Failure- The elixir of success

Dr.Manjushri Sharma MBBS, DPPH, MHM

Agenda
Understand Failure

Learn

Recover from failure

Strategies for learning from failure

Amy C. Edmondson

Understanding Failure
The wisdom of learning from failures is

incontrovertible.

Yet organizations that do it well are extremely rare.

The blame game

The false dichotomy

Failure

Anything goes

The truth

The culture that makes it safe to admit and report failure must coexist with high standards of performance.

The spectrum of reasons for failure

Blameworthy

Praiseworthy

The spectrum of reasons for failure

Deviance

Inattention

Lack of Ability

Process Inadequacy

Task Challenge

Process Complexity

Uncertainty

Hypothesis Testing

Not all failures are created equal

Preventable(deviation from spec.) Deviance Inattention Lack of ability

Unavoidable(inherent complexity of work) Process inadequacy Task challenge Process complexity

Intelligent(answers not known in advance) Uncertainty Hypothesis testing Exploratory testing

Learning comes through.

Detecting

Analyzing

Experimenting

1. Detecting failure

Can this be hidden?

Reasons
Gross underutilization of failure detection tools like

TQM and solicited feedback.

No learning from high reliability organizations. Reluctance to convey bad news( which is a function

of behavior of midlevel managers).

Tendency to throw good money after bad.

Remedy..

Reduce the stigma of failure(failure parties at Eli Lilly and color coding of reports at Ford)

2. Analyzing failure

Can this be avoided?

Reasons.
Emotionally unpleasant and chips away our self-

esteem.
Requires openness, patience and tolerance. Tendency to reward decisiveness rather than

thoughtful reflection.
Fundamental attribution error.

Remedy..
Routine failure analysis (FMEA)

Motivating employees to understand

failure(interdisciplinary teams)

Could we have averted Columbia disaster?

Yes, only if NASA team had established the first order cause(piece of foam hitting the shuttles leading edge) and the second order cause( rigid hierarchy and schedule obsessed culture).

3.Promoting experimentation

Pilot does not produce knowledge about what wont work.

Reason

Too often, pilots are conducted under optimal conditions rather than representative ones.

Remedy

Recognize failure as a necessary byproduct of experimentation.

Strategy as continuum, and not dichotomy.

Ethical Breakdowns

Max H. Benzerman and Ann E. Tenbrunsel

It is believed that employees bend or break rules because those in charge are blind to unethical behavior and may even unknowingly encourage it. The ford pinto story.

Pointer from research

Ethical fading- Takes ethics out of consideration and even increases unconscious unethical behavior(Ann Tenbrunsel). It is a process by which the moral colours of an ethical decision fade into bleached hues that are void of moral implications, i.e. self deception. Efforts to improve ethical decision making, then, may be better directed toward understanding these psychological tendencies.

The article..
This paper examines the root of unethical decisions by

identifying the psychological forces that promote selfdeception. Self-deception allows one to behave selfinterestedly while, at the same time, falsely believing that ones moral principles were upheld. The end result of this internal con game is that the ethical aspects of the decision fade into the background, the moral implications obscured. In this paper we identify four enablers of self-deception, including language euphemisms, the slippery slope of decision-making, errors in perceptual causation, and constraints induced by representations of the self.

Leaders beware

The cognitive biases and the incentive systems they create can conspire to negatively skew behavior and obscure it from view.

The five barriers to an ethical organization

Ill conceived goals

Motivated blindness
Indirect blindness The slippery slope

Overvaluing outcomes.

Ill conceived goals

Strategy of maximizing sales and not profits( repair

the thing that is not broken!).

As the uncertainty involved in completing a task

increases, the guesswork becomes increasingly self serving( Homeownership crisis in USA 2008)
Requirement of goals as means to excel.

Remedy

Brainstorm unintended consequences

Consider alternative goals that may be more

important to reward.

Motivated blindness
We see what we want to see and miss contradictory

information when it is in our interest to remain ignorant( The creditworthiness of credit rating companies!)
Even being aware of this does not necessarily reduce

its impact on decision making.

