Acceptable F-A-I-L-U-R-E

24 July 2014

At the heart of my work is an interesting paradox: that sometimes in order to achieve the greatest long term returns on investment (what we sometimes call efficiency, productivity or just plain “bang for your buck”) it is necessary to embrace a greater degree of short term failure along the way.

The simple thought experiment I’ve always used to illustrate this is a coin toss in which every time you lose you lose a pound, but every time you win you win ten. For some this still feels like a gamble and I’ve had many a senior manager initially refuse the proposition.

But think about it for a minute: if half the time you lost a pound and half the time you made ten pounds – do it in your head for a moment or, better still get a real coin and play it out – even a four or five spin losing streak is cancelled out with one winning one. Five losing spins and five winning spins nets you a handsome £45. Add as many zeros onto this as you’re prepared to invest each time. But remember you don’t make a penny if you’re not prepared to lose – or fail – along the way!

This is not always easy to understand in theory let alone accept in practice. We live in a world where – for very good reason – failure is often frowned upon. One person’s failure can often mean that another person has suffered in some way as a result. Failure has become synonymous with incompetence, ineptitude, uselessness and general unacceptability.

The problem with all these associations – valid though they are in one sense – is that we live in a world of rapidly accelerating change in which the only way to keep up – let alone forge ahead – is to have people who are prepared to try new and different ways of doing things. This applies to both the macro level of strategy and the micro level of individual decision-making and people’s willingness to embrace change.

I’ve worked now with over 100,000 amazing people in over 300 brilliant companies – leaders in their field all – and I can categorically say that most people in most organisations, no matter how talented or senior, are scared of making mistakes.

Given the backdrop against which I’ve set this situation, it’s hardly a mystery to understand the reasons behind it. Embracing potential failure is counterintuitive and therefore difficult. But if people don’t feel they can fail without censure they are unlikely to be highly motivated to do things which may have that very end result – i.e. take a risk!

It strikes me that we therefore need a new way of thinking about failure in business; one which accepts that – while errors and inaccuracies are never welcome – it is possible to distinguish between desirable acceptable failure and undesirable incompetence when assessing someone else’s work.

With this in mind I propose the following manifesto for Acceptable F-A-I-L-U-R-E  in business and life. From now on failures should be considered to be acceptable if and when they fulfill one or more of the following criteria:

1) They represent the perpetrator’s FIRST ATTEMPTS at something new.

If you want to get people to do new things, you can’t come down on them just because their early attempts don’t work. When things are new – certainly if they’re new to everyone but even if they’re just new to the “new guy” – you can’t go judging them by your standards and experience. If they did their best; were untrained or didn’t know better for whatever reason go easy on them. It’s how they respond to the experience that counts.

2) If the failure has an ACCEPTABLE DOWNSIDE.

It’s easy to let the smallest of losses wind us up. The root cause of the stigma of failure in the first place is that most humans are ultimately loss averse. That’s not necessarily a bad thing. But if someone screws up and the worst result is that they have to spend half an hour doing it again, well it’s not the end of the world. Don’t sweat the small stuff, as they say, especially if the person has learnt from the experience.

3) If it’s INNOVATIVE in intention.

You know the stories: Eddison, Dyson, Jobs… and millions of other less charismatic  but no less important innovators and scientists make progress everyday only by being prepared to fail along the way to their ultimate success. Dozens, hundreds sometimes thousands of prototypes; countless fruitless attempts in the hunt for the one that will change the world. Change is easy, improvement is difficult. It doesn’t happen overnight.

4) If it’s part of a process of LEARNING.

Geoff Colvin’s studies into successful ice dancers in the States revealed a strong correlation between medals won and number of times they fell over during practice. Makes sense when you think about it: we only grow when we test ourselves beyond the level of our current ability. But how much time and space do we give ourselves and others to actually do this in real life? It doesn’t have to be chaos in the meantime. Learning can be a managed process. The fact is that your people can be good now or they can extraordinary later… it’s your call.

5) If the situation is highly UNPREDICTABLE.

Some tasks involve piloting known territory. Others however, by their very nature, embrace a greater degree of uncertainty. Trialling, testing, leading pioneering… Navigating choppy waters or high risk markets requires greater latitude and different permissions in order to motivate people to do their best. Simply put, when failure is more likely as a result of the terrain then this needs to be agreed upfront. People engaged in these kinds of missions need support and understanding or no-one is likely to take them on in the future.

6) When the potential REWARDS are huge.

Researching a new drug; writing a book; developing a relationship with a new client; doing extra-curricular training… All of these attempts to bring about noticeable step-change instead of incremental advance are bold and, given certain circumstances, to be encouraged. But all are difficult. Some could fail. Does that make people wrong to try? How you reward and punish people for their actions will ultimately determine how people will behave in the future. What is acceptable and unacceptable in your organization?

7) When the EXPECTATION is positive.

All of which brings us back to the coin toss. The technical term for the return on investment that one experiences in such a situation is EXPECTATION. Expectation is what you can EXPECT to receive if you carry on doing things a certain way. Not necessarily on this attempt… but in the long run if you’re prepared to hold true to certain strategic approaches.

Forget the coin toss for a moment, imagine you’ve got a sales person who is a little more erratic than the rest of the team. They go for longer periods without apparently achieving anything of note and then every now and again they land a massive client. Every time they do it it looks a little lucky but you’re happy to humour them – as long as they keep delivering more than the norm.

Well here’s a thought, what if it’s not luck but just a different strategic approach. Consciously or unconsciously (often the latter) this particular individual just likes to work in a way which is less reliable but more adrenaline fuelled: they keep odd hours, they don’t always say the right thing, in short they FAIL more often but they generate greater value in the long term as a result.

Whether you can deal with their downsides is your decision to make and there are plenty of cultures which can’t and that’s fine. But risk takers come in all shapes and sizes. There are plenty of ordinary people in companies right now who are happy to wear a suit and tie but would still like a little more latitude than they get right now in order to do things differently – and better – than they’re currently being done.

But “latitude” doesn’t mean just platitudes. It’s easy to tell people to “take more risks”. It’s much harder to keep them motivated when the failures kick in because the task it new or difficult or challenging or unpredictable. When that happens you realise it’s necessary to have a new pact, a new set of expectations, a re-aligned set of criteria for what is unacceptable acceptable F-A-I-L-U-R-E

First attempts

A cceptable downsides

I nnovative

L earning

U npredictable terrains

R ewards that are huge leading to

E xpectation that is positive and extra-ordinary.

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