Sunday, November 10, 2013

Culture of Risk-Tolerance: What does it require by Learning from failure?

The culture of failure-tolerance is soil for Innovation. 

It's easy to agree on the value of failure if the failures help expose the fundamentals needed to succeed. So why is it so difficult to create the culture which enables learning from failure? What does it require by learning from failure? And how to build up a culture of Risk-Tolerance?

In order to fail, a company must take "direct risks" substantial enough that the potential for failure is real. There are direct and indirect risks, where "indirect risks" are those associated with inaction and procrastination, in effect the risks of not taking risks: direct risks are proportional with opportunities; the more risks you take, the better opportunities you get.

Excepting for blatant managerial incompetence, or malfeasance, failure must NOT lead to recriminations and scapegoating: Finger pointing, is a big cultural hurdle for many companies, as that is all too often the first and primary reaction to failure. The human tendencies of information silos, "protecting turf," undermining another's turf, positional power, etc. are enough reasons to kill innovation.

Credit & Criticism - Create a positive environment where 'true' failures (unexpected, inadvertent) are not punished. Do systematic failure analysis and learning out of the results. Most important thing for a company or organization can do to learn from their mistakes is to understand them within the context of how the organization works.

Determine what went wrong and for which Communication is the Key. A great way to start this process is for the leader to tell some stories about how he or she made some failures early in their career and the lessons they learned. This is the power of story telling - it can change a culture by sending a clear signal that it is OK to fail – if only you learn.

Set the positive tone: When you reframe the word "failure" to be more positive, you open the door to learning. Failure is often viewed as falling backward instead of leaning forward. When someone fails, try asking them what they learned instead of focusing on what didn't work or chastising them for overlooking something or making a mistake

Curiosity is a great attribute to create the lure. When you are ready and willing to ask questions as to what was the source of failure, what worked, what didn't, why, etc... you are on the path to gaining value. Too often, we want to blame someone or something for the failure instead of using it as a launch point for improvement.


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