In many organizations, like those discussed in this chapter, countless small problems routinely occur, presenting early warning signs that the company's strategy may be falling short and needs to be revisited. Yet these signals are often squandered. Preventing avoidable failure thus starts with encouraging people throughout a company to push back, share data, and actively report on what is really happening in the lab or in the market so as to create a continuous loop of learning and agile execution.

Often a failed project is a critical step in getting to success. Once or twice a year, at our product meetings, I ask all of our managers to complete a simple form outlining their bets from the last few years, divided into three categories: bets that went well, bets that didn’t go well, and open bets. Then we break up into smaller groups and discuss the items in each category and what we’ve learned from each bet. This exercise reminds everyone that they are expected to implement bold ideas and that, as part of the process, some risks won’t pay off. They see that making bets is not a question of individuals’ successes and failures but rather a learning process that, in total, catapults the business forward. It also helps newer people get used to admitting publicly that they screwed up on a bunch of stuff—as we all do.

2. DON’T MAKE A BIG DEAL ABOUT IT

If you make a big deal about a bet that didn’t work out, you’ll shut down all future risk-taking. People will learn that you preach but don’t practice dispersed decision-making… Reed’s reaction is the only type of leadership response that encourages innovative thinking. When a bet fails, the manager must be careful to express interest in the takeaways but no condemnation. Everyone in that room left with two major messages in mind. First, if you take a bet and it fails, Reed will ask you what you learned. Second, if you try out something big and it doesn’t work out, nobody will scream—and you won’t lose your job.

3. ASK HER TO “SUNSHINE” THE FAILURE

If you make a bet and it fails, it’s important to speak openly and frequently about what happened. If you’re the boss, make it clear you expect all failed bets to be detailed out in the open… It’s critical that your employees are continually hearing about the failed bets of others, so that they are encouraged to take bets (that of course might fail) themselves. You can’t have a culture of innovation if you don’t have this. At Netflix, we try to shine a bright light on every failed bet. We encourage employees to write open memos explaining candidly what happened, followed by a description of the lessons learned.

Right Kind of Wrong: How the Best Teams Use Failure to Succeed - Amy Edmondson

Introduction:

“Intelligent failures provide valuable new knowledge. They bring discovery. They occur when experimentation is necessary simply because answers are not knowable in advance.

Embracing the Possibility of Failure to Reduce the Occurrence of Failure

My decades-long fascination with error, harm, and failure has left me humble about the complexity of these topics. The mix of factors—technology, psychology, management, systems—means none of us can master every aspect of the relevant knowledge to feel “we’ve got this.” But a few simple practices have emerged from my work that can help prevent complex failures. With these, we all have the power to make that kind of difference—in our own lives and in the organizations we care about.

Chapter Seven: Appreciating Systems

“In addition to organizational systems such as 3M, all of us operate in systems in our everyday lives—family systems, ecosystems, and school systems, to name a few. This makes system awareness—especially understanding how systems can produce unwanted failures—a crucial skill in the science of failing well. A system’s results are less shaped by its individual parts than by how the parts relate to one another. This simple but powerful idea can help you analyze and design various systems in your life to get better results. Later in this chapter I’ll return to how 3M designed a system to generate the right kind of wrong and thereby spawn countless innovations. But first, let’s take a closer look at what it means to think in terms of systems.