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The topic of failure is the flavour of the month. Both Wired UK magazine (April Issue) and Harvard Business Review (April Issue) had features on learning from failure. Wired looked at it from an entrepreneurial angle and featured profiles on individuals such as Jimmy Wales and Sir Alan Sugar. These are entrepreneurs who have bounced back from several business failures to create successful companies.
The magazine compared the American embrace of failure as a means of moving towards success versus the European fatalistic perspective of failure. These contrasting continental attitudes towards failure could explain why Europe lags behind America in terms of entrepreneurial success stories. It could be argued that the fear of failure or the negative stigma of failure means fewer Europeans desire to be entrepreneurs.
Harvard Business Review (HBR) looked at failure from an organizational context and there are several articles in the issue on this theme. I particularly liked the piece on former Procter & Gamble CEO, A.G.Lafley, who considered his failures as a gift to learn and improve. He believes that the most important and insightful learning is far more likely to come from failures than successes. He advocates for organisations to ensure that institutional learning takes place after each failure. He also stated that it is not enough for CEOs (leaders) to take responsibility for failures, but it is equally important for them to create a culture that turns failing into learning and continual improvement. The absence of such a culture will lead to people trying to hide their failures, instead of owning them and learning from them and also enabling the organisation to learn from them.
A great example is Nick Leeson, a former derivatives broker, whose unauthorized speculative trading caused the collapse of Barings Bank, the United Kingdom’s oldest investment bank, for which he was sent to prison. He was regarded as an investment whizzkid who initially made millions for Barings on the futures market. However, Lesson’s stock betting started to go wrong and he quickly hid mounting losses from his superiors. The more he sought to get himself out of the mess, the worse it became and he found himself unable to approach his bosses about these huge losses. The $1.3 billion of liabilities which Leeson amassed thus ended up wiping out the 233 year old Barings Investment Bank. This was as a result of a culture which failed to enable people to own their failures and learn from it instead of trying to hide it from others in the attempt to rectify it privately.
Check out these two great videos on failure which I discovered this week on Youtube.
(1) Why you need to fail by Derek Sivers
(2) Failure: The Secret of Success by Honda Corporation