How to Create a Company Culture that Encourages and Withstands Failure

Innovation | Teodora Serban |
14 January 2020

While it feels like something that we are all trying to avoid at all costs, failure is everywhere, and throughout history it has proven to be one of the ways breakthroughs happen. Failure is one of the possible and likely probable results of experimentation, and only by experimenting, can we hope for innovation, which is one of the biggest buzzwords in business today.

So, when we start to focus on failure as being intrinsically linked with innovation, there is an opportunity to change your company’s mindset when a failure occurs. Is your company just fixing the problem, or are you taking the time to learn from the lessons, and implementing these learnings in future actions? Does your company allow for failure in its realest sense?

This article will examine what a culture of failure means, what the difference is between failure and mistakes, and most importantly, what steps to take to allow for failure and reap its benefits for your organisation.

WHAT DOES A CULTURE OF FAILURE (& INNOVATION) MEAN?

As opposed to quickly implementing a tried and tested solution that you know does the bare minimum needed to solve a problem, a culture that encourages innovation and failure allows for time to find the best way to achieve something, and never assumes that this way will be the best indefinitely. A culture that is open to failure constantly questions “the way that we have always done things around here.”

Besides improving ROI and customer satisfaction, a company that encourages failure will add to its employee satisfaction and project success. During appraisals, employees can be given the opportunity to document and be rewarded for their learnings and experimentation. It will proactively ask people to think about any hiccups and what they’ve discovered and learned from them.

Such a company is not afraid to talk about failures whenever the opportunity. From the CEO sharing the failures that eventually ended up shaping the organisation today, to a management team and their direct reports being ready to talk openly about what isn’t working and come up with solutions together. It is only by continually empowering your people and creating an environment of psychological safety that is accepting of failure that this can become a real part of business culture.

MISTAKES VS. FAILURE

Be clear about the difference between mistakes and failures. Failure is part of experimenting, being willing to test a solution that one believes could work but being willing to accept when it doesn’t and adapt, whereas a mistake is more around neglect, poor decision-making, or doing something wrong. Failure eventually leads to a solution when the lessons learned help the individual or the team adjust, adapt, and innovate. Compared to this, a mistake, depending on its severity, needs to be addressed in a very drastic way and often requires an investment in educating people on about processes and procedures that are in place to keep a business safe.

PRINCIPLES OF A COMPANY CULTURE THAT WITHSTANDS FAILURE

While not an exhaustive list, there are a few fundamental principles that guide any culture of a business that proactively allows for failure and is also ready to make the most of them. Let’s dive into them and see what they are:

Leading by example – Management should not just share their stories about past failures, but also make sure the people in their teams understand the importance of trying new solutions at the risk of getting things wrong sometimes. Employees will take hints from their superiors around what is ok and what is not, and failure should be on the ok list. Managers who openly suggest new solutions that might not work, and who receive ideas from others without judgement and ridicule will inspire their teams to do the same.
The importance of follow-up – Ok, so the failure happened, but what’s next? The principle of follow-up is about making sure you don’t just fix the problem by going back to the way things were before or by implementing a solution in a silo, but instead you also make sure that you share the story of the failure and the solution, that you replicate the solution in other areas for as long as it is viable, and that the people and teams learn valuable lessons from it. After each failure, it’s safe to assume if it happened once, it might happen again. That is why it’s essential to ask and discuss around “if this happens again, how will we manage things this time?”
Bring a solution – Managers should encourage employees that come with problems to also propose a few solutions that they think might work. Once these are discussed, managers can offer guidance into how to proceed, but managers shouldn’t be the ones that will automatically come up with solutions to all problems, every time.
Transparency – This is not just limited to ideas and way of working but applies to ensuring people feel free to talk about their failures and how they found their way out. This culture of sharing will not just invite more people to speak up but will also enforce the feeling of being safe to try and fail. Transparency is also about trade-offs. Sometimes failure happens because of limited resources – time, money, people. Ask after each failure what compromises were made and how the employee made those decisions. The whole business can learn so much out from the experience and the journey that led to an event, not just from its outcome. It’s also an excellent way to learn from other’s mistakes, if you are aware of what happened, why it happened and understands what’s working and what is not.
Fail fast – Encourage your employees to try things but do so as quickly as possible in the prototype phase to check if there’s a way for them to work. If they realise the MVP is going to be a failure, they’ll start improving right away or drop the idea altogether before wasting any more time and money on it.
Create simulations – This does require investment and it is not always possible, but it’s very valuable to be able to apply new ideas to simulations and see how they work. It can be a situational simulation or a production environment, where the teams working on an innovative solution will be able to test more confidently, speak up and realise sooner if there is a predictable failure and how to adjust or improve to make it a success.
Eliminate drama and penalties – Failure should be encouraged and accepted as is. Any negative emotions associated with failure should be avoided, as should penalties of any kind. Even a bad word from a manager can discourage further innovation. Of course, managers and teams should have contingency plans for failure, but also having an honest and open, blame-free culture helps to build all this.

