Why Failure Is Your Best Competitive Advantage

03/31/2015 12:41 pm ET | Updated May 31, 2015


This is going to be a two-part post. In part 1, I will explore why failure can be a powerful competitive advantage, and in part 2, I will explore how to leverage failure as a competitive advantage.

When I was growing up, I was always told that failing at something was the worst possible thing you could do in life. My teachers always taught this and the companies I worked for always preached this, but I'm not the only one this was taught to. Many people around the world are taught to avoid failure, that failure is bad, failure kills, and failure will ruin your life. However, in today's rapidly changing world failure is perhaps one of the greatest competitive advantages that organizations can have. In fact, many have gone so far as to reward failure. P&G has their "heroic failure award," TATA has a "dare to try award," Supercell (the gaming company behind Clash of Clans) cracks open a bottle of champagne every time a game fails, Google X (an innovation lab within Google) rewards their employees for failure, and so do many other companies.

Although some companies are gravitating towards this type of "reward failure" model, most companies in the world still have a very conservative approach to failure where they fire employees, relocate them, reprimand them, and make their lives unpleasant. But, why the change for some companies? Doesn't rewarding failure just remove accountability and create a culture of mistakes? No. First, I should point out that the companies that reward failure are not rewarding reckless abandon or stupidity. They reward failure in a structured way focused on innovation. Rewarding failure doesn't mean rewarding bad work.

So back to the question...why?

The best analogy I can think of is about children learning how to walk. When kids first learn how to walk they fall and stumble quite a bit (and so did you). Where do you think you would be today if the first time you fell over while trying to walk your parents said "ah well, maybe walking just isn't for you?" Would you ever say that to your kids? Of course, not. Instead, you provide words of encouragement and support, "get up and try again, you were so close, you can do it!"

Rewarding failure does a few things

Encourages innovation

When you have a fear of being wrong you don't voice your ideas or your feedback, and when this lack of contribution happens across a company at scale then you are faced with an innovation deficit. Consider Whirlpool (whose CEO endorsed my book on The Future of Work), an appliances company that recently placed the power of innovation in the hands of every single one of their 80,000 employees through workshops, forums, and training.

Improves engagement

Let's take two scenarios of people or teams that have failed on something. In one scenario they get punished and in the other they are rewarded or recognized. Which team or group of people do you think is going to feel better afterwards and which team is more likely to contribute other ideas in the future? If you want a culture of innovation and engagement, then failure should be encouraged and not punished.

Removes inefficiencies

Oftentimes we stick with failed ideas or approaches because we fear failure and don't want to admit when we are wrong. This means that we push forward with spending more time and more money on things that should have been killed off, but weren't. If organizations are able to embrace and encourage failure, they will be able to more effectively eliminate projects and initiatives before they suck up any more resources. It's like being in a relationship that isn't working just to see what happens -- bad idea!

Provides valuable learning opportunities

This is something that I will also explore in part 2 of this post. By encouraging failure organizations teach employees how to think, how to adapt, and how to develop future ideas that are even better than the original. Employees will understand why their ideas failed and what could have been done differently.

Now the question is, how does your organization think about and approach failure? Is it punished or rewarded? Stay tuned for part 2!

Jacob Morgan is a futurist, best-selling author and keynote speaker, learn more by visiting The Future or check out his latest book,"The Future of Work: Attract New Talent, Build Better Leaders and Create a Competitive Organization," on Amazon.