Rewarding Failure

Imagine a world without mistakes. Does it scare you yet?

Failures are the stepping stones to success and before you close this blog, I assure you that this is not a lesson in moral science. It is about hard corporate facts. Most innovation is a by-product of serendipity, which in turn amounts to failure. For a moment imagine a world governed by global metrics and standard operating procedures. Will any firm gain strategic advantage? An argument could be that firms which adhere to the procedures will do better than firms which are less efficient. Thus success itself is defined by the presence of failure. But I shall not engage in rhetoric or philosophy here.

Penicillin couldn't have been discovered had Alexander Flemming followed adequate sterile conditions for bacterial culture growth. Neither would Post It notes been discovered had the glue not "failed" the test for the "typical" glue. Creativity and innovation cannot exist in a monitored and controlled, sterile environment. They require "impurities", else they would not be deemed creative or innovative. These impurities or lapses in following standard operations are well recorded in corporate and is part of our performance management process. A well known phenomenon of negative reinforcement is introduced in corporates to ensure that these impurities do not creep in. But are we then blocking innovation as well?

Of course, once failure occurs and the result is an innovation, it is but obvious that rewards would follow and the innovation would lend itself as a life boat to the deviation that caused it, to be pulled out from the pool of failures.

Another way of viewing failure is that it sets a precedent to prevent failure in the future. However, most of these failures are set-backs that we do not bring to the notice of our managers for fear of punishment. We all want a clean slate. While a repository of errors will create an environment for better performance across the organization, it will also paint stains on the records of reputed executives.

Is there a way around this? Can we reward and incentivize reporting of failure, even if it doesnt result in immediate innovation and creativity? Lets look at some of the signals that such an incentive would give.

1. It would tell employees that it is ok to fail and report the failure.

2. It would tell managers that failures need to be monitored and not swept under the carpet

3. It would encourage employees to try out new things

However, any corporation cannot be run on chance of failures being industry changing innovations. Hence, it is obviously important to build on the successes of the past and replicate the success through standard operations and replication. However, a noble failure, caused de- facto while carrying out the standard procedures or an honest deviation in an attempt to better things, should always be respected.

As with any initiative, rewarding failures, needs to be endorsed, driven top down and should become part of the cultural fabric of the organization. Questions about whether failures should be rewarded or tolerated will keep arising. In the end the business model of the organization would determine how far rewarding failures would percolate in the organization. Should the assembly line worker be rewarded for failure? Probably not, in a typical mass manufacturing company. However, the R&D department surely should be rewarded to break the convention. Similarly, a high end drug manufacturer would accept high risks and failures even at the front line worker level. The cost saving due to chronicling of errors and hence reducing incidence of similar error elsewhere, would make it worth the while.