Long reads

How a culture of failure works in practice

9 Apr 2021 By Rob Gray

In some organisations, failing is actively encouraged. But how can L&D urge the workforce to take more risks, and where should they draw the line?

Learning from failure has become commonplace in business, at least in terms of acceptance of the notion that it’s a good thing to do – although it’s often easier to talk about than put into practice. While it’s a relatively modern way of thinking for companies, the concept itself is nothing new, nor something that should be confined to a particular industry or function. What has come to be known as ‘intelligent failure’ is a philosophy that can and should be applied across organisations. 

Yet while it’s been around for a while, in today’s fraught climate creativity and innovation have become more vital than ever, and may be the difference between whether a company thrives or dies. Logic dictates, then, that if businesses want to excel at this their people must feel comfortable with experimentation and failure. But from an L&D perspective this is a difficult state to achieve.

So what exactly does ‘intelligent failure’ mean? Amy Edmondson, novartis professor of leadership and management at Harvard Business School, defines a culture of intelligent failure as one that “understands that experiments sometimes end in failure, if the experimenters are legitimately pioneering new ground”, and that “fosters the kind of experimentation that produces smart failures quickly – and avoids the wasteful failure of conducting experiments at a larger scale than necessary”.

Another academic expert in the field – Rita Gunther McGrath, professor at Columbia Business School – typifies intelligent failure as: “That we have a common understanding of what failures are useful and which are just failures; that we distinguish between bad luck and bad management; and that we have sufficient psychological safety that people can – indeed feel obligated to – bring up failures as they arise, so that they aren’t repeated.” 

McGrath cites Microsoft as a business that embraces intelligent failure, pointing to its launch of AI chatbot Tay as a prime example of this culture in action. Microsoft pulled the plug on Tay in great haste after the bot’s interactions with people on Twitter proved embarrassing and offensive. Instead of criticising the team behind Tay, CEO Satya Nadella was supportive and treated it as an important learning experience. “Nadella sent an encouraging note to the team, basically saying that they had no way of predicting what Tay would do when let loose in the world, that they’ve learned something, and that he had their back,” says Gunther McGrath, who adds that Microsoft chief people officer Kathleen Hogan is culturally “absolutely at the very centre” of this way of thinking.  

Companies such as Nike (in its early days), Netflix and Amazon have also been held up as exemplars of a culture of intelligent failure. Yet organisations steeped in this approach are quite thin on the ground. Liking the principle of intelligent failure is one thing – changing management thinking to make it a reality is quite another.

CIPD head of learning Andy Lancaster says that for intelligent failure to become accepted and effective, organisations must have a culture that is trusting, constructive, highly developmental and reflective. “Often we are just too busy to invest time in stepping back and thinking about how things have gone and how they could be improved. Reflection is really crucial in the learning process, and we often miss that,” he says. 

So how should L&D go about managing and developing people in the context of intelligent failure? “One of the challenges for learning teams is often we have a very one-size-fits-all approach to supporting people, and with mistakes-based learning we need a more personalised approach that involves peer support,” says Lancaster. 

Financial services firm Visa, for example, created L&D initiative Visa University (VU), which is key to driving skills and performance at a company-wide level. VU was set up as an ‘internal start-up’ to bring together a range of learning functions in an agile and entrepreneurial way. Head of learning for Europe Ian Fordham says VU is designed to reinforce and promote a culture of curiosity and is embedded in the firm’s global HR function to ensure it drives a more intelligent way of learning and working across the company. “One of our core leadership principles is ‘acting decisively’. This includes challenging the status quo and learning from our mistakes,” he explains. “We actively encourage people to take risks and advocate for changes they believe would benefit the organisation. This is proving to be a powerful expectation for all staff and is driving fresh ideas and innovative thinking throughout the entire company.” 

One of Fordham’s priorities is to encourage everyone at Visa to be bold and welcome new ways of thinking. But what happens in the case of repeated failures? “From our experience, the benefits of intelligent failure outweigh the potential pitfalls,” asserts Fordham.

Melanie Lepine, EMEA head of L&D at property company CBRE Global Workplace Solutions, says some fail more than others because they’re trying many more new things or because they’re trying something far more complex: “The key to a culture of intelligent failure is that we learn from those failures and apply that learning to our next attempt. If someone continually fails based on the same issues, then that suggests they are not learning from their mistakes and some action would need to be taken to address that problem.” 

Packaging company DS Smith is another strong example. It’s big on sustainability, having introduced a set of circular design principles – a concept that aims to continually use the same finite resources and eliminate waste – developed in conjunction with the Ellen MacArthur Foundation to ensure circular design features in every one of its products and that the business challenges the status quo. L&D plays a key role in embedding this mindset by encouraging all colleagues to share their ideas and providing opportunities for experimentation. 

