Success Often Comes from Failure

It’s human nature to want to succeed: most people try hard to get good grades in school, to advance in their careers, to maintain happy and sustainable relationships, heck, even to win at that occasional poker game or round of golf.  Organizations are similar: they want long-term, sustained success – happy, loyal customers; happy, loyal employees; happy, loyal shareholders or funders; and products, services, or programs that offer a competitive advantage in the marketplace.  Organizations are in business to win.  And, in good organizations, that mentality permeates throughout the enterprise – where leaders create an environment for all workers to succeed in satisfying customers, improving processes, and creating sustained value.  Indeed, helping organizations accomplish that goal is central to the Performance Excellence Network’s mission.  But in business (as well as with nonprofits), there is a real opportunity – and, in fact, a real need – for failure…

According to Tim Harford in his book “Adapt: Why Success Always Starts with Failure,” wherever you look, success emerges from trial and error – from trying new solutions, new products, new processes, new business models – experimenting with those that work, learning from those that don’t work, and adopting success while avoiding repeat failures.  As he says, try variations on what you already have, filter out the flops, and copy the hits.  Really, it’s all about learning – both personal and organizational learning.  It’s about evolution; it’s about adaptation.  In order to move two steps forward, sometimes organizations need to take a half step back.

The foundation of organizational learning is really rooted in the scientific method and is embodied in the fairly simple Plan-Do-Study-Act (PDSA) concept, made popular by W. Edwards Deming.  That method is all about systematic learning and discovery: developing a hypothesis, a plan, or an idea for a new product, service, or process; piloting it on a small scale; learning what works and what doesn’t; refining it; and then rolling it out on a larger scale.  By its very nature, this process requires experimentation and failure – sometimes repeated failure – as you eliminate things that don’t work and focus on things that do.  As captured by Ron Ashkenas in an August 14 Harvard Business Review blog: “[A failure] helps you cross out one more invalid hypothesis and gets you closer to figuring out what will really work, whether you are at an early stage of development or trying to determine the best way to commercialize and scale.”

Indeed, the art of failure has been embraced by many successful companies.  In his book, Hartford cites many examples of failure helping some of the most innovative technology companies.  In the 80s, Microsoft defeated both IBM and Apple in the personal computer space, capitalizing on the superiority of its software platform, Windows.  But Apple learned considerably from that experience, developing new business models for delivery of music, video, games, and eventually apps (iTunes) as well as developing a very different hardware platform that leveraged pad technology (and which is revolutionizing computing and smart phone/device technology).  If it weren’t for Apple’s initial failure in the PC space, they may not have been quite as successful with phones, pads, and pods.

As another example, Google has learned through much trial and error what really works in search engine technology and continues to learn and evolve in the space I’d call “organizing knowledge.”  Google, widely considered one of the most innovative companies in the world, understands that breakthroughs come from dogged experimentation: it lets its engineers spend 20% of their time on pet projects, spawning both hits and misses.  And that’s a philosophy embraced – and probably first cultivated – by Minnesota’s own 3M.  Most people know that 3M’s culture embraces innovation through trial and error – allowing employees time to tinker with ideas and concepts, some of which eventually become highly profitable products, but many of which do not.  Think Post-It Notes, which as legend has captured, came from failure in application of an adhesive, but somehow serendipitously landed on paper, resulting in just enough stickiness to tack those little slips of paper to walls, whiteboards, and other papers.  As a result, a billion dollar product was born out of initial failure.

Hartford claims that “in most human endeavors, failure is necessary, useful, and must be tolerated.”  The key, according to Ashkenas, is to fail and fail fast, “conducting rapid tests with low risk.”  He goes on to give an excellent example of how consumer products companies sometimes post new products online that really aren’t yet available (they just show up as “out of stock” when you try to place the order).  In reality, companies are testing whether customers are actually interested in buying such products, which indicates the extent of market demand and helps leaders determine if there’s merit in actually developing and launching the product.  Cheap market research, if you ask me.

But the value of failure goes well beyond product development.  Here are some systematic, proactive ways that organizations can create opportunities for failure – and therefore opportunities for learning and improvement:

Successful organizations frequently “stress test” their core processes, examining how much throughput they can take while maintaining performance within desired tolerances.  Obviously, this works well in manufacturing, particularly where high volumes necessitate finding the outer edge of what’s possible within a process.  But this practice also works in service businesses and nonprofits: how many customers can you serve with a given process before wait times exceed customer requirements; how many stakeholders can you serve with a certain number of program case managers before outcomes begin to erode?

Successful companies also try to sabotage their own information technology systems, trying to simulate hackers and test the rigor of the safeguards on their data.  In today’s environment with cyber attacks, terrorism, privacy concerns, and identity theft, testing IT systems to the point of failure is critical for organizations to stay one step ahead of threats.

