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How Much Does Defensive Entrepreneurship Cost?


One of the tried and true principles of entrepreneurship is the ability to learn from your mistakes. The same holds true for any doctor, since mistakes are inevitable.

One of the tried and true principles of entrepreneurship is the ability to learn from your mistakes. The same holds true for any doctor, since mistakes are inevitable. However, when those adverse outcomes result in a lawsuit, the accused, the plaintiffs, and their families suffer emotionally, sometimes for the rest of their lives. The result can be depression, cynicism, more CYA behavior or even suicide. Given how many doctors get sued during their careers and how many entrepreneurial ventures fail, dealing with the emotional impact of failure is a growth industry.

While there certainly is a difference between harming a patient and harming an entrepreneurial venture, many, particularly investors in the case of the latter, take it just as seriously and the consequences for the responsible entrepreneur are equally devastating.

Doctors are taught in training how to deal with patients and their families when there are unforeseen complications or death following a medical intervention.

Perhaps entrepreneurs can learn some lessons as well:

1. Saying "I'm sorry" is not an admission of guilt.

2. Most complications are the result of several errors involving several members of the team

3. Many errors are systemic problems beyond the control of any one individual

4. Risk management consultation is a key part of managing a complicated, emotionally laden process that is designed to not just mitigate the damage, but to do root cause analysis to improve systems

5. The usual advice is to not discuss the case, particularly on social media. Suffering in silence, however, further exacerbates feelings of despair

6. Few resources are available to help doctors deal with their feelings during or after a lawsuit. The same holds true for entrepreneurs and intrapreneurs

7. Putting a "legal hold" on the chart is a part of the process designed to avoid spoilation of evidence. A similar approach by an outside agent might prevent executives from succumbing to the temptation to alter documents or attempt to cover up their mistakes.

8. When something goes wrong, managers make new rules, regulations, policies, and procedures that are supposed to prevent similar mistakes from happening again. Unfortunately, the time, money and effort required to comply can have the opposite effect. For example, lack of informed consent is a frequent cause of action in medical malpractice claims. The problem is that doctors have less and less time to comply with more and more regulations and mandates so the consent process suffers and they simply "teach to test", making sure the boxes are checked instead of documenting that the patient understood the risks and benefits. Despite its importance, multiple studies have demonstrated that, in practice, the informed consent process is often incomplete and patient recall and comprehension of the discussion is usually low. Patients who are older, less educated, have limited English proficiency, are of minority race, or have cognitive dysfunction or low intelligence levels are particularly vulnerable in the informed consent process.

9. Defensive medicine costs a lot. So does defensive entrepreneurship

10. Following the loss of a patient or a venture, doctors and entrepreneurs go through the stages of grief. Some never get over denial and anger. All this is not to say that entrepreneurs should just play offense. You need to protect your business.

However, the personal, social and financial costs of both clinical and entrepreneurial failure are high. Advising, "just learn from your mistakes," is easier said than done and significantly underestimates the work it takes to recover and move on. Maybe we need to focus more on what doctors and entrepreneurs do right. If Facebook thinks so, it must be a good idea, right?

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