The Failure Imperative

The Failure Imperative

Summer 2010 By CHARLENE LI

Building trust by forgiving mistakes.

CHARLENE LI is founder of the Altimeter Group and co-author of Groundswell. She was the subject of a TCB Review Q&A in the May/June 2008 issue. From Open Leadership: How Social Technology Can Transform the Way You Lead (Jossey-Bass). ©2010

In my work with organizations, one big barrier to adopting a culture of transparency and openness has been a systemic and cultural aversion to failure. When I start discussing the likelihood that things will go wrong when being open and using social technologies, I often see people squirming uncomfortably in their seats.

But I’m convinced that a key part of being an open leader is the ability to effectively deal with failure, because even with the best structures and planning in place, things go wrong. By mastering failure, you create an environment in which risk taking is encouraged and recovery from failure becomes a skill that everyone in the organization possesses. Essentially, I’m talking about your ability to create a culture in which people have such trust in each other that they know they can safely take risks.

How well you, as an open leader, deal with failure is just as important as how well you deal with success. Can you be open to and accept the fact that people will make mistakes? That products will fail in the market? That decisions will have unexpected—and sometimes unhappy—consequences? If you feel you cannot be open to mistakes and failures, think of the consequences of this closed mindset. Your colleagues will be afraid to step out or to speak up, and that goes against the very core of being open.

Open leadership is about building a new kind of relationship with your employees, customers, and partners. In any relationship, things go wrong, mistakes are made, ups are followed by downs. The strength of a relationship is not how perfect it is but how resiliently it deals with the unavoidable downs. And with the advent of social technologies, there are new ways to form those bonds and relationships—but also more potential to amplify mistakes.

Flinging Yourself Off the Platform
Every summer, I go to a camp with my family where a highlight is the ropes challenge course. One of my favorite activities is the Leap of Faith. I climb up a redwood tree, about forty feet high in the air, clamber onto a precarious little platform, and look out at a trapeze about ten feet away. The idea is to fling yourself off the platform and catch the trapeze with your bare hands. I am wearing a hardhat and a harness tied to a rope for safety, but the only thing to keep me from falling and smashing my face into the dirt below is my family holding onto the other end of the rope. There are my husband, brothers, and kids, some of whom can barely grasp the rope. Palms sweaty, heart pumping, I gather up my courage, put my trust in them, and launch off the platform, aiming for the trapeze. And I always miss.

The only reason I’m able to take this risk is that I trust that my family is there to break my fall. And each summer it gets a little easier to climb that tree and fling myself off the platform—I’m getting accustomed to the risk, and it gives me hope that this might be the year when I finally can grab onto that trapeze.

In your organization, how important is it for people to be risk-takers, to be innovators? If initiative and innovation are key to your future success, then you need to take a long, hard look at how you personally create trust and approach failure, because it will be reflected back in the culture that you create. To be an open leader, you need to have the self-awareness and humility to know your limits and, similarly, to know the role that failure has played in your success.

In an interview I conducted with Cisco CEO John Chambers, he shared that he often asks prospective employees about results. “I never get hard work confused with success. So I walk you through your successes, and what you did right. I also ask you to tell me about your failures. And that’s when people make a tremendous mistake. All of us have had mistakes and failures, yet it’s surprising how many people say, ‘Well, I can’t think of one.’ That person immediately loses credibility with me. It’s an important ability to be very candid on what mistakes they’ve made, and then the question is, what would you do differently this time?”

Chambers’ comments reinforce that the ability to recognize and learn from failure is important. In fact, the best leaders prepare themselves and their organizations for failure, and make sure that there are ways that everyone, including themselves, can learn from these experiences so that they are not wasted.

Google’s Amazing Failure Machine
One organization that is really good at failure is Google. Known as one of the world’s most innovative companies, Google understands that to be successful at innovating, the company has to have lots and lots of failures as well. Google has a motto: “Fail fast, fail smart.” And one thing Google has done especially well is to deal with the leadership challenge of picking up the pieces after a failure.

