Most of us would accept that failure is just an inevitable part
of success. For instance, when you learn how to ski, you have to fall a
number of times before you’re able to make it down the mountain
skillfully. There are times, however, when failure is not a good thing,
such as when you need to meet a customer deadline or achieve a
competitive level of quality. Unfortunately, many managers don’t
distinguish between when failure can be a valuable catalyst for learning
and when it can be truly harmful, leaving employees unsure about when
to take risks and experiment, and when to play it safe. For managers and
employees, the key to getting this right is understanding whether the
organization is in execution mode or innovation mode.
I was
reminded of this difference while teaching in Silicon Valley last year.
As everyone knows, the area between San Francisco and San Jose has
thousands of start-up
companies, as well as dozens of innovation “outposts” set up by
established companies from around the world. In talking with the people
who are involved with these innovation efforts, the striking thing is
not their descriptions of success, but of the failures that helped them
along the way. In Silicon Valley (and other hotbeds of innovation),
failure is badge of honor and a pre-requisite for success—not something
to be ashamed of. For these innovators, a successful company, and a
successful career, requires a continuing series of rapid experiments,
tests, hypotheses, and pivots—which means that nobody gets it right the
first time (or the second or third). As a result, failure is highly
valued.
In contrast, the established companies that I’ve spent
most of my career working with are focused on executing what they
already know how to do instead of innovating something new. And when
failure occurs in the context of execution, it can harm results or
reputation or create undo risk. So even when execution-focused
executives say that it’s all right to fail, they usually don’t really
mean it. As someone at the Federal Reserve (the quintessential execution
organization) once told me, “Around here we want to make sure our
people don’t make the same mistake once.”
The real challenge for
leaders is not to either accept or reject failure, but rather to
differentiate between whether they are in execution or innovation mode.
Being in execution mode means that standard operating practices have
been developed and need to be implemented with as little deviation as
possible. Sure there can be improvements made, but these have to be done
carefully and explicitly, under controlled conditions, so that the
basic operations are not disrupted. As such, failure needs to be
minimized or eliminated.
Innovation mode, on the other hand, is
when standards still don’t exist and best practices are still being
discovered and tested. In this kind of situation, it’s important to try
out new ideas, formats, and processes – and allow room for plenty of
failure – in order to learn what works and what does not. Once the focus
becomes clear, managers can more easily communicate what the
appropriate attitude toward failure should be.
The reason why many
established firms struggle with innovation is that they bring the
execution mentality with them, and then don’t encourage the failure
necessary to develop new products, services, or processes. In a large
financial services firm, for example, senior executives talked
constantly about innovation but quashed proposals and projects that
didn’t meet the margin thresholds of their established products within
two months. By setting the financial bar so high, they ended up
discouraging teams from doing prototypes and pilots because in reality
nobody was allowed to really fail.
On the other hand, the reason
why many start-ups hit a wall when they try to scale up is that they
don’t know how to shift into execution mode where failure should be much
less tolerated. For example, a small solar energy start up that that I
worked with in the Bay area, after much trial and error, had produced a
viable product and was starting to generate revenue. But instead of
creating a disciplined process for sales and marketing, they allowed the
manager (an early employee) to continually miss targets and encourage
her sales people to “experiment” with different kinds of pitches and
price points. By supporting this pattern of failure at an inappropriate
time in the company’s evolution, the firm ended up with a major cash
problem that prevented it from capitalizing on its product achievements.
So
yes, failure is a key to learning, growing and figuring out what works.
But before you either celebrate or punish failure, make sure you know
what you are trying to achieve by doing so.
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Ron Ashkenas' blog post on Harvard Business Review. Join the discussion.