PRIMARY RESEARCH
Learning from failure is explored within small and large businesses in three distinct work environments: small businesses, startups, and a multinational organization. To complement the academic literature on this topic, I conferred with industry experts who were able to provide insights from actual practice. I adopt Savoia’s (2019) penchant for early testing of assumptions, as a way to ascertain market relevance at the premise stage, before devoting time and energy to an idea that has no traction.
SURVEY DESIGN
To get an overall picture of how failure is perceived in workplaces, and determine if this is a topic of interest, I post an anonymous survey to Hyper Island alumni, inquiring about fail-friendly and fail-averse practices they encounter at their work. 24 respondents provided experiences ranging from more experimental-minded workplaces that were more open to unpredictable outcomes, to rigid environments characterized by fear and punishment. Respondents were provided the following statements, with two possible choices: ‘that sounds like us’ (yes) or ‘that's not us’ (no). Percentages listed are affirmative responses.
58% Employees are expected to make mistakes
25% Employees are punished for their errors
50% Failures are analyzed thoroughly, and right away
58% Employees fear embarrassment and humiliation from errors they make
42% Errors are shared company-wide to avoid repeating them
38% Sharing errors with coworkers, can be dangerous
58% Employees minimize risk to avoid exposure to failure
Interestingly, there is an equal percentage of employees reporting workplaces that recognize the inevitability of failure and workers who fear the embarrassment of failure at their companies. So despite many companies tolerating failure, a large number of employees do not seem comforted by this. This provided early recognition that while company policy is a factor, a failure-friendly mission statement is insufficient to overcome human nature. Schein (1992) submits that a high level of trust is necessary to overcome both personal and societal restraints. Later on, when I conduct a series of expert interviews, the need for trust and psychological safety reemerge as key components in developing a practice of learning from error.
What is noteworthy, is just how small a number of respondents had any fail-positive work experiences. More common are responses of: 'never worked at such a place', 'my current team does not have this culture', 'not since Hyper Island' or simply 'n/a'. Only 3 out of 24 respondents described fail-friendly working environments, all of which were in new and small ventures, including a two-person agency, an early stage startup, and an autonomous team within a larger company. Ultimately, management dictates the level of experimentation that is acceptable: 'Our leader is young, likes to experiment and allows us to come up with different ideas. So far we have grown a lot, and already made a lot of mistakes and corrected them'. Employees who make up new ventures must develop the experience they lack while on the job: 'we don't talk about it as failure, but we learn by doing’. Unlike established businesses which have multiple systems firmly in place, new operations will first need to determine what is actually needed: 'many of the routines and processes needed are not yet in place, we are forced to shape our work processes with quite some experimentation!'.
Participants share which workplace characteristics promote a fail-friendly environment, which I divide under 3 categories: systems, culture and practice. At the systemic level, leadership must be on board, internal communication must be consistent, and project structure must be flexible enough to allow for exploration: 'Management must understand that even when we do our best, shit will happen anyway and we will deal with it'. A company’s culture that instils trust will encourage openness among teammates. Furthermore, it should employ a bias towards action, which rewards experimentation and accepts a degree of failure. Practices that respondents suggest which promote a fail-friendly agenda relate to the sharing of company knowledge through reflection, check-ins, feedback and documentation.
Not all fail-friendly experiences shared are positive. At a company whose tolerance for failure is limited to the early experimental period, projects are said to stagnate at this stage. The public sector is an example provided by a respondent, who contends that the bar is set so low to almost discourage success and court failure. This example exhibits a different kind of failure which results not from experimentation, but from lack of it. Based on Sitkin’s (1992) criteria of intelligent failure, this variety of failure that is not designed to produce new learning through measured design and immediate feedback is ineffectual in terms of organizational intelligence.
It is not surprising that fail-averse workplaces outnumber fail-friendly, but results 6X higher affirms that fail-friendly is an anomaly, while this remains the norm. Nearly 70% of survey respondents described workplaces characterized by inflexibility, punishment and stagnation: 'Rigid structure, hard-and-fast rules/ways of working, lack of motivation within the team, working without a purpose, being ashamed of failing restraining the team from even trying'. Fear and embarrassment are factors that limit growth potential: 'People try to hide their mistakes and there is a fear about doing something wrong and lose their job'. A common theme that surfaces is the desire for the opportunity to grow at one’s job: 'There was no space for personal development and thus no space to err and learn'. A company’s inability to try new ideas leads to stagnation: 'No challenges, no evaluation. Boring'. Organizations may claim to promote experimentation which is not apparent in practice: 'It’s said that we’re fail-friendly but in reality that doesn’t show anywhere in any way'. Companies tend to be good at promoting their successes, but are highly uneasy to acknowledge failure: 'Only successes are shared'.
