Rewarding failure in the workplace


Rewarding and celebrating success is common enough practice – and who doesn’t like a pat on the back for a job well done? But success doesn’t just happen out of nowhere. Before it’s time to pop open that bottle of champagne, kick back and celebrate, there will be a lot of hard work, experimentation and – yes – failure.

It’s been said that Thomas Edison failed 10,000 times before developing a successful prototype of a light bulb. Most of us don’t think of these failures as we switch the lights on in the middle of the night, but failure is a normal step on the path to success.

These days, talking about rewarding failure in corporate circles has become increasingly popular. Embrace failure. Fail fast. To fail is to learn. But can embracing and rewarding failure really benefit your company? And what would that look like in practice?


Scared of failing

In startups the fear of failure is a helpful emotion driving progress, but in large established companies this same fear hinders it.

Large companies often fear failure because of the perceived risk that mistakes could hurt their brand and cost them money. As established companies, they have a proven business model – and a lot to lose. As well, investors often become more conservative as the business grows. Research also suggests that companies become less innovative after they go public, focusing research & development on more conventional projects that minimize risks.

For employees, the fear of failure can stem from a fear of hurting their career. Unless they trust that failing within the workplace won’t hurt them, there can be little motivation to try new things. There might also be concern that spending time on ‘other’ projects limits their time for their ‘real’ work and that their performance review will suffer.


What do we mean by ‘failure’ anyhow?

A company that rewards failure sounds like the answer to an unemployed sloth’s prayers, but rewarding failure successfully isn’t about high-fiving the slacker. And it’s definitely not about removing employees’ accountability for their jobs.

When we speak about rewarding failure, we’re looking at putting failure in its place, accepting that it happens, but not allowing the fear of it to dominate company culture or squash creativity.

More and more companies are learning that mistakes can drive innovation, as long as it’s ‘smart’ failure.

We’re not suggesting you celebrate foolhardy schemes or a sloppy work ethic. Your company deserves better than that. Instead, look to the failures that might come from well-planned experiments and then use them as learning tools to do better.

It’s about making mistakes that are worth making.


Learning from failure

Learn from your mistakes so you aren’t doomed to repeat them. Sounds like a sensible enough idea, but it can be hard to pull off considering most of us don’t like to admit our failures in a society so focused on success.

But if you can manage it, failure is an opportunity to investigate what went wrong – was it a problem with the product? a pricing issue? inefficient processes? – and create a useful learning experience.

As well, by developing new ideas and creating innovation – whether it’s successful or not – employees learn useful skills that they can bring back and apply to their ‘regular’ responsibilities.

Tor Myhren knows about failure. In 2006 he led the team behind one of the biggest Super Bowl ad bombs ever. This epic fail is said to have cost his company a $300 million account and was even featured in the New York Times. Not exactly the claim to fame most people strive for. But just a year later, he helped create the memorable E*Trade baby, a well-loved advertising campaign that lasted for seven years and launched, ironically, during the Super Bowl.

Myhren used what he learned from that experience to help create a company culture where employees aren’t afraid of making mistakes. At Grey New York, they hold what Myhren calls a ‘painstaking candid postmortem’ after every business pitch, where all involved go over the details of what happened.

This postmortem happens regardless of whether the pitch was successful, taking the emphasis off failure and acknowledging that even the most successful idea probably has some things that didn’t go quite according to plan. Successes are celebrated, but mistakes are examined honestly in order to learn from them.

But this process has another benefit as well. Because everyone goes through postmortems, Myhren says it mellows feelings of criticism so that people aren’t scared to try new ideas again. It encourages people to continue taking risks.

“I do think that fear is the biggest problem in the American business culture. So many businesses punish risk-taking,” Myhren says in an interview for Fast Company. “I think it’s the worst thing you can do.”


How to make failing work for your company

Along with seeing failure as a necessary part of learning, some companies devise specific policies and procedures to support smart failure. As Steve Blank mentions, innovation in large corporations can stall when it’s approached with the same processes and judged by the same set of metrics as the core business.

Believing that failure comes with the job, Charles Schwab implemented a set of criteria designed to distinguish what he calls stupid failures from noble ones. Noble failures have a well-thought out plan backing them up, along with a contingency plan – which has to have been followed – and then those responsible must take part in a debriefing in order to learn from the experience.

