Failure and Reward: What’s Your Risk Tolerance?
by Beth O'Neill
Every October, Major League Baseball creates its big winners and losers. And that process has got me thinking about failure.
A decent hitter in baseball makes an “out” about 70 percent of the time: a fairly significant failure rate. A good team loses just a little less than half of the season. Yet the game requires crazy precision — ever try throwing a ball at 95 mph through a roughly 30 x 22-inch window, just 12 inches off the ground? No, me neither, but I can imagine how difficult that challenge would be.
In a 162-game season, the average entire team defensive error rate is about .5. How do you lead with typical outcomes like these? How does that failure rate translate for a business leader?
Recently, I witnessed both ends of the failure-tolerance spectrum. One client in the energy industry insisted that there was absolutely no room for failure. Even with some prodding, he couldn’t see any risk-reward benefit to a misstep. I understand where he’s coming from, since he’s in a highly safety-conscious industry, and certain failures could lead to loss of life. From that perspective, you can’t take a risk. Yet that fear of failure had crept into all areas of his leadership. He was so risk-averse that his team was unwilling to try anything new — even when a risk would produce a fairly benign failure result, and could reap big rewards if it succeeded.
Later in the same week, I co-led an innovation workshop with my IA colleague Jay Cone for a pharmaceutical company. Based on IDEO’s design thinking methodology, the workshop encourages rapid prototyping and thoughtful yet simple testing of ideas relatively early in the design process.
The notion is to “fail early” and refine — or abandon — an idea before you’ve got too much invested in it. This group was very willing to embrace failure as a necessary part of an ultimately-successful innovation process.
Some say Silicon Valley’s failure tolerance isn’t what they say it is. While many boast that tech companies embrace the idea of “failing fast” or “failing forward,” some insiders insist that’s just talk, and that most tech companies are risk-averse.
It’s important to understand that our failure tolerance is situational. Baseball teams typically are offensively tolerant but defensively intolerant. For the utility worker, safety consciousness and risk aversion are indispensable. But that’s easy when the rules are black and white. It’s harder, however, to assess, balance, and take risks when the consequences are less dire. Good leaders know how to support that balance, and asking the right questions upfront is key.
Our 2014 trust research indicates that highly-innovative companies create safe environments where people are trusted to risk -- and fail. The question is, how failure-willing are you? Do you let your employees fail?
“I hit big or I miss big. I like to live as big as I can. ~Babe Ruth
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