The Right Kind Of Wrong

Intelligent failure is the key to success. Can we learn to embrace it?

To thrive in today’s economy you need to fail fast and fail often.

Or do you?

Amy Edmondson, Harvard Business School’s resident expert on failure, says this tech-inspired mantra is too blunt. You need to learn to fail well - prevent certain types of failure while cultivating an appetite for ‘intelligent failures’.  This isn’t easy because it means fighting some deep cultural and behavioral biases. 

Edmondson describes why and how to do this in The Right Kind of Wrong, The Science of Failing Well which won the Financial Times 2023 Business Book of the Year award.

Three Flavors Of Failure

She identifies three types of failure - basic, complex and intelligent. We want to avoid the first two but embrace the last.

Basic failures happen when there is a clear recipe for getting it right yet we still mess up. These can be things like forgetting your car keys (been there) or not picking your son up after Little League practice (done that). But basic doesn’t always mean the stakes are low - think landing an airplane or manufacturing a car. We know how to do those things, but failure can be deadly.

Complex failures are the perfect storms. For failure to happen multiple things must, and do, go wrong. They often occur in familiar territory - the familiarity leading to complacency that can cause initial warning signs to be missed.

The control room at the Three Mile Island, home to the almost catastrophic nuclear accident in 1979, was one such environment. This example is seared in my mind, having grown up a mere 15 miles from the infamous cooling towers. Back then the types of systems prone to complex failures - nuclear and chemical plants, NASA launches - were not that numerous. But our growing reliance on technology means we’re much more vulnerable now.

Failing fast and often is clearly not the right recipe in these situations.

Safe Space

The key to avoiding basic and complex failures is creating a culture of blameless reporting, where anomalies are rapidly identified without fear of retribution. This doesn’t just magically happen, there has to be a feeling of psychological safety in the workplace. Edmonson first noticed this when studying teams at hospitals where some nurses held back from reporting mistakes for fear being ‘put on trial’.

If the negative effects of corporate trials sounds familiar, you might have read about them in my note on Rob Copeland's The Fund, a bestseller about hedge fund Bridgewater. Its founder, Ray Dalio, claimed to follow a philosophy of ‘radical transparency’ that valued getting at the truth above all else.

Sounds like a recipe for avoiding complex failure. In reality, his humiliating and abusive ‘probings’ of those who made mistakes are the kind of behavior that drives failure underground, storing up more trouble for the future.

In contrast the industrial firm 3M has created a culture of studying failure in a blameless, detached way. It was this culture that helped 3M create Post-It notes by repurposing an adhesive that had failed in its original use case.

The Right Kind Of Wrong

This is precisely the type of intelligent failure Edmondson wants us to embrace. She explained them to me:

It’s the undesired results of thoughtful experiments in new territory. They are the kinds of failures that occur because there was literally no other way to find out that information.

So what’s stopping us from being mini-3M’s?

Our evolutionary heritage doesn’t help. It has baked a range of ‘prepared fears’ into our psyche. When it comes to failure the key fear is ‘banishment from the tribe’.

For our ancestors banishment could lead to a range of unpleasant outcomes - freezing, starving, being nibbled at by wolves, etc. Today fear of banishment manifests in an unwillingness to disappoint those in a position of power - a boss, parent, coach. In the face of that fear we opt to play it safe.

Learning from our own mistakes is difficult because it’s ‘ego threatening’. Instead of acknowledging and studying the failure, we tune out. However, there is evidence that we learn from other people’s failures. But…we have to know about them and, because it’s seen as shameful, people are reluctant to describe their failures. This tendency has been reinforced by social media where we get more photoshopped images of success than honest reporting of failure.

Are there tools to make us feel more comfortable failing well? Edmondson lists several:

1. When you fail - or when someone you know fails - reframe the situation into one where you can learn. Edmondson’s favorite method for this is ‘Stop-Challenge-Choose’. Stopping is taking a moment before you respond. Challenge is asking if your initial framing is right. And then consciously choose a response that helps you learn.

2. Avoid a “performance mindset” that focuses on outcomes instead of process. I understand this falls squarely into the easier-said-than-done category. Just ask any tennis coach who has tried to teach me a backhand. Still…we can try.

3. Identify the stakes. If the stakes are low - have fun experimenting and shrug of failure. If the stakes are high you can still experiment but calibrate the consequences so that you live to fight another day if you fail. My investment firm regularly allocated small amounts of capital to new trading models. Having a bit of skin in the game meant we focused on it more carefully, but if it went wrong the overall fund return wasn’t jeopardized.

4. Learn to apologize! Failing more often means disappointing people more often, so prepare for the fallout. A good apology express remorse, accepts responsibility and offers to make amends or changes going forward.

In that spirit I apologize to Professor Edmondson for trying summarize her life’s work in 1,000 words! You can help me make amends by reading the book and then failing at something new.

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Listen to Amy Edmondson and me discuss The Right Kind of Wrong

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