniel Butcher Elizabeth Holmes, who was convicted of fraud for lying about the effectiveness of the blood-testing product of her biotechnology company, Theranos, is a cautionary tale illustrating a potential downside of entrepreneurship. Unable to deal with the failure of her company\u2019s blood-testing methods, she just plowed ahead, refusing to acknowledge the disappointing results&hellip;","_links":{"self":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts\/3606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/comments?post=3606"}],"version-history":[{"count":0,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts\/3606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/media\/3608"}],"wp:attachment":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/media?parent=3606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/categories?post=3606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/tags?post=3606"},{"taxonomy":"sp_smart_badges","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/sp_smart_badges?post=3606"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/ppma_author?post=3606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}