The word failure can strike fear in the hearts of many in the workplace including executives, department managers, engineers, planners, technicians or programmers who have worked hard on a project—especially when they signed off on it before the launch date. Failure can also mean a flawed supply chain that is especially vulnerable to unforeseen circumstances like a pandemic, natural disasters and war.
While educators recognize failure is an integral part of learning, it is rare to see businesses that execute learning from failures. What’s more common is organizations that talk about leveraging failures for success but do nothing to accomplish that goal. Instead, those in power generally view failures as bad, emotionally unpleasant and unacceptable, thereby creating a negative impact on the self-esteem of individuals and teams. As a result, a cultural fear of failure emerges and spreads throughout an organization. Yet companies that go beyond lip service and develop and use a well-defined failure analysis process make learning from mistakes a priority. The outcome? Companies can mitigate financial, personnel and reputational losses to organizations and become more efficient and effective with their project or product development initiatives.
The first step: what is the problem?
When rebounding from a failure, it’s important to identify both the root cause of the failure and any red flags that were missed. In fact, a larger problem than the failure itself is not correctly determining the cause of the failure. Examples of supply chain failures organizations can learn from include excessive offshoring, overreliance on just-in-time production methods (magnified during the height of the pandemic when factories were shut down as a healthy and safety precaution) and vendor sourcing that is overly complex.
While future missteps may occur, conducting an assessment will decrease the possibility that they are the same ones. Proper analysis involves input from all applicable employees, including management. Failure is a mechanism for learning and a key to understanding why things didn’t work out as planned, whether the problem was due to misuse, wear and tear, a design flaw, a defect or another reason.
Develop an action plan based on failure analysis
Once there is agreement on the root cause(s) of the failure, the next step is to develop an action plan to eliminate that specific issue (or issues) from reoccurring. This can be accomplished through continuous improvement, where standard operating procedures are continually revised or enhanced as the organization evolves. Companies can implement a continuous improvement routine based on this analysis to steer all employees and the organization toward achieving a 100 percent failure-free operation. Continuous improvement means defining the parameters of what constitutes success and recalibrating for the next steps upon reaching that level. It is a collaborative process driven by strong leadership and highlights departmental milestones for success, such as efficiency or the outputs expected. In today’s environment of constantly shifting customer and stakeholder demands, organizations using continuous improvement gain a competitive edge.
The companies that successfully survive failures are those that accept that a failure may happen with a new, changed, or updated product. There are numerous cases that show how a leadership mindset of turning a blind eye to failure has led to catastrophic outcomes. One example is NASA and the Challenger, and Columbia Space Shuttle tragedies, when problems due to O-ring failures between booster rocket segments and with heat resistant titles that protected the crew cabin, respectively, led to the loss of life and major setbacks for NASA. Engineers opposed the Challenger launch in 1986, but “under intense pressure from NASA officials,” executives overruled the engineers. Unfortunately, NASA did not learn from this failure. A report on the Columbia disaster, which occurred 17 years after the Challenger explosion, “blamed ‘cultural traits and organizational practices’ for minimizing safety issues over the year.”
Notable examples of failures related to supply chain issues include aerospace giant Boeing being three years late on producing its first 787 commercial airliners. Suppliers weren’t ready to make the leap forward, but Boeing moved ahead with production and struggled with production and supply chain. At the other end of the product spectrum, Hershey Foods shipped $100 million of its popular Halloween candies notoriously late in 1999 after implementing a series of corporate changes that interfered with its inventory management system. As a result, the company’s stock price dropped 8% in one day.
The corporate philosophy is always geared toward success. Unfortunately, many executives use failure as an opportunity to assign blame rather than leveraging it as a learning tool. But failure comes with new opportunities and lessons that can help improve operations moving forward. How quickly a business learns and then moves forward from failure is a key driver of long-term success.
Time to go bold: create the right culture following a failure
Executives and managers set the tone for an organization’s culture. It’s time to eliminate the fear of failing that prevents team members from taking bold steps. Brainstorming what-ifs and engaging in out-of-the-box thinking, as well as reexamining more routine procedures and practices should be encouraged, even celebrated. Fostering a culture of open communication will persuade employees to come forward and propose solutions that may not be popular but could be on the right track. Fear of failure without encouragement and approval from top executives can result in employees being reluctant to offer innovative or even the best solutions possible. Group forums and employee feedback on a consistent basis should be the goal.
Sometimes failure analysis as to why a product, marketing campaign or even a major corporation as a whole is falling behind can lead to pain, as Louis V. Gerstner Jr. detailed in his book Who Says Elephants Can’t Dance? about the turnaround he oversaw at IBM beginning in 1993, which included massive layoffs and the idling of some long-term projects. Jack Welch did the same thing at General Electric, reviving the manufacturing giant even as some legacy product lines were sold off.
This type of drastic move may not always be necessary, such as resolving supply chain issues at a fulfillment center. Instead, it’s about learning from small failures and considering contributions from all employees so the company can move forward. For example, Amazon endeavors to detect failures in its distribution operations and make improvements on a regular basis and AWS cloud services evolved from the realization that more data storage capacity was needed. Announcing that a failure led to an improved solution may bring back customers who were adversely impacted by a failure.
Failure is an option—and often the reality for many businesses
When the first SpaceX Starship rocket was intentionally destroyed over water just several minutes after it was launched due to partial engine failure, the company’s employees were heard clapping and cheering on the broadcast. Why? Because even though they hoped for a perfect first-time launch of the rocket, the failed launch was successful to a large extent and became a baseline for moving forward. It doesn’t hurt when the boss—Elon Musk, in this case—goes public with the sentiment that failure was not a surprise and was indeed a learning moment.
The events of the past few years also uncovered the deficiencies in supply chains that only worked in “perfect” environments, where assumptions were made that conditions would not change. In many business sectors, as consumer demand ramped up again post-COVID, production could not keep pace, helping to fuel record inflation. That is a major teachable moment when it comes to missing red flags. Failure is inevitable—and essential to success. Organizations that adopt a positive philosophy about failure and spread that culture from top to bottom will move to the head of the pack. Evolution and innovation involve trial and error—a methodology that should be welcomed, not avoided.
