Recently, I overheard the president of an organization proclaim how he wants and expects his employees to make mistakes and that it is okay to fail in order to be an innovative culture. Unfortunately, the cynical side of me came out as I have heard these cliché words spoken many times by other leaders:

"We have a culture that rewards failure." "We expect our people to fail." "We encourage failure."

The reason I become skeptical of these statements is because I don't believe leadership will truly accept someone failing. I believe the person who fails at their work will be criticized publically or privately as opposed to rewarded. I believe leaders want to encourage experimentation and innovation by their employees but don't know how to accept the failure that comes along with it.

So, how can an organization create or build on a culture of innovation when failure is a common outcome? Great question for this week's newsletter.

Great failing,

Diane

                                                                                                                         Michael Jordan

Every client I work with is trying to find ways to innovate. Whether they are a non-profit that needs more creative ways to generate revenue or a manufacturer that needs to come up with the next great widget in their market niche. Innovation is what keeps an organization alive and thriving. So, how does an organization create a culture where all of its employees are participating in the generation of new ideas, products and services?

According to the Harvard Business Review article "To Increase Innovation Take the Sting Out of Failure" by Doug Sundheim the first thing the leadership team needs to do is define a "smart" failure. In other words, what are the parameters that will allow employees to fail? Here are a few examples:

Bad failure- Sloppy work, lazy effort, poor analysis, no "real" problem being solved and not willing to learn from it

Smart failure- Obvious payoff in the new idea, open to learning from the mistake, trying to do a good job, edgier, riskier, new and improved. Listening and responding to what the market is telling you it needs.

Another way to define a "smart" failure is to share examples from leaders that have failed successfully. As a boss, share how you go about deciding when to take a risk. What problem solving process do you use so that your employees may duplicate it?

A FastCompany article by Marissa Mayers mentions nine ways to be innovative and I have highlighted a few of those:

• The idea doesn't have to be perfect. We often lose out when we wait too long. Put a product or service out there that is not perfect and the market will correct it....just put it out there!

• Create a voting pool by having an online dialogue with fellow employees who get to vote on those ideas that are most promising

• Morph projects and don't kill them. Find the potential good in each idea without rejecting it entirely

• Focus, focus and focus on the end user and the dollars will follow

• Don't be afraid of constraints like budgets and dollar amounts to experiment. The best ideas can come from major constraints.

• Make sure you are solving a problem that market sees as a problem.

Other ideas that have proven to be successful

• Allow those who have a proven track record of creative thinking to work offsite as a team to come up with wild ideas that can them be brought back to a team to tear apart.

• Block off one morning a week for innovation by not allowing meetings to occur so employees can work on creative projects

• See failure as paying tuition

Finally, you must walk the talk by rewarding failure. If you have clearly defined "smart" failure, given examples from leaders that have failed and shared the decision making process needed then you must reward the failure. Three examples come to mind...

Tata, an Indian conglomerate, has two awards each year. One is for the best innovation and the other is for the best attempt. The best attempts award is called the "Dare to Try" award. This award is for the most thoughtful and well executed failure. This award recipient receives recognition on stage from the CEO during an all-employee gathering. In 2008 Tata had a few ideas vie for the award and in 2011 they had 132 entrants.

SurePayroll, a small business payroll company, has the annual "Best New Mistake" award and gives out a $400 cash prize.

Grey New York, an advertising firm, has created the "Heroic Failure" award which is given to someone whose approach was an epic fail. A traveling trophy is given to the award winner and they are allowed to keep it in their office until the next year's recipient is announced.

Question for You:

As a leader, are you frustrated with the lack of innovation and risk taking in your culture? Are you aware that your culture may be the reason why employees are not taking risk?

Action for You:

Start by defining what "smart' failure looks like and sharing examples where you have failed. Next try some of the ideas listed above to create a safe place for people to experiment. Finally, reward the behavior you want by offering praise for those that fail in a "smart" way.

                            "Never confuse a single defeat with a final defeat."

                                                        F. Scott Fitzgerald