How to create a culture that embraces failure

From setting failure goals and budgets to offering awards for the ‘best failed idea’, organisations will need to build psychologically safe environments in order to benefit from experimentation. 

Many of us have probably heard of the Silicon Valley dictum, ‘fail fast, fail often’ as the secret to success. While the mentality has been criticised by some as an unsustainable method of growth, there is a kernel of truth in this thinking: adopting an iterative approach to work is a means of setting yourself up for eventual success, and part of that means being open to failing.

However, rather than ‘failing fast’, organisations should reframe their approach to ‘learning fast’.

How can HR practitioners and leaders create the right cultures to nudge employees out of their comfort zones and feel safe to experiment?

Amy Edmondson, Harvard professor, organisational psychologist and author of Right Kind of Wrong: The Science of Failing Well, says organisations first need to ensure they are building psychologically safe environments before employees can feel like it’s acceptable to fail and take risks.

In her early work in psychological safety, Edmondson conducted research into high-performing teams in hospitals. 

Contrary to her initial hypothesis, she proved the most successful teams reported more mistakes than those with less positive team environments. 

When teams felt supported and safe to be honest about their mistakes, they outperformed teams that did not disclose their mistakes, which led to potentially dangerous consequences down the line, such as compromised patient care. The fear of failure hindered opportunities for meaningful collaboration and growth.

Lisa Leong, ABC radio broadcaster, author and podcast host, understands the lessons gained by embracing mistakes.

“When the experiment fails, you don’t fail as a scientist or as a person, the experiment fails. It’s a learning process.” – Lisa Leong

When she chose to make a major career switch after a seven-year career as an intellectual property and technology lawyer, she found herself reacting surprisingly to her newly established career as a radio DJ. 

“I would broadcast for about six hours, and then I would come out and cry. And I thought: ‘But this is my perfect job. This is everything I ever wanted. I’ve retrained myself – why am I crying?’”

Leong, who will also be hosting AHRI’s upcoming National Convention and Exhibition in Melbourne, says treating the change as a working experiment rather than a failure allowed her to reflect more deeply on her career pathway and, ultimately, craft her job in ways that were more personally fulfilling. She learnt this approach from studying science and law at university.

“In science, you have a hypothesis and you run experiments to either prove or disprove this hypothesis. When the experiment fails, you don’t fail as a scientist or as a person, the experiment fails. It’s a learning process.”

As champions of employee experience and wellbeing, with a deep understanding of the business’ needs, HR is well-placed to encourage an ethos of innovation and safe risk-taking, as well as support managers in building healthier, high-performing teams.

Below, HRM collates research-backed frameworks to help HR cultivate a culture where employees feel safe to fail, along with tips to turn learnings into action.

Reframing a failure mindset

Before organisations can capitalise on potential growth and innovation, they first need to embed an openness towards failure within their culture. Here are some strategies that can help:

Set failure goals

‘What if we set annual goals for failure, not just success?’, asks Adam Grant, organisational psychologist, podcast host, Professor of Management and Psychology at the Wharton Business School and author of Hidden Potential: The Science of Achieving Greater Things.

In his podcast, Grant says, “I’m not aiming for failure. What I’m doing is creating an acceptable zone of failure that’s going to motivate some risk taking and experimentation, and hopefully some growth.”

Explicitly seeking discomfort through yours and your team’s goal-setting helps ease the pressure by inviting mistakes for the purpose of discovery.

“If you succeed on 90 per cent of your projects, that should be a hugely successful year. If you’re succeeding on 100 per cent, you’re aiming too low,” he said.

HR action point: Have managers set one or two stretch goals for teams in annual performance plans. When there is mutual understanding between employees and managers around the purpose of these goals, they can serve as healthy motivators, as researchers have found. 

Read HRM’s article about the company that boosted employees’ fulfilment by 10 per cent with a powerful professional development approach.

Taking an experimental, learning approach

Leong also cites Grant’s research in unlocking hidden potential, in an interview she had with him on ABC RN’s This Working Life, which she hosts. 

She says switching to a learning mindset, or what Grant calls a ‘beginner’s mind’, helps remove the emotional aspect of failure and facilitates opportunities to think differently. 

“In our careers, we often become more and more experienced, deepening our understanding [of our own capacity and knowledge]. Therefore, we’re not really used to being not good at things,” says Leong.

“So, every six months, I’ll do a short course on something I know nothing about. I’ve learnt Flemish, fencing and African drumming. The point is to learn how to let go and be okay at being really, really crappy. The discomfort of knowing nothing is something you need to cultivate.”

In his podcast ReThinking, Grant explains our psychological aversion to ‘losses’. 

“One of the reasons it’s so hard for many of us to take failure and criticism is [because] we immediately focus on feeling better as opposed to asking, ‘How can I do better?’” he said.

To put this into practice, Leong has a personal mantra to treat “every day as ‘lab day.’” 

