The ROI of Failure

We have a lot to learn from failure. The state of today’s economy, business and industry in general provide a wide range of learning opportunities. We are surrounded by examples of large-scale, near catastrophic failure: the stock market, financial services and automobile industries, business closures, rising unemployment, and so on. Of course we can’t help wonder when there might be an end in sight, but maybe we can also take time to consider how we make the best of the current situation.

Failure alone is not what takes businesses under. It’s also the fear of failure that can kill an organization. It causes people to hide their shortcomings, be unwilling to ask for or accept help, or learn from and listen to critical feedback that could improve performance and results. It puts a strangle-hold on innovation and creativity, the life source of business.
In the presence of constant fear, our usual response is to run for cover. As consumers, we stop spending and we redirect our investments to safer harbors. As business leaders we baton the hatches and minimize opportunities to get it wrong. Yet, as we pull in and protect the downside, we also pull away from maximizing what might be the upside. With so much at risk, this is understandable behavior. If it can’t be executed flawlessly with predictable outcomes, then it’s not worth trying. So instead, we choose to do nothing. We delay important decisions. We defer taking action. And in so doing, we lose out on the gift of learning that failure brings.

Of course our culture doesn’t exactly encourage us to see failure as a gift, whether it’s our own or someone else’s. We’ve been conditioned to see it as an aberration, as a personal flaw, as something we must avoid. Add in the compounding pressure of the current environment, and we may become even more risk averse, resulting in a downward cycle of paralysis driven by more fear.

Prudent risk management is something every leader does, but at what point can it hinder our organization’s performance? We’ve clearly gone too far when it becomes our mentality in how we manage others and interact with our teams. We’ve gone too far when we don’t offer up that stretch assignment, when we stay too involved and over manage, or when we criticize any progress which is less than perfect. We’ve overdone it when we start to punish for failure instead of asking, “What can we learn from this?” or “What should we do different next time?” So, in a tough environment like this one, can you instead be the rare leader who offers the gift of failure?

Leaders who offer this gift create a learning culture, not by hiding failure, but by shining a bright light on it and by making it safe to inquire about and analyze what went awry. They demand answers to questions which help their organizations extract the wisdom from things gone wrong. And in so doing, they regenerate the spirit of innovation which quickly erodes in the presence of fear. The gift of failure in an organization will create a stronger, more agile business that moves forward not repeating the same mistakes over and over. To be clear, we’re not suggesting a lowering of standards or a soft line on performance. But we are suggesting a careful maneuvering between the drive to be the best and unachievable levels of perfection which feed our fears. Failure at some level is inevitable, so why not see it as an asset and go for the greatest ROI?

How to Get an ROI on Failure:

1. Set expectations: Make sure your team knows your expectations for failure and the importance of learning from it.

2. Dig deep to understand the cause of the failure: In other words, look past the presenting issue to find deeper patterns of organizational beliefs and behaviors that may be at the root cause.

3. Publicize without punishing: In other words there’s a difference between post-mortems and public hangings.

4. Practice rapid-cycle learning: The sooner you get and act on intelligent feedback, the easier it is to correct. Trade in big failures at the end for a lot of small failures along the way.

5. Share your own experiences: Maintain a climate of learning by openly sharing when you’ve made mistakes and what you’ve learned from them.

6. Keep an eye on confidence: Help others maintain confidence in their abilities in the face of failure. This will help prevent losing streaks caused from loss of confidence in ourselves and others.

THOUGHTS FROM LEADERS ON FAILURE

My great concern is not whether you have failed, but whether you are content with your failure.

- Abraham Lincoln

There are no secrets to success. It is the result of preparation, hard work, and learning from failure.

– Colin Powell

Failure is simply the opportunity to begin again, this time more intelligently.

– Henry Ford

The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.

- Michelangelo

For more on the topic, see this link on Pixar’s practices for maintaining a culture of innovation. http://www.youtube.com/watch?v=iizL2iCMe28