Remedy

Root out conflicts of interests(credit rating vs.

creditworthiness)

Indirect Blindness

Managers routinely delegate unethical behaviors to

others, and not always consciously, so that we are less accountable.(using an intermediary-Ovation to hike price of drugs by Merck)

Remedy

Take ownership of outsourced decisions

implications.

The slippery slope

We are less liable to see others unethical behavior

when it develops gradually(incremental infarctions accruing over time are less noticed).

Remedy

Be alert of even trivial unethical infarctions and

address them immediately.

Overvaluing outcomes

We give a pass to unethical behavior if the outcome

is good, i.e. we reward the result rather than high quality decision(fraudulent clinical trials) .

Remedy

Examine both good and bad decisions, and reward

solid decisions not just outcomes.

The Managerial challenge

Avoid forcing ethics through surveillance and

sanctioning.
Cultivate the habit of questioning the ethical

implication of every decision.

Why leaders dont learn from success

Francesca Gino and Gary P. Pisano

How do you interpret this?

Success breeds failure

The three impediments to learning from success

Fundamental attribution errors Overconfidence bias

Failure- to- ask- why syndrome

Lessons from Ducati

You look at the data when you want to understand

whats going wrong. You do not look at the data because you want to understand why youre performing well. Success led Ducati racing team to stop learning.

Making dangerous Attribution Errors

Correspondence bias or attribution effect(classic research by Edward Jones and Victor Harris)

Falling prey to overconfidence bias

Nothing inflates confidence like success- Alan Greenspan(federal reserve Chairman) responsible for housing bubble burst?

Failing to ask why

Success makes us less reflective- we tend to try to learn from mortality and morbidity audits, than to uncover success.

A simple model of learning

Learning is a process of updating theories-the

Macintosh story

Strategies to learn
Celebrate success but examine it

Institute systematic project reviews

Use the right time horizons Recognize that replication is not learning

If it aint broke, experiment

Celebrate success and examine it

Was success achieved by happenstance?

Systematic Project review

After-action-review of combat exercise

Pixar fostering collective creativity

Using right time horizons

Fallibility of human knowledge to overestimate

causality- Hidden role of chance in life and markets by Nassim Nicholas Taleb

Replication is not learning

Is FMEA the only way to do RCA?

SMEA- divide the factors into controllable factors

and external factors.

Experiment

Push boundaries of learning till you break.

Failing by design

Rita Gunther McGrath

How do you perceive failure?

 It wastes money, destroys morale, infuriates

customers ,damages reputation, harms careers .

But can we still foster intelligent failure(coined by

Sim Sitkin in a research article- Learning through failure: The strategy of small losses)

How failures can be useful

Keep your options open.

Learn what does not work

Create the conditions to attract resources Make room for new leaders

Develop intuition and skill

Open up the options

Make more tries- API in pharmaceutical companies

Learn what doesn't work

Successful ventures are built on failed products-

Macintosh after Lisa

Attract resources and attention

Let the old system fail!!!

Make room for new leaders

Lifers no longer work- Alan Mulally from Boeing

responsible for turnaround at Ford.

Develop intuition and skill

Intuition at its heart is highly developed pattern

recognition- Microsofts Xbox 360 succeeded over the grave of 3DO game console

Seven principles to leverage learning from failure.

Decide what success and failure will look like before launching an initiative

The marketing view and the engineering view of

success.

Convert assumptions into knowledge

Confirmation bias, also called My side bias, where we

collect information selectively and land up into illusory correlation.

Be quick about it- Fail fast

Test elements of the project early on- Agile software development

Fail cheaply

Make the consequences of failure modest- What

works at Minnesota Mining and Manufacturing company?

Limit the uncertainty

Experiment in a familiar environment- Google

failing at non-internet radio venture for advertisements Minimize no. of uncertainties through adjacencies( Gravitate- profit from core, beyond the core, unstoppable------ by Chris Zook of Bain)

Build a culture that celebrates intelligent failure

Do not punish failure- A.G.Lafley made fearlessness

in the face of failure a core tenet at P&G, by celebrating his 11 most expensive failures .

