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Innovation through failure

It doesn’t take much experience of life to realize that we vary enormously in how we perceive and respond to failure, and that a great many of those perceptions and responses are shaped by the cultures in which we grew up or now work. Here I discuss in detail the five most important cultural dimensions and describe how some forward-looking companies are managing to reconcile cultural differences to create a powerful platform for innovation.

1. Do We Control Our Environment or Does It Control Us?
This dimension determines whether you manage failure with prevention or with response. Cultures that view the environment as internally controlled believe that good design and planning can help to avoid most failures. Cultures that view the environment as externally controlled accept failure as inevitable and believe that survival depends on developing the skills to respond to it quickly.

People mostly in Western Cultures who feel that control is internal see failure as a personal threat and may become authoritarian or manipulative to increase their comfort level. They may write lengthy contracts that cover every conceivable contingency and hedge every clause. But they are less wasteful, because they tend not to repeat mistakes. Obviously, a company that combined prevention with adaptability would be a formidable competitor. Emirates, the national airline of Dubai, is a good example. During training exercises, Western pilots try to avoid failure, even though “crashing” in a simulator costs nothing. They propose changes in cockpit design and procedures and change routes to minimize the likelihood of disaster. By contrast, Arab pilots who are given a chance to “fail” without consequences will take risks and respond to them. They want to experience a crisis situation—such as how the controls feel seconds before going into a stall. They’ll pass through a virtual cloud rather than around or over it. Emirates learns from pilots of both kinds to prevent failures and improve responses to them, making it one of the safest airlines in the world.

2. What’s More Important, Rules or Relationships?
How strictly we adhere to rules and how eagerly we make them vary greatly from culture to culture. Rule-centered societies like the United States and Britain feel that general rules should have global application and that all comers should compete on a level playing field. Relationship-centered countries like China, Russia, and India value bonds with family and friends above abstract rules: Particular circumstances and the people involved may dictate the response to a situation.

Countries in the former category probably better satisfy the desire for distributive justice, but they may become obsessed with rules and regulations—which explains in part why the United States has so many more lawyers than Japan does. Countries in the latter category tend to resolve failure privately, through relationships. Companies can combine the virtues of both by recognizing that rules and exceptions are mutually sustaining. An exception to a rule may contain the seed of a new rule or illuminate the limits of the old one. Using a technique called “management by exception,” which draws attention to any surprise event falling outside existing rules and expectations, managers can strengthen some rules and obviate others. And the existence of rules helps to make exceptional relationships meaningful.

3. Are Failures the Responsibility of the Individual or the Team?
In individualistic societies like the United States, workers are very independent and even compete with their colleagues. Although internal competition can be organizationally toxic, it can also be highly productive, especially in businesses that compete on their ability to sell. Naming a Best Salesperson of the Quarter at company award ceremonies helps to boost sales targets.

At the other end of the spectrum are communitarian countries, in which people take responsibility for errors as a group, even when only one member is involved.

What we call “co-opetition” can bring some communitarianism to an individualistic company. At IBM, for example, in addition to receiving bonuses based on their volume, salespeople are rewarded for making good presentations to colleagues on lessons learned from client interactions. The group’s performance has risen by 30% since this program was introduced.

4. How Much Do We Identify With Our Failures?
People in non-identifying cultures are not afraid of failure. They compartmentalize, viewing a failure as simply an idea that didn’t work. Furthermore, they celebrate failure as a learning opportunity. For people in identifying cultures, failure is a bigger deal. The idea is personalized.

Consider the dynamic we observed between American and German engineers at the semiconductor giant AMD, which we advised shortly after it had set up operations in Germany. When we interviewed Americans employees, we heard many complaints about the slowness, lack of creativity, and risk-averseness of their German counterparts to exploratory creative ideas. The Germans, in turn, claimed that the Americans were too hasty in their behaviors, throwing clearly underdeveloped ideas into brainstorming sessions. The reason for this tension quickly emerged in our workshops. Because the Americans separated the ideas from the people, they readily accepted criticism during a brainstorming session. AMD found a way to reconcile these views. Time-outs were built into each meeting, which allowed the Germans to swap and criticize ideas in private and in German. Failures in the smaller, familiar group were acceptable. Their ideas were then collated on Post-it notes and shared with the Americans. The Americans were astonished at the resultant German creativity.

5. Do We Grant Status According to Performance or Position?
In achieving cultures, people value others according to their performance, whereas ascribing cultures emphasize a person’s position in the organization and the society. This difference plays a role in determining the extent to which people are willing to show initiative and risk failure.

In achieving cultures, people take a lot of personal initiative—but they are often very protective of their achievements, which can play out in the broader culture as a strong sense of property rights and much litigiousness. In ascribing cultures, people avoid taking responsibility for actions when their superiors are around, because they gain little—and may actually incite hostility—for successes, whereas they are vulnerable if they make mistakes. Employees first discuss their actions with the boss; once they get the go-ahead, the boss takes responsibility for success or failure. In an achieving culture, if the goal demands it, people will take action and inform the boss later. If things go wrong, the boss will judge whether the risk was reasonably assessed and the action had the potential to achieve the goal.

We heard the following story from the head of process control at a an achievement-oriented U.S. bank operating in highly ascribing Argentina. When the American manager of the Argentinean subsidiary complained about the low motivation of his administrative staffers, we advised him to take a look at their job titles, which had been imported from the United States: Departmental Secretary I, II, and III. After the highest-ranking secretary was promoted to Personal Assistant and the others were given titles that made clear the positions of those for whom they worked, a more positive atmosphere quickly developed. The manager told us, “Not only was it in line with their culture, but best of all, it did not affect my budget.”

Organizations will secure long term success by recognising the key dilemmas they face around failure(s) and continually strive to reconcile them. And let us recall John Gall’s Law that states “fail safe systems, fail by failing to fail safe”. And this is true of any culture…

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