During the first workshop of the Stanford Seed Transformation Program, we play a video featuring business leaders from past cohorts, titled "Problem Solvers". One thing they speak about is how often they've failed and how they learned valuable lessons from those failures. It almost seems like they're glorifying failure (you know, the regular clichés: "if you haven't failed you aren't trying hard enough"). This prompted me to think about how we should think about failure.
While there is merit to the idea that an organization shouldn't vilify failure, or punish someone for failing, Jesper Sorenson puts it well when he says "I don't have a problem with well-intentioned failure" (emphasis added). In other words, don't encourage an environment in which people are being reckless, or failing for the sake of failing. The failure must be well-intentioned, in that you thought you had the wrong answer, but it turns out you didn't.
Second, make sure that lessons from failure are well learned, throughout the organization. Any mistakes should (as far as possible), be new mistakes. If you shrug off failure, forgive people for failing, but don't adequately learn from the failure, then you've just flushed a lot of time and money down the drain. Have a process to learn from failure and to disseminate those lessons. Some organizations have a "Fail-faire" where they disseminate these lessons. The World Bank has an excellent blog post that covers how to organize such an event.
Lastly, make sure that any experiments that are likely to result in failure are circumscribed so that they don't take down the whole organization. SMEs have limited resources, and a significant failure may bring the whole organization crashing down. Don't experiment with that important client who is fussy and demanding; find a smaller client who is forgiving and willing to take a chance. Don't roll out that new initiative throughout the organization before testing it with a smaller part first.
By all means, go ahead and fail, but ensure that failure, if it were to happen, gives you the benefits you seek from it. Test new ideas, learn new lessons, create a culture of risk taking, but manage it well.
I happened to recently listen to Freakonomics episode 400 ("How to Hate Taxes a Little Bit Less") and it fascinated me.
Particularly in countries like India, where civic services are extremely poor, a tax payer feels like his or her taxes are being funnelled into a big black hole. The way it currently works is that you pay your taxes, and some opaque process involving central government bureaucrats, parliament, state government bureaucrats, state legislatures, city governments, councils, etc., attempts to funnel that money back into the hands of the local ward official. Remember, that same ward official's office is just around the corner from me, and he/she is responsible for fixing the potholes, keeping the streelights on, picking up garbage, maintaining my neighbourhood public park, etc. He feels no sense of responsibility or accountability to me, the tax paying resident of the ward, but rather to those who allocate his budget in city hall and above.
What if, instead, I could allocate a portion of my local taxes (say 50% of my property tax for example), to a specific set of heads? What if each department of the local ward office got 50% of their budget centrally and the balance from what citizens allocated to them? Then they'd have to show concrete results in our neighbourhoods. They'd have to hold community meetings in the community to explain what their plans are for next year and what they did with the money last year. They'd have to actually show results, because we'd move our money to the department that made the best use of the money we gave them. To avoid their spending a ton of money on publicizing their achievements, we'd restrict their marketing budget (perhaps just 5% of the total budget).
Radical idea, isn't it? I'd love to hear reasons why it might not work, so that I can refine this model.
Executive, entrepreneur, investor and mentor to social entrepreneurs, golf and squash addict, author of thrillers... In short, an amateur dabbler in new experiences, and provoker of thoughts.