Industryweek 4913 Mistake

Continuous Improvement -- Crash, But Don't Burn

Nov. 1, 2004
The road to process excellence and market success -- and wisdom -- is paved with failure.

Think about your company or business unit's most recent, high-profile failure. The new product launched with great expense that failed to interest many customers; the million-dollar piece of whiz-bang technology sitting idle in a corner of the factory; the joint venture in Southeast Asia that had to be written off after two years.

Something quickly comes to mind. But if your company is like most, nobody ever talks about it. Everyone is willing to share success stories though. Many large corporations have created elaborate databases and hold regular get-togethers to make it easier for managers from different locations to share operational best practices and market successes. Some good ideas do manage to proliferate across companies this way. But have you ever noticed how some organizations contribute more than their share of new ideas? What's their secret?

The answer lies in what isn't told during such presentations, whether they're made internally or at industry conferences. What you hear is, "We did this, and this, and here were the results." What's missing, repressed like bad memories, is the other half of the story, "We tried this, and that made the situation worse. After debating it for weeks, we tried this, and that worked OK. But when we tried this, that's when things really started to click."

What doesn't work -- the major and minor failures -- becomes the tacit knowledge and experience that builds up within individuals and organizations as they keep trying new things. Learning from past missteps, the next time they face a similar bottleneck, or a customer makes a similar request, these people and organizations are able to skip some of the trial and error to arrive at a solution faster. In fact, Steve Spears, a professor at Harvard University, attributes some of Toyota's success in the automotive industry to a culture of experimentation that couples doing work (in a controlled and standardized way) and learning to do work better. He says the company's success stems as much from this pattern of learning behavior as it does the material flow and process management tools that many manufacturers have sought to duplicate.

As the stakes get higher in any company, this learning process becomes more difficult. Because financial losses loom, and careers and livelihoods are at stake, when the death knell begins to toll for really big projects, everybody who possibly can, flees, separating themselves mentally and physically from the doomed venture.

But wherever we go, we all carry the ego blow of such experiences. Forever tuned to the warning signs, as individuals we try not to repeat the same blunders. How well organizations themselves actually learn from their flops and fiascos depends upon a company's tolerance levels for both risk-taking and failure. Those with a higher level of control, that have well-defined steps for bringing a product to market or making a capital investment, often have a greater understanding of and tolerance for risk, and a greater ability to learn when things don't work out.

Sure, managers still have to take their lumps, but because the failure can be attributed to a process, the process itself can be modified and improved so that mistakes aren't repeated. Some of the most instructive case studies that MBA students discuss in business school explore the colossal mistakes that big companies with lots of resources and smart people still manage to make. These very same learning opportunities exist within every company at every level.

Imagine, the next time you shut a project down and stop throwing good money after bad, once the dust and emotions have settled, if you took some time to bring everyone back together to discuss what went wrong. By turning the failure into a learning opportunity, you'll build some momentum for the next initiative. Not only that, you'll you have a better chance of getting it right next time.

David Drickhamer was IndustryWeek's Editorial Research Director.

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