How Brands Learn from Failure

Why are so many successful business leaders, all of a sudden, urging their companies and colleagues to make more mistakes and embrace more failures?

James Quincey, CEO of Coca-Cola Co., in May called upon rank-and-file managers to go beyond the fear of failure that dogged the company since the “New Coke” fiasco many years ago. “If we’re not making mistakes,” he insisted, “we’re not trying hard enough.”

Even as Netflix was enjoying unparalleled success with its subscribers, Reed Hastings, CEO of Netflix was worried that his fabulously valuable streaming service had too many hit shows and was canceling too few new shows. “Our hit ratio is too high right now,” he told a technology conference. “We have to take more risk…to try more crazy things…we should have a higher cancel rate overall.”

Even Amazon CEO Jeff Bezos, arguably the most successful entrepreneur in the world, makes the case as direct as he can – his company’s growth and innovation is built on its failures. “If you’re going to take bold bets, they’re going to be experiments,” he explained shortly after Amazon bought Whole Foods. “And if they’re experiments, you don’t know ahead of time if they’re going to work. Experiments are by their very nature prone to failure. But a few big successes compensate for dozens and dozens of things that didn’t work.”

The message from these CEOs is as easy to understand as it is hard for most of us to put it into practice.

Are there techniques that allow organizations and individuals to embrace the necessary connection between small failures and big successes? Smith College, the all-women’s school in western Massachusetts, has created a program called “Failing Well” to teach its students what all of us could stand to learn. “What we’re trying to teach is that failure is not a bug of learning it’s the feature,” explained Rachel Simmons who runs the initiative, in a recent New York Times article. Students who are prepared to handle failure are less fragile and more daring than those who expect perfection and flawless performance.

That’s a lesson worth applying to businesses as well. Patrick Doyle, CEO of Domino’s Pizza since 2010, has had one of the most successful seven-year runs of any business leader in any field. But all of his company’s triumphs, he insists, are based on its willingness to face up to the likelihood of mistakes and missteps. In a presentation to other CEOs, Doyle described two great challenges that stand in the way of companies and individuals being more honest about failure. The first challenge, he says, is what he calls ‘omission bias’ — the reality that most people with a new idea choose not to pursue the idea because if they try something and it doesn’t work, the setback might damage their career. The second challenge is to overcome what he calls ‘loss aversion’ — the tendency for people to play not to lose rather than play to win, because for most of us, “The pain of loss is double the pleasure of winning.”

Creating “the permission to fail is energizing,” Doyle explains, a necessary condition for success — which is why he titled his presentation, with apologies to the movie Apollo 13 – “Failure Is an Option.” And that may be the most important lesson of all.

The team at Actuate Business Consulting, a knowledge based management consulting firm in India, believes, that there is no learning without failure and there are no successes without setbacks. If you’re not prepared to fail, you’re not prepared to learn. And unless people and organizations manage to keep learning as fast as the world changes, they’ll never keep growing and evolving.

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