One of the few certainties across the business landscape is failure – the story of Steve Jobs going from ousted employee to successful CEO has been repeated enough to become cliché. Given the frequency of failure, especially among start-ups (where approximately 50% fail before age 5, according to U.S. Census Data), it is vital to use failure as a springboard for success. Just as is the case for almost every business scenario, approaching failure with a methodical process to maximize the learning experience is important to create a springboard for future success.
A recent article in the Wall Street Journal, “How Not to Flunk at Failure," explored this very concept and found a distinct set of four practical steps to leverage failure as a resource rather than an unfortunate byproduct of risk-taking. These four, which will be discussed later in detail, include: admitting you’ve had failures, asking the right questions after failing, thinking in terms of experimentation and ending failure on a high note.
In Hilltop Consultants and other student groups, a certain degree of “failure” is inevitable – even the most capable and dedicated groups run into failure at one point. From my experience in Hilltop Consultants, the organization has done a great job in weaving these four practical steps into the culture of the organization, albeit likely unintentionally. By openly acknowledging the usefulness of failure, student organizations, start-ups and nonprofits can all benefit from the unique resource.
Admitting past failures is a great way to set the tone for a group’s culture. Too often, leaders try to implement a “win-at-all-costs” mentality, where failure is considered to be “not an option.” While this style may appear to have its benefits in its promotion of competitiveness, work ethic and resourcefulness, it discourages risk-taking and creativity, a net harm. Trial and error has been shown to deliver the strongest and most innovative results – promoting this mentality is only possible if employees and group members do not fear the consequences of failing. One tactic suggested by the Wall Street Journal, a tactic I unintentionally have used in the past, is to use humor to acknowledge that failure is inevitable. For example, I often make jokes about my first client presentation with Hilltop Consultants before my group’s first presentation of the year in order to calm the nerves of new consultants and show them that there’s nothing to be afraid of.
The second step to take advantage of failure is to re-focus the discussion immediately after failing. Rather than ask “who” and assign blame, the best leaders ask questions that can lead to change: what, where, how and why. This is an area where institutionalization of a “culture of failure” can be useful, including in organizations like Hilltop Consultants. Even if failures do not end in witch hunts, the value is lost if the takeaways are recorded only in the memory of the participants. A potentially valuable activity is conducting a post-mortem – when a project or component of a project fails, bring the team together to discuss the what, where, why and how questions. By recording the lessons in openly available writing, all team members have a lasting record to look back upon to avoid similar failures in the future.
As a Finance and Operations major with a biology minor, the third step in leveraging failure is personally interesting. The authors suggest discussing failure in the context of a laboratory experiment. Discussing failures in terms of hypotheses, assumptions, experimental results and conclusions can help to de-stigmatize the process of failing and instead emphasize the idea that every failure is another data point to guide future projects. By understanding that negative results are potentially more useful than good results for future projects, team members are encouraged to think critically about failures.
The final step to utilize failure as a strategic resource is to embrace behavioral psychology and end failures on a positive note. Studies have shown that expectations are strongly based on memory of emotions at the end of experiences – by forming and association between failure and happy emotions, more innovation and risk-taking can be encouraged. The article mentions an extremely powerful anecdote – Severin Schwan, CEO of Roche Holdings, hosts champagne lunches for lab teams that fail to reach positive results. He partially attributes his innovative culture to this very practice.
PwC found that the top three reasons for business failure in 2014 were poor estimates during planning, mid-project changes in scope and insufficient resources. These are seemingly unavoidable problems I’ve run into during my experience in Hilltop Consultants and other student groups. Given the frequency of these mistakes, it makes sense to institutionalize a structure to learn from them – if you pay the cost of failure, you should definitely reap all the rewards at the same time.