Creating An Innovation Culture: Accepting

Failure is Necessary
Guest post by Edward D. Hess, Professor of Business Administration and Batten Executive-inResidence at the Darden Graduate School of Business
Unless a CEO has his or her head in the sand, increasing ones innovation capacity is a consistent
theme in the fight against the globalized commoditization of products and services. Innovation
has become the flavor of the year in business media and everyone has their view of how to
make it happen more frequently in more companies.
Most of these prescriptions while well meaning are not founded in the science of how innovation
occurs. Innovation is the result of iterative learning processes as well as environments that
encourage experimentation, critical inquiry, critical debate, and accept failures as a necessary
part of the process.
Yes, I said failures. Failure is a necessary part of the innovation process because from failure
comes learning, iteration, adaptation, and the building of new conceptual and physical models
through an iterative learning process. Almost all innovations are the result of prior learning from
failures.
Entrepreneurs understand the importance and necessity of failure. So do many of the disrupting
technology-based companies like Amazon, Facebook and Google. These examples though are
not the norm because we as a society have a strong anti-failure bias. Many people and
organizations have as their primary objective the avoidance of failure.
How many companies celebrate the learning that comes from failure? How many organizations
encourage learning by continually doing small experiments? How many parents ask their
children what they learned as contrasted to did you get an A? Businesses managers everyday
go to work with the goal to eliminate failures (variance).
Employees and people in general define themselves by whether they make mistakes or not. All of
this leads to behaviors that minimize trying new things in order to avoid failure. That can lead to
avoidance of new situations and avoiding uncertainty and ambiguity- the place where many
innovation opportunities reside.
My colleague Professor Jeanne Liedtka and I have spent combined over 17 years studying
innovation leaders, systems and processes. What we found is that innovation requires a mindset
that rejects the fear of failure and replaces that fear of failure with the joy of exploration and
experimental learning. We also found that innovation organizations understand that failures are a
necessity (in as much as 90% of the time) so long as the learning comes from small risk
experiments. As one innovation leader stated: we celebrate success; we console failure; and we
get rid of those who are afraid to try.

Innovative organizations build the right culture and enabling internal system that drives
innovation behaviors. Along with mindsets and system come the right experimental processes.
But underlying all of this is one key concept: you must be willing to accept failures as a
necessary part of the innovation process.
Why do many large companies buy their innovation? Because their dominant culture of 99%
defect-free operational excellence squashes any attempts at innovation just like a Sumo wrestler
sitting on a small gymnast. They cannot accept failures. The reality is that failures are a
necessary part of innovation.

SATISH KHADKA