Observations
Individuals work for more than a paycheck, and expect to be challenged. To advance their career aspirations, they hope to enhance their understanding through exploration. An organization’s unwillingness to accept error limits growth potential and lowers job satisfaction, while limiting innovation. Reason (2000) contends that a blame-oriented environment dampens opportunities to learn from mistakes, by encouraging concealment. Swift punishment may give the appearance of eradicating failure, but unless root causes are analyzed, McArdle (2014) warns that mistakes are likely to be repeated. Edmondson’s (2011) scale of failure encourages organizations to discern between failure that is blameworthy and should be punished, to praiseworthy, which potentially produces knowledge, in hopes that they stop treating all failures equally.
INTERVIEWS
Small businesses
Suspecting that the scale of a company potentially influences its ability to learn from error, I turn first to new small ventures in order to later compare my findings to that of a case study conducted within a larger and more structured organization. One of the things that makes small businesses interesting is that despite their size, small sole proprietor or family-owned businesses are actually substantial in aggregate numbers. Employing 60% of Americans, they create 64% of the US gross domestic product (Score.org., 2018). Moreover, bootstrapped businesses seem like an ideal candidate, as limited experience ensures the presence of regular error in the process of finding their way. And while large companies can recover from million dollar mistakes without breaking a sweat, many small businesses have everything to lose and cannot afford not to learn from their mistakes.
I am curious to understand the relationship between tolerance for risk and tolerance of failure. Small business owners are asked how errors are perceived whether made by them, their staff, customers, suppliers or contractors. What I was trying to uncover is if they had actively promoted a culture accepting of failure as a source of learning, and which practices help facilitate that. Small businesses show how open communication and regular feedback facilitate learning from mistakes. Owners seemed to intuitively understand that failure provides learning opportunities. 'Many mistakes out of my control gave me a little bit of anxiety at first, but I slowly learned to focus more on how to turn these situations around' – Karim. Tolerance for risk emerges as a common characteristic, which is not surprising given that going into business is a risky endeavor. 'Forward thinking, sometimes you will do wrong, sometimes you will do right, so you must possess some kind of fearlessness, because nothing goes easy forever. Be curious, see if there’s something in it' – Arvid. Experimentation is understood as a method for sense-making: 'I call my place a playground, where everyone can learn. When we are doing something new, that we need to learn or learn to make it better' – Aleksandra. Small businesses may not have the resources to contract out work, and rely instead on figuring things out as they go: 'For things I don't know, these work by learning by doing, with my intuition, thinking okay is this possible? I try it and then I see, if it works then I continue, if it doesn't I do something else' – Maggie. Small business owners must distinguish between meritorious and meritless failure, by considering both the intention as well as the value it could potentially bring. 'You need to see their motive. If the intent was good, then you try to spin that and learn from it' – Arvid. None of the businesses I spoke with had yet to devise a standardized system for documenting lessons from failure, but there is recognition that learning needs to be remembered: 'Nuts for who is allergic to them is really a big risk to kill someone. So we have all the processes so save that for next time we can do it right' – Aleksandra. To foster an environment safe enough for employees to share weakness, leaders may set an example by openly admitting their own shortcomings. 'I say, another way it can be very, very silly because I already tried. Okay, So I share with them also kind of my mistakes' – Aleksandra. Small businesses intuitively understand the value of direct interpersonal connection, and the trust it builds. 'What users want now: is connection and trust. I am trying to create a space where you feel relaxed and where I also try to open up about my own insecurities' – Maggie.
One of the qualities that stood out from the experience of small business is the ready access to feedback which facilitates learning. Small workspaces reduce the need for formalized feedback rituals, as proximity keeps staff and management apprised of the latest goings on. 'After lunch here for guests, then staff have our lunch, to talk, we tell each other how it was how it went today and I also said okay, what we can do better next time' – Aleksandra. Less hierarchy means there is a shorter distance for critique to travel to reach upper management: 'Generally, if staff had a problem, they would just tell me to my face' – Jay. Finally, small businesses’ reliance on direct interaction with customers help to make them aware of customer reviews. 'Through face-to-face talking to the guest, you break the barrier of host-customer. Then they are more likely to approach you and tell you OK, there was a problem' – Karim. Recognizing the value of truthful appraisal, small business owners seek feedback: 'I invite people to tell me how they feel. How I address issues is with the communication around it, like asking people around me, analyzing with me what happened' – Maggie. That said, owners need to see the benefits of incorporating a feedback practice, and may be resistant where such practices are unfamiliar: 'It would be great at the end of a job to suggest: let's review what we have done so we could do it better next time. Probably a lot of merit. Might give the crew a deeper appreciation for their own work. Could instill respect and raise everyone’s game. But it bucks the culture, so this would feel very alien and weird' – Danny.
