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It is a common tendency to put a positive spin on mistakes. From tech founders embracing the concept of “failing fast” to the podcast How to Fail by Elizabeth Day, which celebrates the lessons learned from failures. The idea behind this thinking is crucial. It prevents individuals from tying their self-worth to unsuccessful endeavors and encourages growth, resilience, and improvement.
However, not everyone seizes the opportunity to learn from their missteps. Often, there is a desire to quickly move on and forget about what went wrong. Ego, embarrassment, or simply a lack of curiosity can hinder the learning process. One executive from a FTSE 100 company shared their experience of repeated compliance errors that were identified five years earlier. The company was hesitant to implement preventive measures for fear of judgment from their board and shareholders.
Boards and executive teams can also become so consumed with short-term crises or long-term strategies that they neglect to delve into the specific details of what went wrong and why. While there are instances where swift action is appropriate, such as personal failures with minimal consequences, in a business or political context, it is important to assess and learn from failures. This evaluation is not only crucial for learning and testing hypotheses but also to prevent catastrophic failures from recurring.
Amy Edmondson, a leadership and management professor at Harvard Business School, emphasizes the importance of taking the time to analyze failures instead of rushing towards the next success. In her upcoming book, titled Right Kind of Wrong, she explores the significance of failing well. Admitting failure is the first step towards objectively understanding what went wrong and finding ways to improve.
Businesses should strive to establish resilient processes. Cybersecurity breaches serve as a prime example. In 2013, US retailer Target experienced a severe attack resulting in the theft of financial and personal information from millions of customers. The incident cost the company over £300mn. Since then, Target has implemented measures to strengthen security, including enhanced monitoring, successfully preventing another attack like the previous one. However, continuous improvement is necessary to enhance cyber resilience.
Martin Reeves, chairman of the BCG Henderson Institute at Boston Consulting Group, suggests implementing a mechanism that allows for learning from both successes and failures during a crisis. Gathering empirical evidence helps understand competitive performance, the company’s initial response to the crisis, and the subsequent recovery. The analysis should include examining individual teams’ performance, the factors driving their decisions, and the presence or absence of necessary capabilities within the organization. Similar to the US military’s after-action review, this process facilitates learning during times of acute stress.
Reeves points out that few companies have systematically incorporated the lessons learned from their experience with the Covid-19 pandemic.
When conducting assessments, Edmondson emphasizes the need to avoid blaming individuals. This distracts from understanding the root causes of failure and overly focuses on personalities. While it is important to pinpoint individuals involved in repeated failures, the primary goal should be continuous improvement rather than settling scores.
Reeves suggests that one way to improve resilience is to subject systems to small-scale tests and assess their ability to handle “small failures” to avoid sudden catastrophic failures.
Even if a previous preventable failure did not have severe consequences, understanding the mechanics and identifying breakdowns in processes, communication, and team functioning is essential to prevent similar or worse failures from occurring again.
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