Head of L&D Ann-Louise Hancock argues that creating a culture that encourages colleagues to contribute to future designs, products and services develops stronger engagement, loyalty and ownership. But how do you make sure ideas are relevant and avoid people being discouraged when they fail? “It’s important to set expectations and parameters, and our experience is that, provided these are clear, you liberate rather than constrain people from feeling able to make a contribution,” says Hancock. “This is supported by a robust framework of line management and feedback.” 

Andrew Jacobs, former L&D transformation lead at HMRC and now owner of consultancy Llarn Learning Services, believes intelligent failure works best when organisations understand at a micro and macro level that ‘fail’ stands for ‘first attempt in learning’. “By making people aware of this the expectation is shared across the organisation and self-policed. The best experience I’ve seen in this was a senior manager who told her team that they could do what they wanted, ‘as long as you don’t embarrass me’. That created a culture where innovation and experimentation were encouraged but the limits were established and, if clarification was sought, could be discussed and agreed.”

The Kotter change model may be helpful for people professionals thinking about any kind of organisational change. Workplace performance expert Gary Cookson believes it adapts well to this situation too. Giving employees permission to experiment and try things, actively encouraging them to do that and to tell each other about it would give some kind of sponsorship and ownership to the mindset shift, he argues. “When people succeed, praise them,” adds Cookson. “But when they fail, particularly if they own that failure, praise them even more and help them to learn from it – having good knowledge management and good recognition processes is critical here.”

Innovation and creativity are often spoken about as if they’re purely positive, which is problematic. In reality, making breakthroughs can be messy, hard and stressful. So applying a failure lens to these processes in an appropriate, honest way can be liberating and reassuring for employees. But for that to work, human nature must be addressed. We all have dysfunctional instincts around protecting ourselves when something goes wrong, from denial and defensiveness to blaming others and wanting the situation fixed as quickly as possible without having to think about it. That all sounds like the antithesis of failing well. 

Ashley Good, CEO of Fail Forward, a consultancy that helps organisations fail intelligently, says it doesn’t have to be like that, and there’s lots HR and L&D can do to instil a healthy relationship with failure into people. That can begin with steps as simple as job descriptions that make it clear the employer views failure as inevitable, expects its people to learn quickly and considers learning by trying and failing to be integral to its culture. Good is adamant people can be taught to embrace failure and thereby deliver better results: “Can you train for this? Absolutely.” She makes the analogy that there’s a right and wrong way to fall – the right way is to relax into a tuck and roll. Likewise, with failure there’s a good way to do it that minimises the risk of damage. 

Risk is also a fundamental part of the equation with intelligent failure. Lancaster couches it in terms of ‘risk-appropriate experimentation’ and says there has to be a line so that tragic and serious mistakes with a high cost to the organisation are avoided. Sectors such as healthcare and aviation are hot on this, for obvious reasons. “What we can do is look for brilliant mistakes that have a relatively low cost to the organisation but a massively high benefit,” Lancaster says. “As learning professionals, it’s about spotting the brilliant mistakes that allow someone to learn and develop in a powerful way that couldn’t be achieved through a course.” 

This ties in with the shift away from courses to performance support that has become evident in organisational learning. Learning technologies including VR are enabling more people to learn through failure via simulations. Adding this to the mix should equip people to deal with ‘real world’ failures better and help embed an intelligent failure mindset across teams and businesses.  

Intelligent failure in practice: Virgin Media 

“While we’re wired to avoid failure, creating a culture of intelligent failure is about acknowledging that not all failure is bad, and innovation is only made possible through trying new things, not all of which will work,” says Mel Gloyn, head of learning and development at Virgin Media.

Recognising that failure helps employees learn and develop, Virgin Media encourages a ‘test and learn’ approach that entails testing new ways of working, which provide a fresh approach to problem solving as a means of enhancing performance. “Our focus is on applying a growth mindset to drive a high-performance culture through ‘team play’,” explains Gloyn. “To us, team play means that we operate as one entity, delivering success and high performance together in a collaborative and inclusive way, which makes trialling new things easier. Our performance and reward schemes have been transformed to support this, with bonus schemes focused on team performance rather than divisional KPIs.”

Overarching this is Virgin Media’s ‘Belonging’ strategy that supports test and learn in practice. One of its key pillars is creating an environment of psychological safety in which everyone feels safe to share their experience and knows their voice will be heard. This inclusive culture helps people feel they are supported to test and learn in a blame-free environment. “Our new performance management process supports a culture of feedback and performance review, which empowers individuals and teams to review unsuccessful projects retrospectively and reflect,” adds Gloyn. 

“Instead of bi-annual reviews, we have implemented continuous conversations between managers and team members who work towards real-time goals. These reflect the projects and tasks people are working on and create space for people to trial, change and discuss regularly.

“This always-on feedback helps build trust and promotes a collective growth mindset. Individuals have an understanding of what went well and what could be developed, which can be used to make refinements that deliver better results in future – without the need to repeat past mistakes.”

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