Observations
From my interviews, the most notable advantage that small stature affords is the ease of communication which promotes both learning on the job and the open exchange of knowledge. When the bacon burns, a hostel guest is unhappy or a waiter drops a tray, employees who share a confined space are fully aware. None of the small businesses interviewed had established formalized methods for feedback, but informal sharing of ups and downs occur frequently and in a timely fashion. In fact, these loose methods appear to elicit natural reflection and feedback, and are perhaps more effective than formalized activities which some interviewees described as stressful. Whereas a number of survey respondents described office environments characterized by fear of making mistakes, new businesses expect things to go wrong, and their practice correcting their mistakes helps build resilience. Small-scale businesses amass experience by figuring things out as they go, and relying on improvisation in unfamiliar territory on a daily basis.
Startups
Startups’ large scale aspirations necessitate a high level of speculation and increased tolerance for risk (Maxwell, 2007). To learn how they address unexpected outcomes, I utilize an expert panel of entrepreneurs by presenting at Startup Dojo Malmö, to understand their process for learning from failure. Primary themes that emerged relate to tolerance for risk and the deterrent of fear. Afterwards, I consider how scaling impacts the characteristics of startup culture, as related to learning from failure, by getting insight from Spotify, who represents one of the great recent success stories and employs close to 5000 employees.
Tolerance for risk is perhaps the definitive characteristic for founders who leave the safety of a full time job to go into business for themselves. Indeed, several in the group cited risk aversion as a weakness of large bureaucratic companies, indicating that this frustration influenced their decision. 'In a normal company, the way to get to the top is to avoid risk, and therefore, cultures like that become non-entrepreneurial'. The recognition of failure is seen as necessary to advance new ideas, and this fearlessness differentiates the startup experience from established companies. 'You're not allowed to fail in big companies. When they review your CV, you already had to succeed just to get entry level. But I am willing to see my failures as successes'. Failing itself is not viewed as the problem, but rather, the fear of failure that limits creativity and kills the possibility of innovation. 'Often, the fail is not such a big deal, it's the fear stopping people from trying that’s the problem'. Considering that the main purpose of a startup is to bring innovative ideas to fruition (Reis, 2011), new ideas are rarely generated from doing the same things as before: 'Sitting quietly and trying to spend all your working time making sure that nothing goes wrong. Like that's not progress'. Established companies may espouse the willingness to change, but 'The bigger the organization, the bigger the bureaucracy, the more the rhetoric about trying, and the less the actual practice of allowing you to fail'. As progress will not result from maintaining stability but from initiating change, Sitkin et al (2011) promote stretch goals as a way for businesses to accept risk needed to challenge the limits. The need to institute these routines seems more suited to large companies that face difficulty stretching, than for startups that more regularly push the limits. Unlike big businesses that focus on profits, it seems that the essence of startups is to test the limits: 'we want to push the edge until there are some failures to give us new perspectives'.
Spotify
Despite the company’s massive growth, a programmer as Spotify assured me that the company still strives to maintain the fail fast attitude, explaining how agile methods help them maintain a startup mentality. Ongoing assessment plays a key role in setting expectations and managing workload, evidenced by the investment the company makes in extensive feedback training for staff. This is put in practice with a daily stand up, where teams sync-up, by updating one another on progress and setbacks. Company culture is accepting of mistakes provided that the team is kept informed: ‘It sucks to let the team down, but it's like at the end they always feel better’. The organization's relatively flat hierarchy and open channels of communication raise awareness of issues to upper management via an unobstructed flow of communication. Lessons derived from error are shared through internal blogs, in courses offered that review past problems and through a Slack channel devoted to incidents. To determine better ways of working by learning from error, retrospectives are conducted while projects are in progress. Afterwards, time and effort is allocated to a post mortem attended by all stakeholders, to understand the root cause of failure. An extensive database of findings is kept for future reference.
Summary
Feedback from these companies affirmed that fail-fast is not merely a slogan, but a mentality that startups wish to maintain, even when they scale. At the smaller end of the spectrum, new startups I spoke with felt that traditional companies were too rigid and therefore, stifle experimentation. Some had said that large companies' unwillingness to take risks or accept failure is why they opted to forego a regular paycheck in exchange for a shot at making it. Naturally, Spotify's experience is vastly different, as it is hardly a startup anymore, but their attitude towards experimentation and tolerance of mistakes, along with how teams take responsibility for them more closely resembles smaller startups I interviewed. Moreover, the wealth of feedback mechanisms that allow teammates to identify problems before they become serious made it clear that scale may not be the factor that differentiates the propensity towards failure friendly versus failure aversion. Despite a fairly large footprint, their culture is decidedly more flexible than rigid.