Sanctioned failure also plays a vital role in workforce development.  It’s widely known that adults often best “learn by doing.”  And “doing” sometimes requires trial and error, so long as it results in learning, development, and improvement.  Indeed, many people learn the greatest lessons by trying things that are outside of their comfort zones – acquiring new skills, trying new job roles, learning new content.  Oftentimes, these experiments result in failures, but it’s incumbent upon leaders to nurture employees through the process: to encourage risk taking, to coach people through the learning, and to reward (even the small) successes along the way.
Spend time “in the trenches.” Umair Haque in the Harvard Business Review article “Why You Should Focus on ‘Worst Practices’” (11/17/10) says that leaders could benefit from spending time actually working in the operations of their organization: “[if you] want to discover what really sucks about your distribution, marketing, pricing, service, partners, or products…then spend some time in the trenches.”  He references the TV show “Undercover Boss,” which helps leaders get a healthy dose of reality – getting out of the board room or the top floor with the cushy carpet, and witnessing first hand the challenges, problems, opportunities, and failures that happen in the core business.  “Managing by walking around” (MBWA) was made very popular in the 80s.  Today’s equivalent is “rounding,” where leaders spend time in the core operations, talking to employees, understanding what’s going on, and maybe observing or actually performing job duties on the front line.  It is not only useful in helping leaders identify failure points in its current operations, but it also does wonders for increasing workforce morale, engagement, and communication.
Another concept recommended by Haque “eating your own dogfood” – not just observing or participating in your organization’s processes as recommended above, but also consuming its products and services as if you were a customer.  You can outsource this function to a third party (mystery shopping is a concept of paying a firm to act as if they are a customer, and then having them provide feedback to the company on the product, service, and/or experience so that failures can be identified and opportunities for improvement determined).  But I think there’s also value in leaders – of all types and in all levels – experiencing the products themselves.  If you sell fast food, eat it on occasion; if you sell financial service products, try applying for a loan sometime; if you educate students, try taking a cource offered by your institution (or just registering for one); if you provide social services as a nonprofit, participate as a client/stakeholder to see how the experience feels.  Putting yourself in the shoes of your customer will really open your eyes to potential failure spots in your product and service delivery, hopefully identifying improvement opportunities before actual customers experience the same issues.
Haque also recommends that organizations – particularly those that are struggling – should sometimes look backwards, examining a time where they were successful, trying to discern what made the organization great, what caused the organization to lose its way, and most importantly, why the organization lost it.  In other words, identifying the root causes of the failure.  Once upon a time, Sony dominated the market with its Walkmans, Motorola dominated with its (analogue-based) cell phones, and Kodak (and Polaroid) with its cameras.  In most cases, something(s) caused the eventual fall of these successful giants – be it a loss of customer focus and missing a changing market, a failure to invest in new technologies, poor leadership decision making, or some other factor.  But recovery and reinvention is possible (think Apple), so studying what once made you successful may help you return to those levels of prominence.
Finally, one way to systematically identify failure points, organizational weaknesses, and opportunities for improvement is to conduct an organizational assessment against a validated set of best practices that have been proven to drive and sustain high performance results.  Namely, conduct an evaluation against the Baldrige Criteria for Performance Excellence.  Mike Sather, director of the VA Cooperative Studies Program out of New Mexico (a 2009 Baldrige recipient): …Baldrige and the assessment “actually enabled us to transform our organization from being good to a great organization, one that is very high-performing.”

The Performance Excellence Network (along with our partners in the Baldrige Performance Excellence Program and 33 other state quality programs) all offer evidenced-based assessments that provide a diagnostic for your enterprise.  Yes, some of these options provide recognition (an award that can be celebrated with your employees and marketplace), but the primary reason organizations conduct these assessments is to identify strengths (on which to build or sustain) and improvement opportunities (on which to focus energy and resources to close the gap).  Think of it as an annual physical for your business.  There’s no better way to find potential process or system failure points than by engaging in a proven third party assessment — it’ll help you focus your efforts, align your processes and activities, optimize your resources, and improve your outcomes.  (For more information on any of the three assessment options offered by the Performance Excellence Network, email me atbrian.lassiter@performanceexcellencenetwork.org.)

The common thread in all of these ideas is in trying to encourage or proactively find failure before it negatively impacts your enterprise.  In some ways, these ideas all fall under the label “if it (doesn’t appear) broken, then break it” – or at least try to break it.  Finding breaking points, encouraging failure and rapid learning, and stress testing your organization are all ways to challenge the status quo and proactively improve performance.  As Haque puts it: they are ways to…challenge the “tired, toxic assumptions of business as usual.”  They are also ways to inspire innovation, motivate your workforce, and delight your customers.

Of course, there are examples where failure isn’t desired – for example with nuclear power or airline safety (I don’t want my plane to be the one in a million that falls from the sky), financial services and banking (where another meltdown would not be desired), or major surgery (where even teaching hospitals rely heavily on experienced surgeons to conduct the most complicated procedures).  But even in these examples, organizations – and sometimes entire industries – must learn and adapt from failure.  The result is hopefully redundant systems (as in the case of airlines and power plants), safety nets (as in financial triggers in banking and securities), and expert consultations (as in healthcare procedures – heck, the entire field of medicine is based on decades of evidence-based protocols, which really are the result of failures, trial and error, and systematic learning).

We’ve been taught that failure is bad.  But in reality, failure has real value in today’s organizations.  So long as leaders encourage risk-taking, proactively seek to identify weaknesses and potential failure points, and commit to systematic learning from actual failures, organizations will adapt, sustain, and thrive.

Yours in Performance Excellence,

Brian S. Lassiter
President, Performance Excellence Network (formerly Minnesota Council for Quality)