I talked to Chris DiBona, Google’s open-source and public-sector manager, about failure and how the organization deals with it. “I fail a lot, so I can help you with that,” he said, only half joking. He told me about one project he worked on that was launched inside the company as a test—a service Google could use internally as well as one it hoped to bring to market. “Frankly, the usage just wasn’t what we were expecting. It ended up simply not working out. People just didn’t need what we were creating.” Google realized that releasing the service to the public would have been a waste of time and money. Once that became clear, says DiBona, it took a few weeks to shut it down—a project on which engineers had worked for almost two years. The engineers were obviously not happy to be shut down. “It can stink to fail. It can just stink,” says DiBona.

What happened next?

“I felt way worse than pretty much anyone else in the company about canceling the project,” DiBona recalls. “But nobody held it against any of the engineers. In fact, my boss, Alfred Spector, said, ‘Listen, we should do what we can and give these guys a ton of flexibility to find projects they really want to work on that are either launched or launching so they continue to respect Google and know that Google wants them to stay and values their backing it up with resources.’”

Google, DiBona says, does more than tolerate failure grudgingly—it actively creates a support system for people so that they feel comfortable failing. But more important, the company is able to identify and separate the personal competencies of people from the failings of a particular project, allowing good people to take risks again. The engineers who kept their jobs now have a lot more confidence to try new things. “In our whole hiring and recruiting process, we emphasize points like this. We make sure the word is out so people come in knowing they can try things, that failure can be OK.”

With its culture, Google creates the trust necessary for risk-taking and demonstrates that support regularly through its actions. Granted, this level of tolerance for failure will be different for every organization, as each company has its own risk-tolerance profile. The key is to figure out how much risk you will tolerate as a leader and how much your organization can handle, then to make sure that the two are aligned.

There are four actions that an open leader can take to ensure that the organization is resilient in the face of failure and able to learn and grow from challenges: Acknowledge that failure happens; encourage dialogue to foster trust; separate the person from the failure; and learn from your mistakes.

Failure Happens
Failure is inevitable. Things go wrong. You may lose clients when individuals make mistakes. People associated with the failure may begin looking for other jobs or anticipate a transfer to the Wasilla, Alaska, office. In the past, organizations tended to keep their failures secret, certainly from the public. Today failure is much more difficult to hide—the employees and customers involved may tweet and blog about it, and you have no way to turn it off. Not only must you guide your organization through the failure—you are likely to have to do it in public for the world to see. Openly acknowledging a failure is a crucial part of openness. The key is to keep everyone focused on the larger goal, not the temporary setback. The greatest generals do not win every single battle, but they are able to rally the troops, analyze what went wrong, and make adjustments for the next battle.

Acknowledging failure publicly can be very, very tough for many organizations. But doing so quickly and moving forward to resolve the problem is essential to driving trust with your customers. Facebook has found itself facing vocal protests over policy shifts several times over the last couple of years, epitomized by a brouhaha in early 2009, after the site changed its terms of service (TOS). For more than a week, nobody noticed. But on February 15, The Consumerist blog posted an analysis of the new TOS, headlined “Facebook’s New Terms of Service: ‘We Can Do Whatever We Want With Your Content Forever,’” spurring angry protests. The problem: The new TOS seemed to grant Facebook an irrevocable right to content created and posted by users, even if those users canceled their accounts and wanted nothing more to do with the site.

Almost immediately, Facebook responded with clarifications, including a February 16 blog post by Facebook CEO Mark Zuckerberg, all trying to explain the logic behind the new TOS. Zuckerberg even admitted at the end of his post, “It’s difficult terrain to navigate and we’re going to make some missteps, but as the leading service for sharing information we take these issues and our responsibility to help resolve them very seriously.” But the new TOS remained in place, and the explanation did little to abate the growing uproar and media coverage.