EXPERT INTERVIEWS
I approached 4 motivational experts, consisting of 3 consultants, and one academic, with the challenge I had set in this project: How might organizations instill a knowledge culture to advance learning from failure? What I hoped to gain is an understanding of actual practices employed in the field which might inform my own industry intervention promoting a failure positive workplace. I opted against using a set script, preferring to see what aspects of the failure discourse my interviewees found most pertinent. Here I pick out their key observations.
Ashley Good. CEO of Fail Forward consultancy, Canada
The founder of the Fail-Forwards consultancy, stresses the importance of developing a healthy relationship with failure. Good establishes that just a decade ago, companies were unaware of the unhealthy relationship but nowadays ‘it's not a knowledge problem’. Many companies now recognize that fear of failure stands in the way of innovation and are looking for ways to promote a more risk taking culture. Citing the importance of psychological safety, she concedes that theory does not always hold up in practice. From her experience in the field, a safe environment may be insufficient to embolden people to acknowledge mistakes or admit they need help. In her opinion, before you can enhance learning, you must first build courage.
Professor Sim Sitkin. Acclaimed Duke University Professor, USA
Nearly 30 years after his seminal paper titled Learning Through Failure: The Strategy of Small Losses, Sitkin conceded that while there is now greater awareness of failure, an overall lack of acceptance prevails. Moreover, what constitutes failure is a gray area, as ‘failure is defined by where you draw that line…so if you want it to redefine something as not a failure, just reduce the expectation’. His concept of strategic failure proposes a more radical approach to the reactionary stance most businesses maintain, suggesting the staging of planned failure as preparation against random occurrences. Calling on companies to adopt stretch goals is a method of instigating intelligent failure to build resilience. He maintains that legitimizing failure is not intended to imply that failure is the goal, but rather, is a means to overcome human nature of avoidance by normalizing the process of immediate reflection.
Samuel West. Curator of the Museum of Failure, Sweden
The founder of a museum focused on flops (https://museumoffailure.com) does not mince words when professing that ‘in general, organizations suck at learning from failure. Failure doesn't fit the narrative companies want to put forth. It's swept under the carpet, both on the personal level and on an organizational level’. Since it is impossible to learn from what is not acknowledged, an organization must find ways to normalize failure, which also happens to be the goal of the museum. Another consideration is that learning from failure is less intuitive and requires more effort than learning from success, where nothing is challenged. In contrast, learning from failure requires a thorough investigation to determine root causes, which entails dwelling on an unpopular topic. He cautions that ‘safe companies are a dying breed’, suggesting that smart organizations like IKEA are aware of the need to change, but are not sure how. He proposes that IKEA is good at taking small measured bets, but risk aversion makes it impossible for them to keep up with more darting competitors such as Amazon. Unless a company’s directors are willing to get up on stage, and model new behavior by admitting their own failure, company culture cannot change.and action.
Johny Zneimer. Sport Psychologist, UK
Bringing considerable experience from working with the UK's leading sports teams, Zneimer asserts that psychological safety is one of the most important elements necessary to accelerate learning within an organizational setting. ‘Do I trust you enough to show you my underbelly? Do I trust you enough to show you my vulnerability?’ Other actionable changes an organization can take is to recognize feedback which he calls the ‘lifeblood’ of an organization: ‘shame on any organization that leaves it says you say to once or twice a year. It should be within the corridors of the organization and should be a formalized process where feedback is solicited and offered as part of the development of the culture’.
Summary
Reaching out to professionals gave me a real world understanding of the struggles to enhance organizational learning, while showing me that there is more than one way to promote a change of attitude towards failure. Good sees fear as the major obstacle and looks to help companies develop courage. Sitkin sees legitimizing failure as a way to encourage reflection and feedback, elements necessary for failure to be intelligent, which is to say, creates learning. West stresses the need to normalize failure, while acknowledging the reality that learning from failure is hard, requiring intensive and uncomfortable analyses. Zneimer labels trust as the key factor behind psychological safety, while also highlighting the need for encouragement and review through ongoing feedforward and feedback.
With data collected from numerous interviews, an entrepreneurs meetup and a survey, I perform a content analysis using an affinity mapping technique, to uncover recurring motifs shared amongst these distinct data sets. Considering the many observations that have emerged from my exploration, evidenced with references to the findings, I look for key themes that help identify a need which warrants intervention. Numerous issues are identified that might positively influence a company’s relationship with failure, but I narrow this to a couple of concepts raised in my expert interviews, trust/psychological safety and feedback as possible areas of interest. Ultimately, I select feedback as a direction to explore further, for which I return to the academic literature for review. While I should probably not begin to solutionize before meeting with my case study, I begin to envision a feedback toolkit, consisting of an assortment of interactive practices borrowed from agile methodologies, Hyper Island, team building exercises and art therapy that I can introduce to my case study through an interactive workshop. This idea fails to come to fruition.