Why Organizations Must Embrace (and Redefine) Failure

In most organizations, people from executive leaders to line employees are socialized to fear failure. Although there are a lot of unhealthy values in many organizational cultures, this is one of the more damaging ones. It leads people to hide mistakes, refuse to share bad news, and most importantly, to avoid risk. Not only does fear of failure lead to negative behaviors, it also mitigates against necessary, healthy behaviors.

This very unfortunate socialization has many sources, but at its core is the terrible reality that in many organizations people are often punished for “failure”—the failure to achieve targets; the failure of a new product or technology to deliver desired results; the failure to reach a goal within a prescribed time frame, the failure of an investment to pay off, etc. In such organizations, people learn to “keep their heads down” and do only what they already know how to do, what doesn’t make waves, and what they won’t have to explain to others. While this may be a “safe” way to behave, it is often disastrous for the organization, particular in today’s environment of constant, high-paced change. James Quincey, the CEO of Coca Cola said it very simply: “If we’re not making mistakes, we’re not trying hard enough.” Fear of failure is the bedfellow of complacency.

Complacency is an obvious, but frankly “lower-level” problem. So, how else does the fear of failure hurt organizations?

First, both individuals and organizations learn as much or more from failure as from success. We all know this intuitively, but the cultural pressure against failure is often so powerful that organizations (and leaders) willingly sacrifice critical learning opportunities in the interest of avoiding what looks like failure. Organizations must “fail” in order to learn and the organizations with the greatest capacity to learn and improve are also those with the highest tolerance for (or even encouragement of) failure.

Relatedly, in a highly competitive environment in which much of what organizations do and sell can be commoditized or rendered obsolete overnight, organizations must have a culture of experimentation in order to stay a step ahead of the competition and in step with customers. They must be willing to experiment with new ways of doing things ALL THE TIME. And the most powerful and high return outcomes tend to come from the highest risk experimentation. As Jeff Bezos said in a recent Harvard Business Review article, “If you’re going to take bold bets, they’re going to be experiments.” He would know.

Change for change’s sake is not necessarily productive, but innovation is critical to success. And that may be the biggest casualty of a culture in which people fear making mistakes and failing. By definition, innovation requires “failed” attempts. The greatest commonality among the most innovative people and organizations is that their new ideas fail to work out far more than they hit the jackpot. Interestingly, what may be the most innovative culture in the world, Silicon Valley, rarely even uses the word failure. When something doesn’t work out as hoped, they “pivot” to the next idea or opportunity, using what they learned from what didn’t work. Even venture capitalists know that they will lose money on many more investments than the ones that will pay off. However, they know that it only takes a small number of big winners to compensate for all the risk taken on the “losers.” Even in the most successful organizations such as Apple or Google, we only know about the experiments that worked out—not the hundreds that didn’t.

As a leader, you must support risk taking and thus encourage (yes, actually encourage) “failure.” And importantly, you must actively redefine failure from a discreet event that is “bad,” to a process that is necessary, if not critical. You must not only make it safe to “fail,” you must reward that behavior by celebrating what was learned, then “pivot” to the next experiment!

Post Script

Strangely, I have sat in Board meetings in which Directors or Trustees were almost paralyzed when it came to committing to strategies due to some level of risk. Not long ago, the mantra in most organizations (and Board rooms) was “data based decision making!” While certainly a plus if possible, in today’s rapid change environment, data driven decision making is a luxury and if you insist on waiting to have compelling data to support your decision, by definition, it will probably be too late to realize much benefit—the train will be out of the station and someone else who took the risk early on will already be “first to market” and reaping the benefits—and generating the data 🙂



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