Codify and share what you learn

Mini postmortems and checkpoint reviews.

The point.

Avoiding failure is not an option, create an environment in which failures are discussable.

How did your failures over the years affect you as a leader?

They were a part of my growth and development. Its

Darwin theory, when you stop learning-you stop adapting-you stop developing and growing.

Can leaders learn as much from success?

We learn much more from our failures, like Dryel at

home dry cleaning kit and Fit Fruit and Vegetable wash. My favorite failure is Vibrant(against Clorox), a color safe low temperature bleach that was supposed to be launched in Maine, Portland .. The learning- Tide.

How did you use failure as a tool

We analyzed our failed acquisitions- found out five

fundamental causes-absence of wining strategy, not integrating quickly, expecting synergies that dont materialize, incompatible cultures, and incompatible leadership. Lesson learnt - acquisition is a disciplined process, and someone has to be in charge of each phase. We did this successfully in Gillette acquisition.

Did you ever make a mistake in what you didnt do?

I missed two potentially transformational

acquisitions, the reason- could not close with minority partners in first and could not manage the human motivators , behaviors and different personalities in the second.
Lesson learnt- we got trapped in a debate on

profitability of options rather than the issue of strategic fit for P&G.

What advice would you offer to other CEOs about learning from failures?
Some of the most important and insightful learning

comes from failures. The learning has to be institutionalized, through in depth analysis, to create institutional learning and memory. It is crucial to create a culture of courage and openness to change and continued improvement. Think of failures as a gift.

How to Avoid Catastrophe

Catherine H.Tinsley, Robin L.Dillon, Peter M.Madson

Near misses- the unremarked small failures

They are often the harbingers of impending

crisis(The British Petroleum gulf oil rig disaster that killed 11 people, sinking the rig and triggering a massive oil spill).

Deepwater Horizon Crisis

The reason?

The stakeholders were lulled into complacency by

catalog of previous near misses in the industry

How?
Through two cognitive biases that blinds managers

and clouds their judgment, namely

1, Normalization of deviance 2. Outcome bias

Root of crisis
Organizational disasters rarely have a single cause.

They are initiated by a complex interaction of;

Latent errors(human ,technology, decision) & Enabling conditions + chance = Failure

Costly crisis revisited

Where the latent errors combined with enabling

conditions, by chance, and produced a corporate failure.

Bad Apple
Complaints about dropped calls and poor signal

strength immediately after the launch of iphone 4 Apples response- its a non-issue, and hold your phone properly. Result- huge backlash through social media, reputation crisis when Consumer Report did not recommend iphone 4 Lesson- The latent error had always been present, combined with social media backlash and report.

Speed warning

Lexus has been downplaying more than 2000 complaints

of unintended acceleration among its cars since 2001

California highway patrol officer along with three family

members dies in a crash in 2009 because the gas pedal of lexus sedan got stuck.
Toyota suffers $2million loss because of recall and

stoppage of production.

Jet Black andBlue

Since 2000, JetBlue airways had taken aggressive

approach to bad weather. Feb 2007 experiences a massive ice storm, and the pilots find themselves stuck on the tarmac, with passengers trapped for more than 11 hours. Severe loss of reputation follows along with half of its flights being cancelled.

Recognizing and preventing near misses

Seven strategies that recognize near misses and root

out latent errors:

Heed high pressure

When people make decisions under high pressure,

they tend to rely on heuristics, or rule of thumb, and thus are more influenced by biases.
When deciding, ask yourself- If I had more time and

resources, would I be making the same decision?

Learn from deviations

Seek out operational deviations from the norm and

examine the reason for tolerating them.

Uncover root cause

Correct the cause and not the symptom(FMEA)

Demand Accountability

Require managers to justify their assessment of nera

misses.

Consider worst case scenario

Consider near misses as potential

disasters(Walmarts response to hurricane katrina)

Evaluate projects at every stage

Pause and learn(NASA follows this up with

knowledge sharing workshops)

Reward owning up

Publically reward staff for uncovering near misses.

The lesson

Surfacing near misses and correcting root causes is

one of the soundest investments in an organization.

Thank you for interacting.