How To Turn Failure Into A Competitive Advantage

Have you ever worked for a manager who made these statements to your Teams?

Failure is not an option.

We cannot fail.

To deepen this scenario — have you ever worked in an organization that rated you as a poor performer for making responsible mistakes? Shockingly, this is still happening in many companies – even the ones that are trying to become more nimble and innovative. For a company to maximize its ability to innovate (which is one measure of an Organization’s Agility), it requires everyone to learn how to fail in a responsible way.

High performing Agile organizations embrace failure as a competitive advantage that leads to sustainable business success. For those of you who work within these remarkable workplaces, I celebrate your success and the courage it takes to embrace this attitude within your company’s culture.

Success is stumbling from failure to failure with no loss of enthusiasm. ~ Winston Churchill

An example of failure and how the company handled it

I once served within a company where a complex software Product was under constant pressure to deliver new features to a mission critical customer segment. As I got to know these Teams from the periphery, I could see how much they cared about their work and how passionate they were for delivering really cool stuff to their customers. To be honest, I was envious of their situation because people were having a lot of fun in that part of the organization. What’s not to love about that?

So, as these Teams prepared to ship a new set of features (on a weekend), I was off work — actually, I was nestled comfortably in a movie theater with my kids when the “buzzzzzzzz” of my pager kicked in (yes, we used to have pagers!). As I quietly scanned the dimly-lit pager screen, it didn’t take long to realize that something went terribly wrong with their latest Product update. As I started following the threads of communication, I could see some panic playing out in that Product organization – the latest update had failed and unfortunately, there was a major loss of customer data that the Teams were unable to recover.

After the shock & awe phase settled down, I had a chance to facilitate a root cause analysis session with the Teams and senior leadership. What they jointly discovered was a lapse in judgment by one (passionate, skillful and caring) Team Member who bypassed company red tape in an effort to ship the Product update quickly – but as a result, this individual made one small mistake that permanently deleted a large portion of customer data.

What happened in this situation? Would you characterize it as a failure? What would you have done to that Team Member?

Every failure is an opportunity to learn and improve.

As you might imagine, the customers were quite unhappy. This was a clear failure, and (as characterized by many) an irresponsible choice in the heat of delivery. Technology executives had to scramble to provide an explanation to customers, how they were going to fix the problem, and how they would avoid it in the future.

How did the senior leaders handle the situation?

1. They pointed the finger at the issue, not the Teams – Through a powerful root cause analysis session, the Teams (including leadership representatives) focused on the issue, not the people. This allowed for open dialogue which surfaced a deeper problem that went well beyond that one Team Member’s mistake. If they had played the blame game, then the underlying organizational root causes would have never emerged.

2. They never used the word FAILURE – In this Product organization’s culture, they called these situations “learning moments”. In this particular situation, it happened to be an enormous learning moment that had an obvious sense of urgency for immediate remediation. Within this culture, it allowed the Teams to analyze the situation swiftly, objectively, and without judgment. What did this teach us? What insights do we have? And … what experiments can we run to prevent this from ever happening again?

3. The person was not fired – Yes, it was a terrible lapse in judgment. Many companies might have fired the employee on the spot – and in some situations (e.g., where people’s lives are at stake), that might have been the best course of action. But in this particular situation, the organization leveraged an environment of professional safety to allow this person to speak freely about his actions and what he had learned from it. The person was not fired, his pay was not docked, and he continued forth as a thriving Team Member within the Product organization. In fact, he led the charge on a series of significant organizational improvements that strengthened the operational capabilities for the company as a whole.

How can your company transform failure into learning moments?

An organization’s attitude toward “failure” will directly influence the actions that it takes in response to these situations. In real Agile organizations, resilience to failure is an advantage that sets these inspiring companies apart from their lagging competitors. They do this by being:

  • Optimistic – “Learning Moments” keep a feeling of optimism in the face of these difficult situations. Failure can be perceived as a permanent state, but learning moments serve as the stepping stone for meaningful improvement within the organization. What happened? What did we learn from it? What do we need to do to prevent it in the future?
  • Compassionate – The senior leaders were able to empathize with the Teams by connecting to their passion for delivering exciting Product features to their customers. In addition, they capitalized on that passion by acting with positive intent (i.e., our goal is to improve how we ship new Product features, not to seek out and fire employees). Compassionate leadership allows the organization to tap into the energy and skills of the Teams to continuously out-improve their competitors.
  • Focused – An Agile organization operates with a high degree of focus. When learning moments emerge, the organization behaves with a “stop and fix” mentality. Agile organizations don’t waste time blaming people, and senior leaders don’t worry about protecting their power in a corporate hierarchy. The focus is on learning and swift improvement; all in the interest of serving the paying customer with high quality and innovative Product.


Your Call to Action

Does your organization treat failure as optimistic, compassionate and focused learning moments? If not, why? What can you do to influence a change in your organization to start thinking and acting this way?

Please share your thoughts in the comments section below so we can all learn from each other.


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