Failure is normal. Failure happens. We may think of only one kind of failure – catastrophic failure that gets everyone fired – but failure is multifaceted, nuanced, and occurring right now in each of our organizations.

Failure is also not a “bad” thing. Failure is a mark of leadership and innovation in pushing the boundaries of what is possible and profitable when scaling from pilots to global programs.

6 Steps to Reduce Failure Risk

Leading over a decade of Fail Festivals for company events has taught us that failure is not predetermined. Failure happens when organizations attempt innovation without well thought through processes.

How can teams can actively work to reduce the probability of failure? Here are six simple steps that companies can use to mitigate failure and improve the opportunity for success.

1. Before action report

Teams should think through all the possible results that could happen from the project. Then they can document which outcomes they should actively work to avoid or welcome.

This process can help companies understand why they should welcome the experiment and start teams on the learning journey that will result from the resource investment.

2. Making a success spectrum

The potential outcomes developed in the Before Action Report can be sorted to see all the ways the project could have positive impact, and at what points can the team claim a success.

Companies can realize that success does not need to be binary. Reaching 50-90 percent of the experiment’s objectives can still be a success, even if the effort does not reach 100% of their goals.

3. Open sharing sessions

During every phase of a project, teams should have risk-free conversations on what isn’t going right, not to assess blame but to mitigate problems early and often.

This opportunity to increase psychological safety within teams can be an everlasting outcome of the experiment, and lead to trust and innovations well beyond the specific experiment.

4. Codifying permission to fail

Leadership can develop a fail-positive organizational culture where everyone – from the CEO on down – admits to failure and discusses what they learned from it.

Innovation – and its failure corollary – can only happen when both are discussed openly at all levels of an organization. In fact, a minimum level of failure is a proxy for organizational innovation.

5. Creating innovation funds

Companies can budget and time for no-stress experiments – something like a 10% of projects by number or value.

This is large enough to get staff attention and motivation, new enough that investors will want to support it, but small enough that failure of any one project, or even groups of them, will not cause undue stress for corporate leadership.

6. Publishing failure reports

Companies can share results of experiments – good and bad – across the organization and publicly.

Teams need to talk about failure. Mistakes that get covered up do double harm: first at the original failure, and then again every time someone else makes that same mistake – because they couldn’t learn from the first error.

Failure is a mark of leadership, innovation, and risk-taking in pushing the boundaries of what is possible and profitable in scaling ideas from pilots to global programs. We should be demanding a minimum level of failure as a proxy for how innovative an organization is.

Why ask for failure to ensure success?

In the research paper, Innovation, exnovation and intelligent failure, the authors argue that success can foster decreased investigations, increased complacency, risk aversion, and destructive homogeneity. Conversely, modest levels of failure can promote a willingness to take risks and foster resilience-enhancing experimentation.

Success and failure are therefore siblings.  An inability to learn from experience – and particularly failure – can doom a company to repeat the same mistakes over and over without improvement.

7 Steps for Intelligent Failure

They also define seven steps companies can use to reduce the risk of innovation failure and increase the probability of pilot success. Key ideas we can all learn from to keep from staring in the next Fail Festival.

1. Well-planned, thoughtful innovation

The first step for any good innovation is to invest in careful planning of what will be done and the expected outcomes.

For example, a Before Action Report can help document all the potential outcomes.  This the opposite of post hoc rationalizations of why something was started, after its already in process and potentially failing.

2. Documented uncertain outcomes

An experiment, pilot, or test, are all by definition leading to multiple uncertain outcomes.  However, they don’t need to be unknown outcomes.

Doing a Before Action Report and creating a Success Spectrum can document and sort all the ways the project could have positive impact, and at what points can the team claim a success.

3. Clear underlying assumptions

Don’t just document the process and potential outcomes, also be clear about the underlying assumptions and background context of each innovation investment. Ask questions like:

• Does the experiment require teams to follow or flout rules?
• Are there unaccounted resources, like volunteer team members?
• Can this innovation only exist in specific enabling environments?

4. Small Scale Innovations

A key aspect of intelligent failure is to make sure that companies budget and time for no-stress experiments that will not harm the organization. Something like a 10% of projects by number or value.

This is large enough to get staff attention and motivation, new enough that investors will want to support it, but small enough that failure of any one project, or even groups of them, will not cause undue stress for corporate leadership.

5. Experiments Relevant to All Teams

Companies need to make sure the context of the innovation is familiar enough to the relevant teams that it can create effective diagnosis of the failures and teams can adopt the lessons learned.

This is why I always design Fail Festivals to be organizationally diverse, bringing in staff from different levels and backgrounds so that each participant can see themselves in at least on presenter.

6. Asses early and often

I really like the intelligent failure point of assessing the innovation early and often at specific checkpoints. These pause-and-reflect sessions should be identified in advance to allow teams to quickly identify whenever the activity is diverging from the original plans.

Not all divergence is bad, and not every change means failure. If a company did a Before Action Report, then these inconsistencies can be anticipated and mitigated in real time.

7. Lessons learned are quickly shared

Along with assessing pilot projects early and often, organizations can develop a culture of innovation by talking about how teams learn from failure.

The goal is to establish failure as healthy for a company and get past thinking of failure as a catastrophic event. Failure is nuanced and failure – a sibling of success – requires risk tolerance for innovation.