Is failure just a necessary part of success? How do we measure when failure moves from being a necessary part of innovation to a failure to execute?
When you start out in a new task or activity there is usually a couple of trial and error moments and some learning. It is harder to judge when failure occurs as a result of missing deadlines with clients, levels of achievement and something not being performed to a standard, and possibly having to be accepted when inferior or repeated, resulting in double costs. Failure to execute is a major concern for business in all spheres – and as a manager there is a fine line to manage the link between strategy and execution, while getting the most out of the potential of your people.
One of the skills of management is to discern between when failure is a valuable catalyst for learning and when it is truly harmful, leaving employees unsure about when to take risks and experiment, and when to play it safe.
For managers and employees, one of the major elements to getting this right is to understand whether the specific task and learning is happening in execution mode or in innovation mode.
In innovation mode – failure is valuable and “failing fast” is necessary. We put out new ideas, see how they come back and adjust the approach to do more of what works well. Failure is a precondition to learning in this context and is backed by people that want to see the idea work and that can afford to take risks for higher returns.
Long established companies often do very little that is new and follow the same model, often year after year. If there is innovation, it is outside of the core delivery framework. When failure occurs in this type of business context it harms results and reputation and creates further significant risk.
In the established environment, execution-focused executives often say that failure is accepted but in real terms these organisations are often designed to eject failure. Mistakes are generally not tolerated and failure is not an option. The business model is usually also geared to “tick-over” with resources and expectations 100% clear.
Leaders need to differentiate when failure is acceptable and if they are in execution or innovation mode. Being in execution mode means that standard operating practices have been developed and need to be implemented with as little deviation as possible. Sure there can be improvements made, but these have to be done carefully and explicitly, under controlled conditions, so that the basic operations are not disrupted. As such, failure needs to be minimized or eliminated.
Innovation mode, on the other hand, is when standards still don’t exist and best practices are still being discovered and tested. In this kind of situation, it’s important to try out new ideas, formats, and processes – and allow room for plenty of failure – in order to learn what works and what does not. Once the focus becomes clear, managers can more easily communicate what the appropriate attitude toward failure should be.
The reason why many established firms struggle with innovation is that they bring an execution mentality with them, and then don’t encourage the failure necessary to develop new products, services, or processes. In a large financial services firm, for example, senior executives talked constantly about innovation but quashed proposals and projects that didn’t meet the margin thresholds of their established products within two months. By setting the financial bar so high, they ended up discouraging teams from doing prototypes and pilots because in reality nobody was allowed to really fail.
On the other hand, the reason why many start-ups hit a wall when they try to scale up is that they don’t know how to shift into execution mode where failure should be much less tolerated. A classic pattern is that once the product is selling, many firms struggle to get further. Instead of creating a disciplined process for sales and marketing, they allow the manager to continually miss targets and encourage the sales people to “experiment” with different kinds of pitches and price points. By supporting this pattern of failure at an inappropriate time in the company’s evolution, firms end up with a major cash problem that prevents it from capitalizing on its product achievements.
Execution is defined as the exercise of the capacity to complete assigned tasks and responsibilities to customary or specified standards within a specific timeframe.
How do we overcome a failure to execute then?
- When setting goals – decide if they require innovation or if they are to continue to achieve your existing business. If necessary split the components and decide where failure is appropriate and where success is non negotiable. Measure the achievement of these goals appropriately.
- Match the expected results with the capacity required to achieve these results and make sure this is profitable by design. Hold people to these standards and “Fail fast”. I.e. if a resource is not performing to achieve the standard, then replace them as soon as possible and employ a resource that can perform to the standard.
- Clearly assign accountability and responsibility. Do not forget to also assign appropriate authority for decision-making and to measure the results in terms of the accountability. Many organisations fail to appropriately make people responsible for results and then when failure is clear, accountabilities cannot be enforced.
- Specify the standards of completion. Many times management fails to explain the underlying expectations in getting things executed. You may specify a certain turnover, but not the type of clients and payment period. This may result in extended cash to cash cycles and then the business runs out of money. The sales people are happy with turnover, but the execution has failed because it did not support the original assumptions in the business model.
- Clearly manage innovation processes. Innovation must often be “ring-fenced” from a experimentation perspective. Innovations often require minimum parameters for success. To get it right may take many iterations and prototypes – but when it works the focus needs to be on how to commercialise. The transition between the two states needs to be managed by people that understand how to capture processes and manage for success.
- Build on clarity of accountability. By creating clear accountability you allow the right personalities to build on their successes and push for more and better results. Realise that the innovator and the executor are two different personalities in your organisation and that they focus on different things. If you can find people that can do both – that is great, but in many cases you need to hand over things that need to run smoothly to people that know how to run them smoothly. Executors also get stuck and cannot cope with change or innovation – so there is a balance at all times.
- Drive rules through technology. Technology is great to connect people to processes. Broken processes will not be fixed by technology – but good people will flourish when technology supports them. Train people to achieve the results they are required to deliver.
- Spend time on connecting people to the purpose of the business. Research shows that people need to connect to the purpose of business to be effective. When people understand where they fit it – they will contribute and the synergistic effects of teams and people will start to yield results.
Breaking through the failure to execute requires as much working on the process as it requires working in the process. When it works, do more of it and make it a lot more systematised. Use technology and business purpose to enforce rules and motivate people to greater heights.