Why failure is good for business
Nobody likes to fail. But failure can be vital to success, encouraging business owners to learn from their experience, try new management approaches and innovate in new markets. Here, we ask a corporate psychologist about using failure to your advantage – and find out why it might just be the best thing to ever happen to your business.
When the Harvard Business Review conducted a 10-year research project to discover what made the most successful CEOs, it met with a surprising finding. Of the 2,600 leaders surveyed, almost half (45%) had been through at least one ‘major career blow-up’, such as being fired, botching an important deal or making a hash of an acquisition. Even so, 78% of these executives had eventually landed the top job.
Historically, business and workplace culture has treated failure as a taboo subject. Speaking about it openly, it was assumed, carried a serious risk to the long-term health of your career. But things have started to change.
Fail fast, fail often?
Somewhat ironically, journalist Elizabeth Day’s book, How To Fail, has been a bumper success this year, enjoying a prolonged stay near the top of the bestseller lists. In technology, the mantra of ‘fail fast, fail often’ is now embraced by start-ups from Silicon Valley to Saudi Arabia as something that was once stigmatised is now glamorised. But, of course, failure hasn’t suddenly become a good thing in and of itself. It’s a little more complicated than that.
‘For both organisations and individuals, failure can be disastrous,’ says Chris Martin, a business psychologist at the Silvermaple practice. ‘But it can also be the defining moment; a turning point that enables a business that was struggling to suddenly perform or excel.’
As Stuart Firestein, professor of biology at Columbia University, writes in Failure: Why Science Is So Successful, there is more than one type of failure. ‘Good failures […] are those that leave a wake of interesting stuff behind: ideas, questions, paradoxes, enigmas, contradictions.’
‘Businesses and individuals have a choice,’ says Martin, ‘whether they want to use failure to their benefit or to allow it to become something that works against them.’
Martin, who spends much of his working life on consultancy projects designed to change the culture of organisations, says one of the things that often prevents companies from taking advantage of their setbacks is a culture of defensiveness. ‘We psychologists call it attribution,’ says Martin. ‘People attribute their failure to other things; people other than themselves.’
But this way of thinking prevents ‘double-loop learning’. ‘That’s when we ask ourselves: “What went wrong? What part do I have to play? What learning do we get from the learning?” That’s actually the most effective way.’ Indeed, this kind of ‘growth mindset’ (as described by Stanford psychology professor Carol Dweck) seems to play an important part in senior executives’ careers. The Harvard Business Review CEO Genome study found that CEOs who thought of setbacks as ‘failures’ had 50% less chance of thriving.
Learn to grow
Different people, companies and entire industries often have totally different attitudes to failure, says Martin. And while the risks and danger involved in, say, the transport or energy industry might mean that this is understandable, the status quo isn’t always right. This is a theme picked up by Matthew Syed in his book Black Box Thinking, which is subtitled The Surprising Truth About Success (and Why Some People Never Learn from Their Mistakes).
Syed contrasts the way that the aviation and healthcare industries deal with failure. Aeroplanes are fitted with so-called ‘black boxes’ that record reams of data from each flight. If and when something goes wrong, that data is analysed to discover the problem and find a solution – of engineering, management or some other process. It’s largely thanks to this approach, Syed argues, that the accident-rate for major airlines has been driven down to just one crash for every 8.3 million take-offs.
Compare this, he says, with healthcare. In the US, the ‘egos’ of doctors and a ‘fear of litigation’ means that rather than learning from its mistakes, the healthcare sector covers up and repeats errors. ‘According to the Journal of Patient Safety, 400,000 people die every year in American hospitals alone due to preventable error. That is like two jumbo jets crashing every day.’
Don't fear the feedback
In Martin’s experience, those who are best at turning disaster into triumph are often wired in a similar way. Many of them are professional sportspeople, like Olympic gold medal-winning rower Alex Gregory, with whom Martin has collaborated on workshops and courses.
Gregory has suffered injuries at crucial moments, missed selection and even turned to gardening to supplement his income along the way. But he also has two Olympic gold medals, five World Championship gold medals and an MBE to his name. ‘He attributes his success to the way he learnt and dealt with failure,’ says Martin. ‘One of the key things is being hungry for feedback, even if it’s negative. And, of course, having a good coach, which he did in Jürgen Gröbler – someone who was able to give the right advice at the right time, often very subtly.’
But corporate organisations can be quite different environments from elite sports teams. In the context of a more traditional workplace, Martin says it’s especially important to communicate the type of behaviour that’s desirable. ‘Then, it’s about identifying opportunities to put in place consequences to reinforce and encourage those desired attributes. Most organisations have in place enough unpleasant things to bring to bear on people when they don’t do the right things, but there’s normally an absence of positive reinforcement for high performance.’
It isn’t possible to win a gold medal at work – at least, for most people. But perhaps that’s the way to get failure to work for you, or the people you manage: making it a little more about the carrot and a little less about the stick.