The next day, at 10:17 p.m., Zuckerberg wrote another post that reverted the TOS to the original one, writing: “Over the past couple of days, we received a lot of questions and comments about the changes and what they mean for people and their information. Based on this feedback, we have decided to return to our previous terms of use while we resolve the issues that people have raised. . . . Going forward, we’ve decided to take a new approach towards developing our terms. . . . Since this will be the governing document that we’ll all live by, Facebook users will have a lot of input in crafting these terms. . . . If you’d like to get involved in crafting our new terms, you can start posting your questions, comments and requests in the group we’ve created—Facebook Bill of Rights and Responsibilities.”

Facebook clearly acknowledged that it had made a mistake, but the company’s leaders didn’t just apologize—they moved forward not only by explaining how they would address the problem (revert the TOS to an earlier version) but also by creating a process for developing the new TOS with input from Facebook users. The company’s open culture allows it to move rapidly and to try new things, but it also gives tremendous power to users, which Facebook must in turn respect. Looking back at the TOS debacle as well as other failures, HR VP Lori Goler commented, “In all of these mistakes, we look for the learning opportunity or the teaching moment, and then take it as an opportunity for innovation. TOS happened. We came out and apologized. Then we came up with an entirely new paradigm for the way we think about our relationship with users that I think has gone a lot farther than most other companies would be comfortable going.”

Open leaders respect that today an organization’s customers, clients, prospects, partners, and others have power to share information. You can look at it as a way to expose failures, and fear it. But effective open leaders will also see it as a way to strengthen the relationships that will be needed to move on from those failures.

Encouraging dialogue, bolstering trust
Have you ever been in this situation? You attend a meeting where everyone avoids talking about “the problem.” It can be anything, but it’s the elephant in the room that no one wants to name—so it never gets dealt with. But right afterward, when the meeting adjourns, everyone begins talking about it privately. Kodak CMO Jeffrey Hayzlett recalls his experience: “You can see the elephant in the room. We should deal with it in the room in the first place. When people do deal with it, it makes relationships much more powerful because you have the transparency to have that discussion.”

Kodak is an interesting corporation because its longtime core business, photographic film, is rapidly disappearing. Fortunately for Kodak, the market shift did not happen overnight, giving management time to move into digital photography and digital printing. They had to buy companies, integrate them, and continue to rev up their innovation engine. In undertaking such a massive shift, Hayzlett explains, many things weren’t working right. “We didn’t have the trust, and frankly you just can’t go out and have a coaching program” to correct this.

So Kodak’s leadership created with a core set of values they wanted the organization to exemplify: focus, accountability, simplicity, and trust, known by the acronym FAST. CEO Antonio Perez focused in particular on the last element of trust, an outgrowth of what he called “healthy debate.” Hayzlett recalls, “If we got nothing out of FAST, other than that we made mistakes quicker, we would be further ahead.” Kodak realized that healthy debate and an honest exchange between people would be the foundation for trust in the relationships the company wanted to build. People needed to be able to have vehement disagreements, resolve them, and still be able to work together.

To support that honest dialogue, Kodak put in place an internal social network as a way for people to get to know each other. Employees use the network as a way to develop relationships internally, and the intention from the beginning has been to eventually open it up to customers so that they could get to know Kodak people better as well. This is especially important for Kodak’s burgeoning new business-to-business relationships with hundreds of thousands of customers: With a simple click, customers can see profiles of their account manager, customer-service team, and technicians—and begin a dialogue with them.

Separate the Person From the Failure
One key thing Kodak did by spurring that debate was to separate what people did from the specifics of the failure. Rather than simply say or imply, “You failed, so you can’t be any good,” Kodak communicated to people, “You didn’t fail—the project did. So what can we learn from this to do better next time?” Hayzlett shared his framework for understanding the three elements required for trust: sincerity, competency, and reliability. These have always been necessary, but social technologies add new dimensions to each of these elements.

