Failure. It’s a bad thing right? At least that’s the underlying belief held by many leaders today, in fast growing startups and established corporates alike.
The problem is that without embracing failure, we risk strangling innovation. And innovation is what helps companies stay disruptive rather than becoming one of the 53% that are currently facing disruption themselves.
Before you nod your head and think, “OK, but we’re ok with failure in our business,” we’d advise a little caution. Because according to the findings of our Disruptive Leadership Report, that’s exactly what the most disrupted leaders are thinking too…
Innovation isn’t always comfortable
When we interviewed John McCusker, VP Talent at Bacardi, he used two words that nicely sum up the challenge for many businesses when it comes to innovation:
In our report, 50% of the C-Suite respondents said a risk-averse culture was a top blocker to innovation. And it seems to be pretty difficult to shake. As McCuster says: “The DNA of many organisations and their leaders is seeking clarity and predictability.”
It’s a strategy that no longer fits the times though. There was a day when you could build a business on a bedrock of forecasts and sure bets. But now we’re building on an ocean in high winds. Market change is constant, disruption is inevitable and the odds of sinking have never been higher.
You might imagine that working furiously would be a way to survive in this climate. But a full 60% of leaders say high workload is blocking their ability to innovate – a warning to startups who are scaling fast and stretching thin to the detriment of creative thought.
The problem is, disrupted businesses are trying to deal with disruptive change in a linear way. They’re looking to get from A to B, out of the whirlpool and into a stable state. But in their pursuit of safety, they’re actually killing it.
As one C-Suite leader put it to us, the “appetite for experimentation is strangled” throughout the organisation.
Leaders are failing to fail
Every organisation is trying to innovate – to do otherwise is to commit your business to the grave – yet only a few are succeeding. Products are rebooted, services reimagined, methods revised, and somehow it’s just not successful enough.
“Organisations talk about failing fast,” says Nathan Ansell, Marketing Director at Marks & Spencer. “But it’s counter-cultural and very hard to embed.”
Culture, as it turns out, is the core issue. While many of the leaders we surveyed said they were investing in innovating products and services, 56% ranked culture innovation as the lowest priority.
You can’t shortcut culture. It doesn’t matter if you’re a startup with an innovative product, if your rapidly-scaled culture doesn’t enable you to keep innovating, you won’t survive. And even if your company has a successful culture that goes back decades, that success is not a free pass for the future. It might prevent you from welcoming the failure you need.
Organisations are trying to cover up their ‘mistakes’
In the businesses we saw responding well to disruption, leaders were 21% more likely to embrace failure as an opportunity for learning.
“We need to focus on increasing leaders’ capacity to be courageous and take calculated risks,” says Madhusudhan Rao, EVP at Unilever. “Growth mindset and psychological safety are the foundations to achieve this.”
Netflix has laid some good groundwork here. When anyone in the organisation fails, they ‘sunshine’ – publicly sharing what went wrong and what they learned. While disrupted organisations may encourage this in principle, it’s another thing entirely to actually share stories of failure as keenly as stories of success.Innovation comes easily when everyone is voicing their failures, their honest assessments and their brilliant ideas. Too many organisations only want to hear one or two out of three – so they get none. But disruptive leaders dismantle shame by placing everything in view, and their employees then feel free to do the same.
Ideas from beyond the bubble
And organisations need those employees to speak up. “It starts with everyone,” says Gwen Burbidge, CHRO of Wetransfer. “Anyone can start an innovation. Ideas come from across the organisation not from senior leadership. It’s our job to facilitate their ideas.”
No organisation can rely on an A-list of ideas people. That practice becomes a recipe for fewer diverse perspectives, and leadership teams end up falling prey to group thinking. The market soon catches them off guard.
Our research found that leaders in disruptive organisations were 30% better at building diverse teams. Dan Hynes, Head of Talent at Atomico, one of the world’s largest venture capital funds, told us about their own uncompromising policy. Any founder who receives investment must sign a pledge to have a diverse team in 12 months. It’s not just a question of reputation. It’s a question of innovation.
T-minus was forged in the fires of startups and world-leading companies. After 20 years of leadership, we’ve seen that culture innovation is not optional. And as the world is thrown headfirst into the fourth industrial revolution, uncertainty, vulnerability and diversity aren’t optional either.
In this changing world, the only constant is disruption. To be ready for it, download our Disruptive Leadership Report, a playbook for leaders of the fourth industrial revolution.