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Organizational failure – to stigmatize or reward?

Consider the following examples:-


Nestlé’s chocolate-flavored drink Choglit, OK Soda or Surge, New Coke, Sony Corp.’s The eVilla, General Motors Corp.’s The Pontiac Aztek, The CueCat, Virgin Atlantic Airways Ltd.’s offering “a bed in business”. Can you draw a similarity?


When Columbia was destroyed, NASA conducted an exhaustive investigation to realize that the loss of a piece of foam insulation triggered such an explosion.  This was overlooked a year before when the space shuttle Atlantis was launched. What was the reason? The Atlantis mission was a success, and Columbia was a catastrophe.


Organizations that stigmatize failure may run the risk of jeopardising future organizational improvement because major breakthroughs depend on them.


Research shows that knowledge gleaned from failure is retained longer and at a far better rate, almost 89% of the learning from failures while only 34% from successful events.


Have you ever wondered why VC’s often look for managers with a setback, to run startups? Failure is so crucial to the experimental process. Probably, that’s why true, breakthrough innovation — an imperative in today’s fiercely competitive world, is so hard. Organizational leaders should, therefore, treat failures as invaluable learning opportunities, encouraging open discussions and sharing of information.



118 thoughts on “Organizational failure – to stigmatize or reward?

  1. Failure is definitely a learning experience. And i also agree that operations managers should have risk taking attitude. In operations term, risk taking has a measurement and there’s always a ‘buffer’ with the ops manager. It’s true that every success and failure should be properly documented. It can be used in almost every step of operations strategy development. But theres’ always a cap to the rate of failures. An Ops manager or any manager infact will not appreciate high failure rate. There always a small but significant level of experimentation or risk taking involved. There are many reasons why managers cannot allow high degree of risk taking. Firstly, every production/operations environment is governed by some quality standards- like Total Quality Management(TQM), Six Sigma or maybe some inhouse quality management system. In reality, Quality management systems do not allow deviations from ‘documented parameters and standards’. So in a way QM systems keep a close tab on ops activity. Secondly, In manager’s world everything starts from cost and ends at cost giving the byproduct of profit. So the ops manager is pretty tied up. It’s a delicate game. The manager needs to devise a way to allow ‘priority risk taking’(interesting word) and keeping in accord with QM and cost factors.
    A manager will do anything at his disposal to avoid a fail situation. It’s a test an opportunity. As for risk taking, there’s a thin line between being brave and being mad. There’s no place of madness in real business.

    1. Very well said. Insanity, perhaps, separates an entrepreneur from an entrepreneurial manager.

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