By treating every project she decides to take on as an experiment, she can reframe her instinctives response to any mistakes by drawing on the principles of the scientific method: rigorous observation and questioning.

“With an experimental mindset, you can ask: ‘Why was this so terrible? What [are] the data points here that I can learn from?’”

While thinking like a scientist injects curiosity and boundary pushing, it also involves designating clear pathways to assess the progress of a project and adjust accordingly. There should be clear metrics, escalation paths and governance processes in place. 

HR action point: To build opportunities for experimentation, consider fostering projects that emphasise cross-departmental collaboration and encourage employees to work outside their comfort zone.     

Read HRM’s article about how to push employees outside their comfort zone (without pushing them too far).  

Exercises to put risk-taking into action

In order to encourage healthy risk-taking in your teams, try the following approaches: 

Reward the right kinds of failures

Not all failures are equal nor should be, says Edmondson. 

In her book, Edmondson argues some failures are smarter than others because they help to illuminate an eventual pathway to success. 

She calls these ‘intelligent’ failures, as opposed to ‘basic’ failures, which are caused by carelessness, and ‘complex’ failures, which arise from a combination of factors. 

As sourced from Harvard Business School, intelligent failures can be characterised by four characteristics. They:

• Aim to break ground and offer something new. 
• Present a credible opportunity to advance toward a desired goal. 
• Are “hypothesis-driven” and informed by present knowledge. 
• Do not risk excess resources. This could mean pursuing a pilot project before launching a new initiative.

Organisations need to learn to differentiate between these and cultivate and reward intelligent failures if they want to maximise outcomes. 

One team did exactly this when they pulled the plug two years after a project began.

Project Foghorn, a research project at Alphabet’s research and development company, X, took on the ambitious task of turning seawater into a carbon-neutral fuel.

While the technology passed proof-of-concept, the team could not bring down costs to a commercial scale, so they made the tough decision to flip the kill signal, despite being relatively close to their end goal. 

Rather than punishing the team for wasting two years’ worth of resources, the research team was rewarded for knowing when to call it quits. Their work has been documented in X’s website as an invitation for other researchers to learn from. 

Another example of a ‘failure culture’ in action comes from French energy company Engie, which offers a ‘best failed ideas’ award to its employees as a way to encourage an experimental mindset within the business.

As relayed in The Conversation, this award reinforced the notion that there are rich learnings to come from these near-successes, known as ‘nearlings’, and was a simple way for the organisation to embed psychological safety into its culture.

HR action point: Alongside reward and recognition structures, HR might consider implementing mechanisms that acknowledge measured risks made by employees in attempts to innovate, such as NASA’s ‘Lean Forward, Fail Smart’ Award launched following the Columbia shuttle disaster.  

“In our careers, we often become more and more experienced, deepening our understanding [of our own capacity and knowledge]. Therefore, we’re not really used to being not good at things.” – Lisa Leong

Give people permission to take risks

Accounting for a ‘certain percentage of failure’ can empower employees to experiment without the fear of being criticised or punished.

Instead of trying to limit failures, organisations can provide pre-approved licence for employees to make intelligent mistakes. 

Leong often runs workshops which highlight how we naturally react to a mistake. 

“Often the leaders are the ones who are the hardest on themselves,” she says. 

“Part of the leadership halo or shadow is that others will observe what you do, rather than what you say.” 

Instead of leaving it to chance, leaders can be explicit about the times when mistakes are encouraged. For example, during the idea generation and prototyping stages for product and service development. 

Ami Vora, Chief People Officer at Faire, who has extensive experience in scaling product development at Meta and WhatsApp during their growth periods, incorporates a budget for failure in her professional and personal life.

She writes: “Preparing for [failure] from the beginning – and even assigning a budget to it – makes it easier for me to recognise and deal with failure when it happens.” 

This not only ‘budgets’ set backs in advance, but also unburdens employees from the psychological stress of uncertain consequences and “makes failures less emotional”.

Swedish furniture giant IKEA extends this concept in the form of its ‘go bananas’ cards. 

Introduced by Ingka Group CEO Jesper Brodin, the cards are issued among senior management, pre-excusing any holders who choose to exchange their card, when the risk doesn’t pay off. 

For example, say an employee wanted to trial a new software to automate a key process in their business, but it didn’t work as they had expected it to. They could cash in their ‘go bananas’ card and be rewarded for giving it a go. It’s this intrapreneurial mindset that will help businesses of today stand out from their competitors.

Leong says creating an organisational culture of curiosity where employees not only feel like they can make mistakes but also understand how to transform those stumbles into new knowledge, is crucial to uncovering valuable connections in the business.

“Because you, as a [HR] leader, can’t see everything. You need everyone, all eyes on deck, to notice and bring you different [and diverse] perspectives because [that’s what you need when] trying to solve complex problems.”

Lisa Leong will be hosting AHRI’s National Convention and Exhibition in August. Enhance your HR practice by hearing from a range of expert speakers. Don’t miss out; register now. 

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