Let me give you a quick insight into one really useful thing we do here at Grant Thornton – our ‘failure talk’. When we get our senior members of the marketing department together, however brief the meeting, we always block out 10 to 15 minutes to discuss failure. A volunteer will explain how they 'failed' at something; they’ll explore what went wrong and share the lessons.
Why do we do this? Because we want to be more comfortable with failure. By talking openly, we all become more at ease with the prospect of failing in our own ventures and, in turn, it makes us more adventurous and less ruled by fear. Ultimately, we focus on failure because we want to innovate - and you can’t have one without the other.
If you have a culture that encourages people to try something new without fear of failure, then there are at least four positives.
An admission of failure or making the wrong decision, lets you move on quickly. I’m an American football fan and saw a brilliant example of this at my team, the Carolina Panthers. In 2010, they drafted a quarterback from Notre Dame called Jimmy Clausen. He arrived amid huge hype; he was to be the golden child. The problem was that they quickly learned he wasn’t right for the NFL (National Football League) and his numbers weren't great, which is why the Panthers soon drafted Cam Newton to replace him. This season, Newton was named most valuable player in the NFL and got the Panthers to the Superbowl. If the team hadn’t cut its losses on Clausen they’d have struggled for many seasons. An admission of failure let them move onwards and upwards. The same is true in business.
Businesses often resist a change of direction because it can be seen as an admission of failure and because they are reluctant to invest further. However, if the current situation is hampering the business, then further investment and a fast change of direction could reap benefits sooner.
Too often we stand by bad decisions for the worst reasons. We’re afraid of upsetting the person who came up with the idea, especially if they happen to be our boss. The Gambler's Fallacy and Loss Aversion are two well-documented cognitive biases that cripple investors when the value of their shares fall. If you are afraid of failure you are at risk of trying to spin every situation for the better. That’s dangerous. Only when your emotions are calm, because you're not afraid of failure, can you clearly see the positives and negatives of each scenario without distortion.
Employees must be free to air ideas, however large or small, sensible or crazy. They’ll only do that if they know they’ll be supported. The Media Lab at the world-renowned Massachusetts Institute of Technology sets up groups briefed to generate radical ideas. When I was at Bank of America, the bank designed a sensor that tracked the mood of customers when they entered a bank. The staff would be warned if the customer was angry or happy, enabling them to respond accordingly. We didn’t adopt it, but it’s an example of the fantastic innovation that can flow in a creative environment.
If you want to win big you need to take risks – even though you’ll sometimes fail. By contrast, if you're risk-averse, you'll miss out. Here’s another sporting analogy for you: in his early days, around 1918, baseball legend Babe Ruth led the American League for home runs. But he also had the highest number of strikeouts, which means a player is out. He was comfortable with this failure, knowing his ‘hit for the fences’ attitude would give him more home runs, despite the high risk of being out. It is just the same in business – it's a balance of risk and reward. Try to identify the things you are willing to fail at (or at least risk failure at) to deliver your bigger wins and overall success. This can involve making sure the focus is on the things that really matter, rather than the granular things that happen along the way.
I believe you have no choice but to get comfortable with failure, to take calculated risks, encourage a culture of trial and error, and learn by sharing experiences. The key is to ensure you have effective feedback loops – re-deploying resource and investment towards those ideas that are working out. Innovate through trial and failure, be agile and nimble and instil a culture that lets everyone thrive in an environment where they are encouraged to have ideas.
We use failure talks to hone our company culture. I’d love to hear what you do- if it’s good, we'll try it!
To share your experiences with Grant Thornton and find out more about how your company can build a culture that learns and benefits from failure, please contact gtimarketing@gti.gt.com