The Powerful and Lasting Lessons You Learn From Failure

There are few things in business that have a higher economic value than innovation.

But unfortunately, along with that economic value come a lot of issues that need to be addressed in order to maximize innovation.

One of the most common but powerful occurrences that frustrate those who are innovating or managing innovation is the frequent and inevitable failures that occur on the way to a successful innovation. The reality is that when you are trying to do something innovative that has not been done before, you will be taking a lot of risks, so the chances of completely succeeding on your first try are almost zero.

What is more likely is that you will initially have several small step successes, accompanied by a number of small step failures.

For example, the inventor of the famous Dyson vacuum cleaner had to build 5,126 prototypes before his innovation process was complete. The key lesson to learn is that if you want to maximize innovation, rather than trying to avoid failure, it needs to be accepted and well-managed and even embraced.

Handling failure is a factor in increasing innovation

There are five (5) foundation factors that directly contribute to corporate innovation. They are:

1. Increased collaboration;
2. Rapid learning;
3. Expecting innovation;
4. Stretch goals; and,
5. The ability to learn from failure.

The setting of stretch goals is especially important in any discussion of understanding failure. By the very nature that they are “moonshot goals” it forces employees to take risks, which result in numerous failures. In fact, last week I wrote a companion piece on how something as simple as setting stretch goals can drive innovation.

Stretch goals are problematic because when they are set correctly, you can expect between a 20 percent and 40 percent failure rate on the initial try to meet those goals. And without a special effort to help managers and employees deal with this high failure rate, in most cases innovation will slow or even stop.

Remember what Robert F. Kennedy said:

Only those who dare to fail greatly can ever achieve greatly.”

The many benefits of failure

The best way to get risk-averse managers and employees to learn to accept higher risks and their associated failures are to educate them on the many positive aspects and benefits of failure. Some of those many benefits include:

• Some 70 percent of the time, the risk-taking DID work — When 30 percent of something fails, it’s easy to focus on those failures. However, a more effective approach is to focus on the positive side because that means that the other 70 percent of your effort didn’t fail. With those successes, you are clearly still learning a great deal about what works. This means that rather than starting from scratch, you already know 70 percent of what you need in order to succeed during the next phase of your innovation effort.
• A failure signals that a “pivot,” rather than an abandonment, is needed — Medium-size failure, rather than a signal that it is time to give up, should be treated as a valuable heads-up alert or warning, signaling that it’s time to gather data on that failure, and then to shift or “pivot” into a slightly new direction. As the CEO of GE advises, “We encourage people to try new things, pivot, then try them again.”
• Failure tells you what to stop doing –– Obviously failure reveals what doesn’t work, so you can avoid using similar unmodified approaches in the future. And over time, by continually eliminating failure factors, you obviously increase the probability of future success. Thomas A. Edison made the point succinctly when he said “I have not failed. I’ve just found 10,000 ways that won’t work.”
• A failure in one area may be a success in another area — The employee who invented the glue used in the now famous “sticky notes” was actually trying to invent permanent glue for another use. His failure in producing “non-permanent glue” was short-lived because he successfully repurposed the glue to a more profitable purpose. Obviously, it makes sense for corporations to formally widely share their failures, based on the possibility that others may put them to greater use.
• Failure is the best teacher — Failure is only valuable if you use it to identify what worked and what didn’t work and to use that information to minimize future failures. In the corporate and engineering worlds, learning from failure starts with failure analysis. This is a process that helps you identify specifically what failed and then to understand the “root causes” of that failure (i.e. critical failure factors). But since failure and success factors are often closely related, the identification of the failure factors will likely aid you in identifying the critical success factors that cause an approach to succeed. The famous auto innovator Henry Ford revealed his understanding of learning from failure in this quote: “The only real mistake is the one from which we learn nothing.”
• Failure stimulates an improvement in employee capabilities — failures reveal roadblocks and they create uncertainty. But to innovators, those are often motivators because, in order to overcome them, you must improve your capabilities and stretch your perseverance and creativity to the limit. To the best employees, failure is a golden opportunity to get better, and fortunately, those enhanced capabilities will last for the employees’ entire careers.
• Failures may eliminate reasons for delay — in many cases, individuals are afraid to proceed with an innovative project because of their exaggerated fears of catastrophic failure. However after the first run, everyone will clearly know if the failures associated with the effort are catastrophic or only minor. Realizing that the encountered failures are only minor will help to minimize any delays in moving forward.
• A failure factor in one area may apply to another area — Failure analysis tells you what failed and why. But the best corporations develop processes that “spread the word” and warn others in your organization about what clearly doesn’t work so that others don’t need to learn the hard way. On the positive side, lessons learned from both successes and failures in one discipline may be able to be applied to another discipline or functional area. For example, if you find that a retention program failed because the managers wouldn’t participate in retention training, you may be able to transfer that key learning about manager resistance to training into other existing and new talent programs.
• Wild success is remembered long after incremental failures are forgotten — Two of the most famous baseball players ever, Babe Ruth and Mickey Mantle, are remembered by all as world-famous hitters. But those successes clearly eclipse their failures — both Ruth and Mantle also broke the major-league strikeout record. The lesson  is that a smashing success in one area will likely boost your career and be remembered much longer than the series of minor failures that you learned from along the way.
• Experience builds your capability to handle future major failures — Avoiding risks and failures over time may lead to atrophy. Which means that when a major failure does occur, your “rusty” employees and your out of date processes simply won’t be able to handle it. Both the military and healthcare managers have proven that the more often you train for and work through actual major failures, the better prepared you will be when an unplanned failure occurs in the future.

