In high-performing organisations, whether in business, elite sport, or the military, success hinges on the ability to perform under pressure. The difference between those who stagnate and those who rise isn’t talent alone, it’s mindset. Specifically, how we interpret setbacks: do we see them as threats that paralyse us, or as challenges that fuel our performance? This fundamental distinction—the challenge vs. threat mindset—determines whether we react with fear or rise to prove why we are the best in the business.
Challenge vs. Threat: The Psychology of Performance
The challenge vs. threat framework stems from performance psychology and stress research. When faced with adversity, our brains assess whether we have the resources—be it knowledge, skills, or resilience—to handle the situation. If we believe we do, we see it as a challenge, activating a physiological state that enhances focus, motivation, and cognitive function. But if we perceive the situation as overwhelming, we view it as a threat, triggering a stress response that can lead to tunnel vision, poor decision-making, and ultimately, failure.
This distinction is critical in high-performance environments—where marginal gains and split-second decisions separate victory from defeat. In business, sport, or military operations, the best teams and individuals don’t just endure adversity; they thrive on it.
From the Battlefield to the Boardroom: Mindset Under Pressure
In military operations, plans rarely survive first contact with the enemy. The ability to adapt and overcome is drilled into soldiers from day one. You are taught to expect the unexpected, to embrace the chaos, and to view setbacks as opportunities to demonstrate capability. The same principle applies in business and elite sport. Strategies fail, products underperform, and markets shift unexpectedly. What separates elite organisations from the rest is their response.
When an unexpected failure occurs, an organisation can either catastrophize—spiralling into blame, frustration, and paralysis—or shift into challenge mode, seeing the adversity as an opportunity to showcase resilience, intelligence, and speed of adaptation. The best organisations thrive under this pressure, proving time and again why they lead their industries.
Great Successes Born from Failure
History is filled with examples of innovations and triumphs that emerged from failure. Thomas Edison, famously unfazed by thousands of failed attempts to create the lightbulb, said, “I have not failed. I've just found 10,000 ways that won’t work.” His ability to frame failure as a learning process led to one of the most transformative inventions in history.
NASA provides another example. The Apollo 1 disaster in 1967 was a tragic failure, but rather than seeing it as an endpoint, NASA used the lessons learned to revolutionise safety protocols, leading to the successful Apollo 11 moon landing. Similarly, when the Apollo 13 mission encountered catastrophic failure, the team’s ability to remain solution-focused turned a potential disaster into one of the greatest examples of crisis management in history.
In sport, Michael Jordan, arguably the greatest basketball player of all time, credits his success to his failures: “I've missed more than 9,000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game-winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed.”
These examples illustrate that setbacks are not signs of incompetence—they are the breeding ground for breakthroughs. The highest-performing organisations understand this and build a culture that embraces learning from failure rather than fearing it.
Moving from a Threat to a Challenge Mindset
Shifting from a threat to a challenge mindset is not an overnight process, but it is a skill that can be developed at both an individual and organisational level. Here’s how:
- Reframe the Situation – Instead of seeing a setback as a disaster, ask: “What can we learn from this?” Acknowledge the difficulty but focus on the opportunity within it.
- Control the Controllables – The best organisations train their teams to focus on what they can control. Fear thrives in uncertainty but breaking a challenge down into actionable steps shifts focus from panic to problem-solving.
- Normalise Setbacks – High-performing organisations actively discuss past failures and what was learned from them. This reduces the stigma of failure and helps individuals develop resilience.
- Use Stress to Your Advantage – Research shows that moderate stress can enhance performance if perceived as a challenge rather than a threat. Encouraging a culture that embraces pressure as a sign of high expectations can shift team mindsets.
- Develop a Growth-Oriented Culture – Leaders set the tone. If failure is met with blame, people will play it safe. If failure is met with curiosity and learning, teams will push boundaries and innovate.
- Practice Under Pressure – Just as elite athletes simulate high-stress scenarios in training, businesses can create controlled challenges—like crisis simulations or high-pressure decision-making exercises—to prepare teams for real-world adversity.
» READ MORE: Explore PepTalk's top growth mindset speakers.
Building a Culture of Challenge Thinking
For an organisation, fostering a challenge mindset is about more than just individual resilience—it’s about culture. A company that collectively adopts a challenge response will outperform one dominated by a threat mindset every time. Leaders play a crucial role in this. How they respond to setbacks sets the tone for everyone.
- Blame vs. Solutions – In a threat-based culture, failure leads to blame. In a challenge-based culture, failure leads to problem-solving.
- Fear vs. Learning – In a threat-based culture, people fear making mistakes, leading to conservative decision-making. In a challenge-based culture, mistakes are learning opportunities, fostering innovation.
- Fixed vs. Growth – A threat-based mindset views ability as static: “We aren’t good enough.” A challenge-based mindset believes in development: “How do we improve?”
Proving Why You’re the Best
The measure of an elite organisation isn’t how well it performs when things go right—it’s how it responds when things go wrong. In business, elite sport, and the military, adversity isn’t a possibility; it’s a certainty. The mindset you choose in those moments defines whether you falter or rise.
The greatest companies and individuals don’t just tolerate failure—they use it. Every setback is a test, an opportunity to reinforce why they are the best in the business. They don’t allow failure to be the end of the story; they make it the beginning of their next great success.
So, the next time adversity strikes, ask yourself: Is this a threat? Or is this your moment to prove why you belong at the top?
