Challenge 11: How is your company dealing with failures?

Diagnosis

Innovation is related with experimentation and risk-taking. That means that mistakes and failures are a part of the process. Embracing failures as part of the innovation process allows SMEs to identify potential risks early and take proactive steps to mitigate them. They provide valuable learning experiences. They highlight what didn't work and help SMEs refine their strategies, processes, and products for future success. Learning to embrace failures is a challenge and requires specific attitude and company culture. Wrong approach to dealing with failure is one of key innovation killers and obstacles to change and development of your company.

Positive aspects	Negative aspects
Employees feel comfortable discussing failures openly without fear of retribution.	Failures are met with blame and finger-pointing.
There's a lack of blame assigned to individuals for failures, focusing instead on understanding the underlying reasons.	Employees fear punishment for unsuccessful attempts.
The company regularly holds sessions to discuss failures and extract valuable lessons for future improvement.	Leaders never admit failure.
Failures are thoroughly analyzed to understand root causes, enabling the identification of areas for improvement.	Leaders and employees are uncomfortable showing vulnerability to their teammates.
Employees are encouraged to experiment with new ideas and approaches, despite failure being an option.	The company hides failures from stakeholders or tries to cover them up.
Leaders actively support employees who experience failures, offering guidance and resources for improvement.	Management takes punitive actions against employees or teams responsible for failures.
The SME allocates resources for training and development programs that allow employees to learn from failures.	Failures are quickly forgotten without analysing the root causes and extracting valuable lessons.
The company promotes rapid iteration and testing of ideas.	Leadership doesn't offer support or guidance to employees who experience failures.
Teams use failures as opportunities to adapt and find innovative solutions to challenges.	Employees avoid experimenting with new ideas due to the fear of failure.
Different teams collaborate to collectively understand the reasons behind a failure and brainstorm solutions.	Employees are only granted resources for projects if results are highly predictable.
SME provides a safe space for employees to try out innovative experiments.	Failed projects result in reduced resources, budget cuts, or lack of support for future endeavours.
Leadership explicitly emphasizes the importance of innovation and the role of failure in its process.	Failures are seen as an argument that new ideas or approaches should be avoided.
Employees who apply lessons from failures to future projects are recognized and supported, despite initial failure.	Employees who experience failures are not provided with resources or guidance to recover.
Failures are seen as part of the journey toward continuous improvement.	The company doesn't conduct analyses of failed projects to understand what went wrong.
	Employees with failed projects are stigmatised due to the failure.
	Failures are not used to reflect on the company's strategy or direction, leading to repetitive mistakes.
	Failures decrease our openness to attempting new ways and ideas.

Actions for implementation

Supporting experimentation and failure is a tough and scary task. Even if your company is not penalising failure you need to periodically remind everyone how to react when failure happens. It is so as we all have the natural tendence for fight-or-flight response when we are under stress, and failing in business is usually related with stress and anxiety. Overcoming those tendencies is necessary for fostering innovation in your company, but requires constant reinforcement. In this activity we will focus on reinforcing positive response of management to failure, which is of critical relevance.

1. Invite your management team for a session focused on how to deal with failure and support employees that face it.
2. Start from highlighting how failure is often a necessary part of the innovation process, leading to breakthroughs and creative problem-solving.
3. Follow with failure storytelling. Start with your experience. Bring about failures in your professional life and discuss what you learned and how those experiences shaped your approach to challenges. Mention also how you dealt with the failure, how did you feel, if other people supported you etc.

Than ask managers to share personal stories of failures they've experienced in their careers.

Help your managers understand that sharing failures should be a natural part of your working environment and critical learning pillar rather than a shameful activity.

1. Afterwards, provide managers with external case studies of both successful and unsuccessful projects. Have them analyze what went wrong in the failed cases and how those failures could have been addressed differently, to better understand the learning value of failure.
2. Follow with presenting managers with hypothetical scenarios of potential project failures. Ask them to brainstorm strategies for responding to these scenarios, including learning points, action plans, and interaction with employees involved.
3. At the end, work with your managers on clearly defining what is the difference between a failure in the innovation process vs. neglective behaviour for everyone to be on the same page regarding what should be accepted and supported and what is not to be tolerated. Setting the boundaries, remember that innovation needs a broad space for risk and experimentation and requires sufficient autonomy.