LEARNING FROM OTHERS ON WHAT A CULTURE THAT WEATHERS FAILURE MEANS

Target

The massive retailer faced a considerable security breach scandal in 2013. During the Christmas shopping rush, they discovered their card terminals had been hacked, and around 40 million shopper’s debit and credit card details had been stolen, together with their names, addresses, and phone numbers. The data breach cost the business over $100 million in settlements with banks, Visa and a federal class-action suit, and Target CEO Gregg Steinhafel resigned in 2014.

Still, how they chose to act after this scandal made all the difference. They built up their security systems and have been transparent about their actions. They also host security events and invest in communities to start exchanging threat intelligence amongst retailers.

Target faced a massive scandal because of a failure on its security system. But their culture, as well as technology, helped them survive this and grow stronger. They didn’t just fix the initial problem but continued to follow-up and invest in their security systems to the point of becoming role models, being transparent about their actions and focusing on the positives out of this situation. Other companies would have been quiet about it, fixed the issue, not invest in improvements really, and faced the same kind of security issues again later.

British Airways

British Airways had to cancel all flights from Heathrow and Gatwick airports in London, over a bank holiday in May 2017, stranding more than 75,000 travellers. They blamed this on human error, explaining that a contractor turned off the uninterruptable power supply button inside the data centre, and when the power was restored, the systems had damaged data. This raised a lot of questions around the design of both the power supply and data back-up systems.

Human error should never be used as an explanation for failure, as it doesn’t exist. It rarely happens that a good person who has been well trained and is operating from a place of moral integrity goes around ignoring all that information and doing whatever they want, and as a result, haphazardly cause a major failure. The real problem lies with the tools and processes that did not prevent the failure or issue sufficient warnings about the inevitable mistakes people can make. An uninterruptable power supply should not have a button that is easily accessible, and if action needs to be taken using such a button, it should require at least two people as a failsafe. Some systems may need to be automated from the start to avoid human error.

In a culture that withstands failure, responsibility for such incidents would never be put someone’s shoulders but taken as they are, analysed and learned from transparently.

Facebook

This is a very recent example which occurred on July 3rd, 2019, when some photos appeared blank when uploaded on Facebook and Instagram or when sent via chat on Messenger or WhatsApp. Facebook kept in constant communication on Twitter about the issue, its cause, and the status of solving the problem.

An unspecified issue had been accidentally “triggered” during “routine maintenance,” but it was fixed within a few hours. It was not the first time Facebook, or its other companies, had faced issues but their timely response and constant updates made the difference in this circumstance.

These are just some example to jumpstart your thinking. Changing, or creating a culture that encourages a healthy way to fail is not easy, and there are many nuances as to what the right thing to do is and what fits the grey areas. Still, asserting each failure one by one and encouraging behaviours that lead to employees trusting they can safely experiment with the risk of failing is what will make the difference long term.

Teodora Serban

Head of Marketing

Teodora is a marketing professional with 10+ years of experience in events management, marketing and communications as well as people management and leadership. She is a strong believer in life work blend, in fact she has a blog focused on the topic. She is also a big fan of dogs, especially her Shih Tzu Luna. When she’s not excelling at work or spending quality time with Luna and her family, you can find her leading the Endava hiking club up her favourite mountains.

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