All companies face failures. But the key to navigating them successfully and learning from them lies in how managers and executives react to those failures. Here, we cover the three types of failure, the effects of Intrinsic Motivation on failure, and seven ways to manage your employee after a failure.
All companies, large and small, face failures from time to time. On the one hand, there are startups struggling to quickly learn what works before they run out of funding. On the other, there are global enterprises investing billions of dollars in their project portfolios in order to find the next big thing. Depending on the company culture—which is heavily influenced by the business environment, events in the company’s history, and the employees themselves—the response to failures varies.
At my past workplaces, I have met company executives who try to avoid failures at all costs, and if failures still happened, they would make sure to find the culprit. But then I have also encountered others who try to celebrate failure as a natural step in the learning process.
Naturally, the organizations working for these two types of executives turned out quite differently.
On first hearing about a failure, the first words uttered by an executive can have a remarkably big impact on an organization. Consider the following example of a project gone wrong:
Executive A:What? Who was responsible?
(A bit later, talking to the person responsible) How in hell did you let this happen? Tell me what you’re going to do right now so this never happens again?
Effect: People in this organization avoid raising the bar. The risk of failure is not worth the effort, so they do not try their best. Eventually, the company may go under.
Executive B: I see. What did the team learn from this? What are they planning to do next?
Effect: People in this organization understand that if they want to learn something to take them to the next level, they will have the support to try something new. And by not giving up, even after many failures, this organization will be able to grow permanently.
Types of Failure
Let’s be honest: no one likes to fail. After spending countless hours and sacrificing nights and weekends to keep things on track, it can be very unpleasant to not be able to achieve your goals.
A few years ago, when I was working as a portfolio manager for an IT company, my team was assigned an internal project to build a new mobile app for a bank. We were very excited about this project because it represented a rare opportunity to bring the bank into the 21st century. As with any mobile app development project, we set up an agile process and the team worked through many iterations with feedback from our customers.
When the app was finally completed and handed over to the bank for user acceptance, some stakeholders raised concerns that the UI was not responsive enough. This surprised us, and we ran a couple of sprints to improve it. However, at that point, the bank told us that the project budget had been used up and we couldn’t add a single dollar for compliance purposes. We then asked, “So what should we do with this app?”
They said, “Just throw away all the code, we can’t use it.”
The above failure was preventable, which according to Amy Edmondson, author of ‘The Fearless Organization’ and the originator of the term Psychological Safety, is one of three categories of failure.
Let me explain further what these categories are:
Preventable failures: Deviations from known processes that produce unwanted outcomes, commonly caused by deficiencies in behavior, skill and attention. For the above example, we failed to do proper cost management and stakeholder analysis.
Complex failures: Unique and novel combinations of events and actions that give rise to unwanted outcomes. These can be caused by complexity, variability, and novel factors imposed on familiar situations. The 2003 failed re-entry into the Earth’s atmosphere by NASA’s Columbia space shuttle is one such example.
Intelligent failures: Novel forays into new territory that lead to unwanted outcomes. Causes for this could be uncertainty, experimentation, and risk-taking.
Connecting back to the two groups of executives, they should both aim to avoid “preventable” and “complex” failures, but certainly be very careful when dealing with “intelligent” failures. A high-performing team pursuing the next big thing will rack up a fair amount of these types of failures.
But what is a couple of million dollars sunk cost in comparison with billions of dollars in new sales?
And what is the secret to dealing with intelligent failures?
The Effect of Intrinsic Motivation on Failure
Professor Carol Dweck of Stanford University, whose prominent research on mindsets shows that a learning orientation increases an individual’s sense of accomplishment and resilience in the face of challenges, points out the importance of praising people for their efforts regardless of the outcome.
When people believe that their ultimate performance is a sign of their ability or intelligence, they are less likely to take risks for fear that the results will call their ability into question.
However, if we believe that our performance reflects our efforts and ability to test different strategies, we will be motivated to try new things and persevere in the face of adversity and failure.
Also, all people are not motivated in the same way. Since Intrinsic Motivation is an essential part of a person’s ability to achieve results, we need to consider what difference a person’s dominant motivators have on their reaction to failure.
Here are some of the ways managers can handle people depending on their top motivators:
Competition
Someone who constantly ventures beyond their limits, setting their own standards higher than others, will need to cope with under-par results quite often. These people should be pretty resilient about failure, but the manager will still need to adopt a coaching role to ensure that they learn from it, and use what they’ve learned to their advantage next time.
Feedback
A person who is able to see their work and performance as important and successful only when recognized by others is likely to be open-minded in terms of their own role in a failure. The manager therefore needs to provide support and encouragement, as well as praise for even small successes, to help that person bounce back strongly.
Innovation
Characterized by a creative urge and innovative spirit, with an ability to examine problems from several different angles, a person intrinsically driven by Innovation is likely to bounce back quickly by themselves, but the manager will need to clarify that there are three types of failures, and that not all of them can be brushed off easily.
Progress
For people who put value on challenging work that includes complex situations or tasks exceeding their knowledge level (since this is where they see opportunities for growth), a failure might impact their learning trajectory. The manager will need to carefully assess whether the failure was due to poor performance or poor process, and support the person’s recovery accordingly.
Rationality
People who remain objective and logical in all circumstances, and who strive to make decisions based on rational arguments, are probably more likely to see a failure approaching before others do. However, this is not the time to say “I told you so”. Rather, they should reflect on their own role, asking what they could have done differently to influence others—and the manager needs to work out how to facilitate this communication within the team.
Security
It could be a good idea to involve people highly motivated by well-defined and regulated procedures into the formation and execution of fixed processes and workflows. This will likely enable the company to run a structured operation and prevent “preventable” failures.
Status
Employees motivated by Status will likely be the most sensitive to failures, as it impacts the perceived respect and esteem they receive from others. The manager therefore needs to be careful about how such failures are reported in the organisation, and avoid finger-pointing as much as possible.
At the end of the day, failure is a valuable part of innovating, and while it may not always feel great, it is not something to be feared, nor is it necessarily something to be punished. Perhaps the great American industrialist Henry Ford put it best when he said: “The only real mistake is the one from which we learn nothing.”
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November 1, 2021
By Mattias Hallberg 
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