This article also appeared in Finweek Magazine in their 15-Nov-2012 issue

“You need to burn to learn”. In other words, we are wired to learn the hard way. In the business world, Rupert Murdoch with MySpace is a classic example of exactly this.

In 2005 News Corporation, Rupert Murdoch’s global media empire, bought MySpace. The purchase price was a staggering $580 million, but one could argue he did it for the right reasons. News Corp. had failed to properly engage with the online world – and was in danger of losing its hard-won place in news as a consequence. News Corp was gearing up for a radical rethink of its web strategy. At the time MySpace was the most popular social network in the world. In the words of news tycoon Rupert Murdoch, “Young people don’t want to rely on a god-like figure from above to tell them what’s important”. He recognised that young people wanted to make their own decisions as to what was important news and what wasn’t, they didn’t want journalists and newspapers dictating to them. MySpace allowed them this freedom. The purchase seemed to tick all the right boxes for News Corp.

However this turned out to be a very foolish investment. In 2011 News Corp sold the rapidly dwindling social network for a dismal $35 million. Rupert Murdoch called the MySpace purchase a “huge mistake.”

Back when News Corp had just acquired MySpace, sceptics had argued that this would be yet another failed strategy for Murdoch. In 1999 News Corp announced big plans for their online business – only to have a number of well-financed operations shut down within months of their launch. Prior to that, they had dismal failures such as Delphi Internet in the 1990s, an online service which combined their UK and US content and didn’t take off, plus a bungled internet service provider experiment known as LineOne.

Why did it take the staggering loss of the MySpace blunder for him to learn? The truth is, it’s the way we are wired.

Growing up, my parents tried to teach me not to touch the stove or to stick my fingers in plug sockets. I would usually reply, “I need to make my own mistakes. I cannot learn from yours.” Imagine how hard it must have been to be my parents and to watch me burn my fingers. I’m lucky I made it to adulthood with all 10 fingers and 10 toes. We called it the davkah gene. In Yiddish it means contrarian: whatever someone says, you do the opposite. I see it in my own kids. They want to learn things the hard way.

This trait isn’t unique to our family.

Have you ever received advice from someone a good few years older than you? Most of it was probably sage advice. Did you listen and change your habits? Probably not. Very often, it’s only after we’ve experienced the painful consequences of ignored advice, that we finally listen.

We all tend to think that it won’t happen to us, until it does. One moment you’re on top of the world. The next moment, something unexpected happens that you didn’t see coming. It could be retrenchment, a car accident or a business opportunity that slips through your fingers. You find yourself wishing you were more prepared. If only you’d gotten that job reference from your boss before the firm went under. If only you’d gotten disability cover before that disabling car accident. But it’s too late.

If only we had listened to that good advice. But the truth is, we’re not built to learn that way. If evolution is about survival of the species that learn and adapt quicker, why do we need to learn the hard way?

1. We learn best from personal experience.  Going as far back in 1956, Benjamin Bloom’s “Taxonomy of Learning” theory says that there are three areas of learning: thinking, feeling and doing. All are related to memory. Most importantly, all three involve connecting emotions with those memories. By way of example, ask many entrepreneurs and they’ll tell you: the painful memory of those difficult first years surviving on two-minute noodles make you hungrier than ever for success. However, when someone gives you advice, the experience usually isn’t emotional for you unless you’ve personally been through what they’re talking about. We may hear what they are saying, but without a powerful emotion or a memory to make their words real, we don’t really listen. So it’ll only be advice rather than a lesson learned.

2.    Pushing the boundaries. How do you learn right from wrong? By pushing the boundaries. Watch little children. They keep pushing and pushing, until they push too far and they get punished or get burnt. Then they know the boundary for next time. Adults are no different. If the global financial crisis hadn’t hit, banks would have continued giving loans to people who couldn’t afford it. Enron is another case in point. Or what about that heart attack that made your dad give up smoking (at least until his next heart attack a few years later)? At this point we’ve seen the consequences of our actions and felt the pain of going too far, and we pull back. It’s a case of us having to “burn to learn”.

3. We think we are far removed from it. Deep down, we know that everything has consequences. We just think it’s going to happen in a long time, or that it’s not going to happen to us. In fact, the younger we are, the more we think our actions won’t have repercussions and the more reckless our behaviour. This is why insurance companies charge higher premiums for drivers under 25. Too often, we only change our behaviour after we’ve experienced the painful consequences of our actions.

So the next time a team member says, “Let me do it myself”, give them the space to experiment safely. People come round once they’ve learnt the hard way.