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7 Ways Companies Can Harness Failure to Drive Success Today's growth companies need to recognize failure as a necessary component of learning and learning as a necessary component of success.

By Kalon Gutierrez Edited by Maria Bailey

Opinions expressed by Entrepreneur contributors are their own.

Academic institutions have banished the f-word, and it needs a revival. I'm talking about failure.

Today's students are increasingly under the impression that if they fail just one course or test, all hopes of attending their desired institution, being hired for their dream job and making something of themselves will, in an instant, disappear.

Perfectionism among teens has increased significantly since the 1980s, according to research from the American Psychological Assn. Author and researcher Brene Brown defines this phenomenon as "life paralysis," referring to all opportunities we miss because we're too afraid to put anything out into the world that might be imperfect.

Related: Why Entrepreneurs Should Plan for Failure, Not Success

Let's fast-forward 15 years to those very students, those perfectionists, who have now graduated and moved on to the working world and are running the very companies we work for. They are creating hiring rubrics, performance evaluation frameworks and company presentations. They are defining what success looks like, and within this definition lies no room for failure.

Research shows that failure is a necessary ingredient of success. A study conducted by Northwestern University analyzed 46 years' worth of venture capital startup investments and found that while not every failure leads to success, failure is a necessary step to success.

In fact, Dashun Wang, who conceived and led the study, said that "trying again and again only works if you learn from your previous failures." Success will not come without failure, and true learning will not manifest without recognizing that.

Related: 8 Reasons Failure Makes You a Better Entrepreneur

Today's growth companies need to recognize failure as a necessary component of learning and learning as an essential component of success. Leaders must ask themselves how they can incorporate failure as an integral part of their hiring, leadership and success practices. And, more important, how they can reframe failure, correlate it to learning and hold themselves accountable for doing so.

Here are seven ways companies can utilize failure to drive learning-led leadership:

  1. Broaden the hiring scope: We must recognize that there is an implicit bias toward hiring based on perfectionism. But will a hire who grew up with perfect marks be the one to take your company to the next level of innovation? Will an A+ student be willing to risk failure for progress? To remain innovative, companies need to consider non-conventional backgrounds and work harder to broaden their hiring scope.
  2. Incorporate failure as a key hiring ingredient: When hiring an executive, companies need to make failure a key component of their evaluation. As a hiring manager, do you ask candidates, "What's your biggest failure, and what did you learn from it?" And if so, how is failure assessed and incorporated into that candidate's evaluation?
  3. Hire leaders who have taken varied career paths: Leaders who have explored varied industries, built diverse growth companies and chosen non-conventional career paths are most likely to bring fresh insights to a company. We need to remove the cookie-cutter framework of check-the-boxes conventional leaders and hire ones who bring perspective to their leadership platform.
  4. Evaluate failure as a required component of the company's existing leadership evaluation: Failure needs to be a required component of a leader's evaluation — not a lack of failure, but a recognition of how the leader has failed and a dedicated commitment to learning. A leader who walks away from the past year saying they never failed either is placing their personal reputation before company success or is lacking self-awareness. Without failure, there is no opportunity for learning.
  5. Integrate failure into company objectives and leadership platforms: Today's leaders can incorporate "biggest company failure and lessons learned" into their company communications. In fact, failure can even be a metric to track against — a rubric outlining key failures, lessons learned, action steps taken and results achieved.
  6. Allocate time for big-leap innovation: Encourage employees to explore, attempt and assess big-picture, big-leap ideas. Yes, these may have the greatest risk of failure, but that's exactly the point. This pool of ideas is most likely to birth one (or more) that has the most meaningful, positive impact on the future of the organization.
  7. Reward risk-taking: Reframe failure from a nasty f-word that we don't talk about to an integral and useful part of our working lives. Every successful leader has failed multiple times. Period. If risk-taking is not encouraged and rewarded, we will lose valuable learning and organizations will experience stagnation and eventually decline.

By demonizing the great f-word, our leaders are losing a significant learning opportunity. Today, more than ever, we are presented with an open door for progress — communication, production and distribution have never been as fast and accessible. It's time we acknowledge failure, reframe it as a critical leadership component and leverage it to drive more impactful innovation.

Kalon Gutierrez

Entrepreneur Leadership Network® Contributor

Consultant, Advisor & Entrepreneur

As managing director with Manatt's digital and technology consulting practice, Kalon Gutierrez leads next-generation initiatives for top innovators. He’s a three-time entrepreneur, advisor and strategist who writes and speaks on emerging tech trends, leadership and diversity and inclusion.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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