Celebrating Failure: How to Make a Hit Out of Misses While many large corporations loath failure, in the startup world it is often celebrated. When failure occurs, here is how to make the most of it.
Opinions expressed by Entrepreneur contributors are their own.
"Only those who dare to fail greatly can ever achieve greatly."
-Robert F. Kennedy
In a recent column in The New York Time, "Start-Up America: Our Best Hope," Thomas Friedman contrasts the malaise in Washington D.C. with the can-do culture of Silicon Valley. He gets closest to the secret of the startup economy's success when he writes:
"Silicon Valley: where there are no limits on your imagination and failure in the service of experimentation is a virtue. Washington: where the "imagination' to try something new is now a treatable mental illness covered by Obamacare and failure in the service of experimentation is a crime. Silicon Valley: smart as we can be. Washington: dumb as we wanna be."
It's no secret that failure is our greatest teacher. Every self-help book and Horatio Alger success story is built on this trope. Yet a fear of failure is surprisingly pervasive in executives and the organizations they run. As companies succeed and grow, the nothing-to-lose spirit that likely sparked the business in the first place begins to ebb. "Great" gives way to "good enough."
Related: How Cheezburger Founder Ben Huh Rebounded After Hitting Rock Bottom (Video)
One of the great lessons of Silicon Valley for the rest of corporate America is the way startups inoculate themselves from risk aversion. At NerdWallet, we are trying to build a company that champions success, which often is built on failure.
Here is what we have learned with this approach:
Celebrate failure in a public way. Prominent inside NerdWallet's office is the "Fail Wall," which is festooned with Post-it notes of lessons learned like this one from our CEO Tim Chen, "I tried to outsource PR to an agency, idea generation and all. We got five press hits in six months."
Honest admissions of failure from our CEO, managers and other employees, displayed for all to see, set the tone for the company. Still, the sentiment expressed can't be just a placard on the wall.
Cultivate a culture of experimentation. Employees must think of every action as an experiment rather than as something on which they'll be graded "pass" or "fail." The scientific method never looks at an experiment as a failure -- the endeavor returns information that leads to greater knowledge, no matter the result. Even if the action is going to cost the company money, if you can justify the risk and the potential upside, it's worth the investment.
Related: Afraid of Failure? Think Like a Scientist and Get Over It.
Moreover, the fact that employees are allowed -- indeed, expected -- to stretch themselves is a powerful motivator. Without it, they risk falling into the bad habit of only doing things they know will succeed and that's a formula for uninspired work and burnout. You may rack up small wins, but you'll never see exponential improvement.
Be honest with yourself and others. There's been a raft of mea culpas recently from leaders of failed startups. In January alone, founders of Drawquest, Outbox and Prim discussed with extraordinary candor why their babies went belly up. In the wake of what must be a deeply personal loss, they would have been forgiven if they'd chosen to hide in the back room of a bar. Instead, they gave postmortems of their failures in the most public way. Why?
In Silicon Valley (and other startup ecosystems) it's not necessarily frowned upon to create companies and then run them into the ground. In fact, many founders of failed companies find it easier to raise money for their second company. Investors know they are buying experience and the lessons learned from those failed endeavors.
At NerdWallet, we start management meetings each week discussing successes and failures. To do that requires a real honesty with each other and themselves.
Related: 7 Ways to Get Moving Again After a Failure
Figure out the next steps. The impulse in much of corporate America is to minimize mistakes or sweep them under the rug. But you can't learn a lesson unless you examine what went wrong -- you need to sit with the failure and understand what are the next steps. The learning has to be actionable: It must change your behavior or your strategy.
The lessons learned this way at NerdWallet are legion. For example, when gas prices were high in 2011 we spent a great deal of time and money putting together a price-comparison app we were sure would be a hit. It turned out that nobody cared. Lesson learned: Talk to users first before writing a single line of code. That has been invaluable in the success of subsequent apps.
Nobody likes to fail. It hurts our pride and possibly our bottom line but only in the short run. One of the quotes on our "Fail Wall" is this line from Winston Churchill, "Success is stumbling from failure to failure with no loss of enthusiasm." The success of America's startup economy was built on weaving this idea into the fabric of how we do business every day.
Related: Failure Is Part of the Game. Getting Back Up Is the Magic Sauce. (Motiongraphic)