Sincerity. By this I mean that you are saying what you genuinely feel or believe based on eye contact, body language, tone of voice, and past experience. You are not dishonest or hypocritical. Although in many social-media situations we lack the eye contact and body language of an in-person encounter, tools such as Cisco’s TelePresence enable individuals to see each other for more than once-a-year meetings. But when you engage in a regular dialogue, respond to questions, help with problems, and offer useful tips, it goes a long way to convince a customer that you are sincere (aka authentic) in your desire to have a relationship. They can see in your blogs, in your videos, in your interactions with them that you are sincere in your desire to help.

One can, of course, be sincerely mistaken. People who believe they have been abducted by space aliens may be perfectly sincere. But that’s not enough to warrant acceptance of the person’s statement as describing a verifiable reality. In addition, I often see the issue of sincerity raised when somebody endorses or condemns a product—for example, in a blog or Twitter post. Does the blogger really love the product, or is the person being paid? Conversely, did the tweeter truly have a bad experience, or is that person really a competitor pretending to be a customer? Just as we as individuals in everyday life are usually able to ascertain the veracity of a person’s comments, we are quickly acquiring the skill to differentiate between what is real and sincere online and what isn’t.

Competency. This next element concerns your ability to do something and, more important, whether people believe you have the ability to do what you say you can do successfully or efficiently. Thus your actions speak for your ability—for example, you display your expertise publicly in your blog postings, in forums, in your reviews of books, music, products, services, and so on. Or you have given good advice to people over and over in a support forum, so they’re going to trust the advice you give. Or they know that the products you have created in the past have worked really well. You have demonstrated that you can build a reliable car, an effective search engine, an elegant laptop, so they’re going to trust that the new products you develop are pretty good too. Also, other people in ratings and reviews vouch that you are able to do what they need you to do.

Reliability. You are consistently good in quality or performance both in routine circumstances and in hostile or unexpected situations. Customers know they can depend on you. They can trust you to be there when they need you. When you say you will do something, you do it, and if you cannot do it in a timely way, you tell them and give them a compelling reason why you cannot. (“Abducted by space aliens” is not good enough.)

Breaking trust happens when one or more of these three elements are absent. It does not necessarily mean that a person who has failed is morally depraved or wicked—it may simply mean the person is sincere and competent but unreliable. For example, a child may be perfectly sincere in saying he will bring his jacket home from school. You know he is quite competent to do so because he’s done it in the past. But he’s not reliable: Sometimes the jacket comes home, sometimes it doesn’t. Because he’s your child, and because a forgotten jacket is a minor lapse, you don’t fire him. Instead, you put in place a system to ensure that the jacket usually comes home with him. Similarly, if failures tend to repeat themselves in your organization, what structures can you put in place to prevent them in the future?

In the same vein, someone can be sincere and reliable but not competent. A dyslexic child may spell sugar “suger” every single time she writes the word. You know she’s sincere in wanting to spell sugar correctly, but she reliably spells it wrong, so her competency is quite low. She is going to fail to spell sugar every time, so you look for ways to improve that competency. If you have an employee who lacks the skill to do the job and fails as a result, you may need to determine whether you have prematurely advanced that person without the proper training. The logical follow-up would be to give that person the proper training to increase the competency that’s needed to do the task.

Finally, some people are reliable and competent but not sincere. This usually surfaces as passive-aggressive behavior in the organization. They are capable of doing the work, and they are, in their way, reliable when they do it. But they may say they will do something, they may agree with the plan, but they do not perform and follow through, because it’s not in their interest to do so. For example, an IT manager may commit to some programming for a corporate project but go back to the office and, rather than pull the best person from another project, assign it to whoever happens to be free. The result: The work gets done, but it’s not of the quality that people expected.

