To Increase Innovation, Take the Sting Out of Failure

“We need more innovation around here. We need people to think more creatively and be more entrepreneurial. I’ve been saying this for the last couple years, and yet very little seems to be changing. It’s very frustrating.”

This was a recent lament from a client, a senior leader at a medium-sized professional services firm. He was frustrated that even though his organization was encouraging people at every turn to take chances on new ideas, too few were actually stepping up to do it.

I pushed him a little further and asked him what he meant when he said he was “encouraging people at every turn to take chances.”

He explained that the need for innovation was a thread running through all communications these days. Senior leaders of the firm were relentlessly making the case that they needed to innovate or they’d lose their footing. They shared specific places where they’d missed market opportunities and were now playing catch up. A few more of these missteps, and they feared they’d lose their market leading position. The frustrating part was that, for the most part, people around the organization “got it” –yet behavior still didn’t change.

Then I asked him how he treats failure in his organization. He wasn’t sure how to answer the question. He hadn’t really ever considered it before. His first off-hand response was, “As something to be avoided.” He immediately saw the inherent problems with his answer as soon as the words came out of his mouth.

Unfortunately, my client’s story is all too common in organizations these days. There’s a strong logical need for more innovation efforts, yet weeks, months and years go by they don’t happen. The reason for this is simple; it’s an emotional, not logical problem. Innovation efforts are risky and can (by definition) fail. And failure can sting. So if you haven’t figured out how to take some of the sting out of failure, you won’t get innovation.

Start by defining a smart failure. Everyone in your organization knows what success is. It’s the things you put on a resume: increased revenues, decreased costs, delivered a product etc. Far fewer know what a smart failure is — i.e. the type of failures that should be congratulated. These are the thoughtful and well planned projects that for some reason didn’t work. Define them so people know the acceptable boundaries within which to fail. If you don’t define them, all failure looks risky and it will kill creativity and innovation.

Questions to consider in defining smart failures: What makes a failure smart in our organization? What makes a failure dumb? Specifically, what guidelines, approaches, or processes characterize smart risk taking? What clear examples can we point to, to demonstrate smart failures? You want people to clearly understand the right and wrong way to fail.

Next, reward smart failures in addition to successes. Once you’ve defined smart failures, you want to reward them just as you do smart successes. It sends a powerful message about what sort of behavior is encouraged in your organization. An example is Indian conglomerate Tata’s Innovista program in which they award the best innovations of the year and the best attempts. The latter is called the “Dare to Try award” and goes the most thoughtful and well-executed failures. When they first launched the program in 2008, few teams entered the Dare to Try category. Then everyone saw the winners get congratulated on stage by the CEO alongside every other category. By 2011, 132 teams entered the category. The thoughtful recognition had changed peoples’ thinking about the value of taking a risk. And the increased smart risk taking had increased the volume of innovative ideas.

Finally, as a manager, make your approach to risk taking transparent As a leader, you’ve taken risks to get to where you are. You’ve had your fair share of successes and a few memorable flops. Share these with your people. Share how you approached both, how you made mistakes, how you learned to mitigate risks, how you dealt with the uncertainty, and how you succeeded. Let them see your decision process and how you weighed pros and cons. Let them know you’ll support them as they experiment and learn to take smart risks.

(By Doug Sundheim)

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