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The Right Way to Fail


Jan. 9, 2013

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The general perception about failure is that it is bad -- and rightly so. However, innovative global companies realize that not learning from defeats can be worse and actively prevent it. For example, at US multinational conglomerate 3M, the McKnight Principles established by former Chairman William L. McKnight encourages employees to take the initiative and accepts the fact missteps will be made. At IDEO, management believes that giving employees a license to fail provides impetus to creativity.

Amy Edmonson, Harvard University professor of leadership and management, believes that some failures can be deemed a success if they lead to innovation. Specifically, a system that accommodates diverse attempts, anticipates failures and gleans information from them can lead to success. In this way, causes and effects are analyzed and lessons from failures are accumulated to serve as reference for future failures.

In his book, “No Failures; Only Success Delayed,” Michael Lum, a trainer from Singapore who also wrote “Who Broke My Rice Bowl?” and “I Once Wore Diapers,” places company and individual failures into four categories. The “born loser” does not have the ability to learn from their mistakes, and the “professor” does. However, both avoid new challenges to protect themselves from risks and failures. The “survivor” also is incapable of learning from mistakes but does not retreat from new challenges. Consequently, mistakes are repeated. Finally, the “conqueror” is someone who takes risks and faces new challenges while learning from mistakes to achieve creative and innovative results. To successfully fail, conquerors employ a number of strategies.

First, the fear of failure is removed. Many employees avoid challenges as failing results in criticism, low job evaluations in addition to blows to confidence and self-esteem. Conqueror companies work hard to lower these fears, sharing past cases of positive failures that have led to greater success and even praising them when they have made a successful mistake. For example, 3M holds ‘Failure Parties' and automaker BMW awards those who have made outstanding mistakes in order to encourage employees to free themselves from the negativity of failure.

Second, conquerors encourage employees to openly reveal their failures. It is only natural that people want to hide their mistakes and flaws. However, in doing so, mistakes can be repeated, leading to even bigger mistakes. Also, if a failure is not acknowledged, more and more assets may be unwittingly committed to a moribund venture, turning the failure into a much bigger problem. Motorola's satellite phone Iridium is a prime example. The company invested ten years into the development of its satellite phone. However, by the time it was complete, mobile phones could be used almost anywhere. Nevertheless, Motorola was unable to admit defeat, which caused the company to fall behind new trends in the mobile phone market. Eventually it was forced to merge with Google.

Conquerors make efforts to create a stable atmosphere where failures and errors are not reprimanded. For this purpose, Children's Hospitals and Clinics in the US state of Minnesota has implemented a voluntary anonymous system for reporting medicals errors so that those who have made mistakes feel able to report the incident.

Thirdly, conquerors are relaxed about exposing shortcomings at the initial stages of a project. They believe making adjustments will ultimately lead to a hit product. Certain companies recommend prototyping as it allows for more mistakes at a lower cost. British company Dyson developed a staggering 5,127 prototypes for its bag-less vacuum cleaner to achieve great success in the market. The Lean Startup strategy, which is sweeping across Silicon Valley, is also based on similar fundamentals. The methodology advises that companies, especially startups, should start on a small scale and analyze the market response and customer feedback. Then they can improve their product or service immediately or design a new product or service with the exact content that answers consumer needs and desires. The strategy helps companies avoid major errors and failures by revealing flaws and weaknesses through minor failures.

The fourth strategy involves collaboration and time. Conquerors do not regard failures as an individual's problem. Instead, they try to find a solution at the organizational level. At Pixar Animation Studios, employees who are completely stumped can share their problem and solicit help at large review sessions. However, in order to truly capitalize on failures, one more element is needed; allowing time to analyze errors and failures.

Most organizations do not take this time before moving onto the next step, making the same mistakes inevitable. American manufacturing company W.L. Gore & Associates allocates 10% of its employees working hours to “dabble time” in which they are free to do whatever they wish. During this time, employees can take a breather and look into the unsuccessful elements of a failed project or start new ones. Through this, such innovative products as the company's revolutionary guitar string, ELIXIR ® was born.

A majority of companies express the importance of failure but fall short of providing the needed support that turns mistakes into innovations and ultimately a business success. Concrete support includes defining the concept of successful failure, establishing a consensus with the employees and disseminating methodologies for failing successfully. Furthermore, it is vital to implement an evaluation system that promotes successful failure. Finally, successful failures must be managed systematically so that they can be utilized as an asset.

The author is research fellow at Samsung Economic Research Institute. Visit www.seriworld.org for more SERI reports.

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