Leadership Memo 2023-12
Would you agree that failure (try something out that didn’t work the way you’d hoped) is a lot more common in highly uncertain environments than it is in better-understood situations? Yet, instead of learning from failures, many executives seek to keep them hidden or pretend that they were all part of a master plan and no big deal. To those executives, I would argue that an extraordinarily valuable corporate resource is being wasted if learning from failures is inhibited.
However, not all failures are the same, and not all failures are useful from a learning perspective. According to Dr. Amy Edmondson, professor of leadership and management at Harvard Business School, there are 3 types of failures: basic, complex, and intelligent. Only intelligent failures are useful from a learning perspective. (If you missed it last month, you can go here to review the details of those 3 types of failures).
According to Dr. Sim Sitkin, professor of leadership and ethics at Duke Business School, intelligent failures are crucial to organizational learning and sense-making. They show you where your assumptions are wrong and where future investment would be wasted. They can help you identify those among your team with the courage to persevere and creatively change direction instead of charging blindly ahead. Intelligent failures are about the only way in which an organization can reset its expectations for the future in any meaningful way.
Here are the criteria for intelligent failures:
- They are carefully planned, so when things go wrong, you know why.
- Underlying assumptions are explicitly declared.
- They are genuinely uncertain, so the outcome cannot be known ahead of time.
- They are modest in scale so that a catastrophe does not result.
- They can be tested at specific checkpoints, identified in advance, since planned results may not equal outcomes.
- They are managed quickly so that not too much time elapses between outcome and interpretation.
- Something about what is learned is familiar enough to inform other parts of the business.
So, approach uncertain decisions as experiments and adopt the idea of intelligently failing.
- Stop the blame game.
- Design experiments that reflect real life.
- Stop imposing the expectation of meeting plans on people doing things in unpredictable environments.
- Recognize that failure needs to be re-defined.
That way, so much more can be learned (so much quicker) than if failures or disappointments are covered up.
You may also want to read Dr. Edmondson’s new book “Right Kind of Wrong”, which just won the Financial Times Business Book of the Year Award, to help your organization get rid of the fear of failure and embrace learning under uncertainty.
So, are your organizations genuinely reaping the benefit of the investments you’ve made in learning under uncertain conditions? Do you have mechanisms in place to benefit from your intelligent failures? If not, who might be taking advantage of the knowledge you are depriving yourselves of?
How about you? How do you treat failures? Are managers supposed to be always right? Is having the right answer just as valuable in management as it was in school?
Comment below and let me know what you think.
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I’m thrilled to welcome Bjarte Bogsnes, Chairman of Beyond Budgeting Roundtable, back this week to SFBABAM (San Francisco Bay Area Business Agility Meetup). Bjarte introduced us to the basics of Beyond Budgeting over 2 years ago. This time, he’ll share more insights and case studies from his decades-long Beyond Budgeting journey and advisory work helping organizations unlock performance potential by moving beyond traditional budgeting. It’s going to be a lively discussion session. You don’t want to miss it! RSVP now!
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