Steps for increasing learning from failure

If you expect your employees to be comfortable with high-risk “moonshot goals” and their associated high failure rates, take steps to improve how failure is handled. Some of those action steps include:

1. Make everyone aware of the benefits of failure — Make sure that your employees and managers fully understand the many benefits that can come from failures and handle them correctly.
2. Expect failure analysis — Expect a failure analysis after every significant failure. The goal should be to identify what went wrong and why. And that information should be made available to others in the corporation so that they can learn too.
3. Provide education about failure — There should be an internal knowledge website and a forum that allows managers and employees to learn about and exchange ideas on all aspects of failure and innovation. In some cases, online training classes may be appropriate.
4. Make team conversations about failure routine — If you want your team to feel more comfortable with failures and to learn more from them, make failure discussions a routine part of team meetings. That already happens at firms like Google, where for example the SVP of Google X spent “50 percent of his staff meeting on what failed last week and what did we learn from it?”
5. Maximize the sharing of failure learning — There needs to be an internal website, social media group, or email list that quickly spreads information about failures (and successes) throughout the corporation so that others can use that information.
6. Expect “reasonable risk” failures — The best failures have calculated reasonable risks that are assessed in advance. The financial firm Charles Schwab expects failures but wants them to be “noble ones.” This means that there must be three elements:
   1. A thorough plan to start out;
   2. A contingency plan for handling failure; and,
   3. A debriefing to learn from any failures.
7. Educate employees on how to identify precursors to failure — Many failures can be avoided or minimized if you have previously identified the “precursors” to failure. These events or things that occur immediately before a failure may warn you of an upcoming failure in time to reduce or stop the failure.
8. Learn to celebrate failures — It may sound silly initially, but reasonable risk failures should be celebrated, because of the many benefits associated with learning from that failure. In fact at the headquarters of the financial firm Charles Schwab, there is a physical display and a video shown during onboarding that reveals and celebrates each of the “noble failures.” The reasoning behind that is that “when the celebration of noble failure becomes institutionalized, people within the organization are more willing to reassess earlier decisions.” You don’t, however, want to go so far that you reward failure, but you should certainly recognize those that learn rapidly from it.

Talent management leaders too often are risk-averse 

When you are trying to increase innovation specifically in the area of talent management, be prepared for some special challenges.

The HR function has been ranked alongside accountants and lawyers as among the most risk-averse functions in business. Unfortunately, too many managers of HR functions have gotten into and succeeded in their positions at least in part because they are highly risk averse.

In fact, over the last 30 years, I can only think of four corporate talent acquisition leaders who were willing to accept a failure rate of up to 40 percent (Michael McNeil, Jason Warner, Michael Homula, and Dan Hilbert). Instead, I have found that corporate talent managers are seldom willing to accept any risk above 5 percent.

That means that if you expect innovation in talent management, you’re going to have to shift the culture so that employees feel comfortable with stretch goals and the high failure rates associated with them. 

Final thoughts

Whether you are a talent management leader or simply a recruiter, if you ever take the time to analyze your career trajectory, you may find that everything you have done and planned to do fits into the low-risk, low-return category.

And that means if you want your thoughts of “I want to make a difference” or “I want to do great things” to ring true, you need to embrace risk-taking innovation and the stretch “moonshot goals” that accelerate it.

Obviously, once you begin to take risks, you need to have a process for handling and learning from the numerous failures that you will encounter.

Author’s note: I’m frequently asked the question “What books am I currently reading?” Well, I have recently completed reading an excellent book by talent industry icon David Forman entitled Fearless HR — Driving Business Results. It’s full of practical tips on how HR can become more businesslike and directly impact business results. I recommend it highly (I have previously also recommended Laszlo Bock’s book Work Rules).