In Amantha Imber‘s book The Innovation Formula: The 14 Science-Based Keys for Creating a Culture Where Innovation Thrives, Neil Christie from advertising firm Wieden+Kennedy explains how their mantra ‘Fail Harder’ is used to push employees to take big risks and keep trying, regardless of failure.

“[We] encourage people to try things that sometimes they can’t do. If they’re never failing, then the suggestion is that they’re not trying hard enough,” says Christie.

The company even goes as far as building this appreciation of failure into their performance reviews, when they ask everyone about their “bravest and best failure.” This seems a useful approach to help negate employees’ fear that taking time to work on new ideas (that might not lead anywhere successfully) can negatively impact their ‘regular’ work and therefore their performance reviews.


Failure awards

At first glance, the Tata Group – a 140-year-old conglomerate of over 100 companies – sounds like a company that would be inclined to shy away from trendy ideas like rewarding failure.

But instead it’s embraced the cliches and, since 2008, has included a category in its annual innovation awards just for failure, as mentioned on their company website: The award lauds bold attempts at innovation that did not succeed. It celebrates the spirit that propels individuals and teams to try and innovate and is a reward for the risk-taking capability that is necessary for path-breaking innovation.”

Along with its postmortems, Grey embraces failure with its quarterly Heroic Failure Awards, complete with a two-foot-tall trophy for the winner. And at SurePayroll, an American payroll-services company, employees nominate themselves for the Best New Mistake category in its annual SureChoice Awards. Winners receive $400, double what winners of its more traditional awards receive.

“If you don’t encourage people to take risks, then you end up with incrementalism forever,” SurePayroll’s president, Michael Alter, tells Inc magazine. “Mistakes are the tuition you pay for success.”

Rewards aren’t just limited to formal awards. At Gore, the end of a project is celebrated with beer or champagne, regardless of if it was successful. Creating an environment, or a corporate culture, that accepts or even encourages failure goes beyond annual award ceremonies.


A new culture

“If you are saying to all your employees, ‘Innovate, innovate, innovate,’ but you give the Employee of the Month parking space to the person who never screwed up and you give the bonus and the vacation to the person who doesn’t make mistakes, you are not serious about innovation, and your team knows it.

The way they will know you’re serious about innovation is when you reward and promote people who make mistakes, and you fire people who don’t. If you do that just a few times, the entire company is going to change.” – Seth Godin

Rewarding failure is part of the broader idea of accepting failure as necessary for successful innovation. Companies need to look at building a corporate culture that’s interested in testing new ideas and taking risks.

It’s about creating a culture not of screw-ups and failures, but of learning.

Caddell Insight Group launched a website where employees can post – anonymously, if desired – about their mistakes. Allowing employees to share their mistakes anonymously keeps the focus on what happened and what can be learned, as opposed to who did it or who’s to ‘blame’.

Sharing failures publicly – via a website, awards, public debriefings or some other way – helps to demonstrate a dedication to learning and continual improvement, and means others can learn from mistakes, too. Research indicates that using failure as a teacher works best when it’s someone else’s failures. (Funny how that works, eh?)

Creating a culture that values learning and failure means your employees know that your company is a place where they can develop new ideas and grow their careers. And consider this: 70% of successful entrepreneurs left established companies to pursue business ideas they developed while employed. Wouldn’t you rather those successful business ideas became a part of your company instead?

Even in cases where companies might be accepting of failure at a policy level, this may not trickle down to the personal level. Employees are people, after all, and people generally don’t like to fail. We’re scared of missing out on a promotion, of being looked down on, or simply of being embarrassed.

Thoughtful, strong leadership is needed to help create a culture where employees trust that failing really is acceptable. By focusing on outcomes instead of failure or success, by admitting their own mistakes and by encouraging collaboration, leaders can help shift company culture and build a strong, more successful company.

As Dean Keith Simonton, a psychology professor at the University of California tells the Wall Street Journal,

“The most successful people tend to be those with the most failures.”

Is failure always a good thing? Of course not. But smart failure isn’t something to be afraid of, and is a necessary part of learning and innovation.

Instead of fearing it, reward those brave enough to try. Plan for failure, learn from it and make it work for you.

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