We are continuing our journey to explore innovative ideas and cases across the global business community. Today we share our thoughts on the organizational change area: how to foster innovation by accepting, and even embracing, failure.

Multiple studies confirm that for any breakthroughs and innovation to occur, there must be a willingness to risk failure. Many companies struggle to innovate because they try to eliminate the possibility of failure and engage in success bias, ignoring the realities of the market and business environment. Organizations must have a healthy relationship with failure because it is often a sign of experimentation and learning.

The role of senior leaders in fostering innovation and learning is critical. Leaders must promote and model an attitude of learning from mistakes. They need to create psychological safety, a culture that allows employees to share failures without fear and promotes open discussions and feedback. In such an environment, employees view failure not as a career-limiting move, but as a possibility for learning and improvement. Companies must encourage employees to share mistakes and analyze what went wrong without blame or punishment. Root cause analysis can help identify the real reasons behind the failures, avoiding similar mistakes in the future.

The company should celebrate failures just as they celebrate successes when they represent meaningful learning or innovation steps. By rewarding failures as learning opportunities, organizations can motivate their employees to take calculated risks, experiment, and innovate.

There is a change management approach named “failing forward”, where organizations foresee likely failures and plan their responses beforehand. By adopting such an approach, they don’t just react to failures when they occur but actively use failures as steps toward success.

Companies could also use operational-risk techniques to handle and learn from failures. Some techniques include scenario planning, red teaming, creating “pre-mortems” to identify potential failure points before starting projects, and building redundancy into systems.

However, organizations still need a balance: while embracing failure, it's also crucial to ascertain risk tolerance levels and figure out when it's okay to fail and when it isn’t. The goal isn't to promote reckless behavior, but to leverage failure as a steppingstone towards innovation, better decision-making, and, ultimately, success.

To summarize: by changing their mindsets towards failure, viewing it not as detriment but as an opportunity for learning and improvement, organizations can foster a culture of innovation, resilience and growth.