This last point about passive-aggressive behavior is especially tough in collaborative environments such as Cisco’s, which is why that organization spends a significant amount of time making sure people are aligned around shared goals. Ron Richie, VP of company positioning at Cisco, says that although he and co-workers rarely have disagreements, “when we do, one of the things that is important is that it is not personal. One of the keys of the culture of shared goals is that you have to be able to disagree on the substance of the issue without it being personal.” Ron and his co-worker may have dramatically different viewpoints about what to do, but at the end of the meeting, if the co-worker’s idea is bigger than Ron’s idea, and the group agrees on it, Ron has to accept that the decision is not personal. And then he has to agree to back the idea fully and, most important, be held accountable.

Having regular dialogue facilitated by social technologies allows the open leaders at Cisco and Kodak to have personal relationships with people throughout the company and, increasingly, with partners and customers as well. That allows them to identify the problems, address them, and still retain the relationship. If passive-aggressive behavior is a problem in your organization, make sure that you have the full commitment of repeat offenders before letting them return to their desks—and follow up with measurable expectations that are clearly laid out.

Teachable Moments
A friend of mine worked for a nationally branded coffee roaster. Several years ago, the firm introduced a special coffee blend for the western U.S. market. The tagline was “Black as Night, Hot as Fire.” Because at the time Westerners preferred their coffee light and relatively weak, the product flamed out completely. Three years later, when my friend was involved with another brand introduction, he wanted to research the earlier brand’s experience. It was like doing research in a paranoid totalitarian state. Management had not only killed the product and the campaign but also destroyed virtually all evidence that the brand ever existed. What a shame—in its fear of failure, the corporation lost any opportunity to learn from the fiasco.

As a study of contrast, take a look at how Walmart was able to learn from its multiple failed social-media efforts. In July 2006, Walmart launched its own social network, The Hub, in a futile attempt to challenge then-leader MySpace. The Hub lasted only ten weeks, mostly because the site used actors and models to populate content and continually pushed visitors to buy Walmart merchandise. That September, a folksy blog about a couple traveling across the country in a recreational vehicle and staying in Walmart parking lots was revealed to be company-supported. Significant media coverage of the broken trust followed.

But wait, there’s more. Walmart came back in the fall of 2007 with a Facebook group focused on back-to-school shopping. Although well executed, the Facebook group was focused on fashion, whereas Walmart was known for low prices, so there was a disconnect with the targeted college audience. Worse, Facebook members started protesting Walmart’s labor practices via comments and turned the site against the company.

It looked as though Walmart simply didn’t get social technologies and never would.

But behind the scenes, there was a steely determination to engage with customers via social technologies, in much the same way that the company engaged with customers in its stores. With every setback, it learned something new and took it to heart. It learned that it needed to be consistent with the company’s corporate mission of helping families save money. It also realized that there were significant detractors with concerns that would be difficult to address in an open forum, so it had to navigate social media carefully in order to have a truly open dialogue with people without having the conversation hijacked.

So in December 2007, Walmart launched Check Out blog, with Walmart employees such as Susan Chronister, a buyer in the movie category, writing the posts. The site shared the perspective of what the Walmart buyers were thinking as they selected merchandise for the stores—and it was a hit. Check Out was quickly followed by the addition of ratings and reviews from Bazaarvoice and, in December 2008, by the launch of the elevenmoms.com blog, written by a collection of mommy bloggers sharing tips on how to save money. Walmart was undaunted by its previous setbacks and not only as determined as ever to figure out a way to engage but willing to try many new things, even as it struggled to figure out what works. The result: Although not active in all social-media channels, Walmart is well on its way to mastering social technologies. Its Facebook members number 1.2 million, and it has dozens of employee Twitter accounts tweeting to customers.

What is your organization’s ability to learn from mistakes? Are you like the coffee company, sweeping failures into musty dark corners, hoping that by ignoring that they happened, you will help your organization quickly move onward? Or do you face failure head on, as Walmart did, focused by a common vision to learn from the experience so that you can achieve your goal?