UNDERSTAND, LEARN & RECOVER

By Sonika & Rosy

RATIONALE OF THE PRESENTATION

Failure is supposed to be a great teacher. But if that's true, why are so many of us unable to acquire the knowledge this "great teacher" has to impart? Why do we keep failing? This presentation will describe and illustrate good failures (when we expect to fail and learn something), bad failures (when were interrupted by errors in judgment), or unavoidable failures (when complex systems break down). Success Stories Are Great - Failure Stories Are Even Better, but in real life - and in real companies - failure is extremely disliked. Were afraid of it. We avoid it. We penalize it. Failure is unavoidable and often out of our control. But we can choose to understand it, to learn from it, and to recover from it. Revisit your failures, it will bruise your ego, but it will strengthen you for sure.

CONTENT
A) FAILURE: UNDERSTAND IT
1. Strategies for Learning from Failure 2. Ethical Breakdowns 3. Why Leaders Dont Learn from Success

Amy C. Edmondson Max H. Bazerman and Ann E. Tenbrunsel Francesca Gino and Gary P. Pisano

B) FAILURE: LEARN FROM IT

Failing by Design 2. I Think of My Failures as a Gift
1.

3.

How to Avoid Catastrophe

Rita Gunther McGrath An Interview with A.G. Lafley by Karen Dillon Catherine H. Tinsley, Robin L. Dillon, and Peter M. Madsen

C) FAILURE: RECOVER FROM IT

1. Building Resilience 2. The Globe: How China Reset Its Global Acquisition Agenda

Martin E.P. Seligman Peter J. Williamson and Anand P. Raman

A (1)

UNDERSTANDING FAILURE
We are programmed at an early age to think that failure is bad. That belief prevents organizations from effectively learning from their missteps. The Wisdom Of Learning from failure is unquestionable. Yet organizations that do it well are extraordinarily rare. This gap is not due to a lack of commitment to learning. First, failure is not always bad. In organizational life it is sometimes bad, sometimes in-evitable, and sometimes even good. Second, learning from organizational failures is anything but straightforward. The attitudes and activities required to effectively detect and analyze failures are in short supply in most companies, and the need for context-specific learning strategies is underappreciated. Organizations need new and better ways to go beyond lessons that are superficial or self-serving.

Leaders can begin by understanding how the blame game gets in the way
The Blame Game Failure and fault are virtually inseparable in most households, organizations, and cultures. Every child learns at some point that admitting failure means taking the blame. That is why so few organizations have shifted to a culture of psychological safety in which the rewards of learning from failure can be fully realized. Not All Failures Are Created Equal A sophisticated understanding of failures causes and contexts will help to avoid the blame game and institute an effective strategy for learning from failure. Although an infinite number of things can go wrong in organizations, mistakes fall into three broad categories: preventable, complexity-related, and intelligent.

A SPECTRUM OF REASONS FOR FAILURE

BLAMEWORTHY

DEVIANCE: An individual chooses to violate a prescribed process or practice. LACK OF ABILITY INATTENTION : An individual inadvertently deviates from specifications. LACK OF ABILITY: An individual doesnt have the skills, conditions, or training to execute a job. PROCESS INADEQUACY : A competent individual adheres to a prescribed but faulty or incomplete process. TASK CHALLENGE: An individual faces a task too difficult to be executed reliably every time. PROCESS COMPLEXITY :A process composed of many elements breaks down when it encounters novel interactions. UNCERTAINTY : A lack of clarity about future events causes people to take seemingly reasonable actions that produce undesired results.

PRAISEWORTHY

HYPOTHESIS TESTING: An experiment conducted to prove that an idea or a design will succeed fails. EXPLORATORY TESTING :An experiment conducted to expand knowledge and investigate a possibility leads to an undesired result.

Leaders need to recognize that failures occur on a spectrum from blameworthy to praiseworthy, and that they fall into three categories:
1.

2.

3.

Preventable failures in predictable operations: Failures in routine or predictable operations, which can be prevented. Most failures in this category can indeed be considered bad. They usually involve deviations from spec in the closely defined processes of high-volume or routine operations in manufacturing and services. With proper training and support, employees can follow those processes consistently. When they dont, deviance, inattention, or lack of ability is usually the reason. But in such cases, the causes can be readily identified and solutions developed. Unavoidable failures in complex systems. :Those in complex operations, which cant be avoided but can be managed so that they dont mushroom into Catastrophes. Intelligent failures at the frontier. Unwanted outcomes in, for example, research settings, which are valuable because they generate knowledge. Failures in this category can rightly be considered good, because they provide valuable new knowledge that can help an organization leap ahead of the competition and ensure its future growth.

How Leaders Can Build a Psychologically Safe Environment

FRAME THE WORK ACCURATELY People need a shared understanding of the kinds of failures that can be expected to occur in a given work context and why openness and collaboration are important for surfacing and learning from them. Accurate framing detoxifies failure.

EMBRACE MESSENGERS Those who come forward with bad news, questions, concerns, or mistakes should be rewarded rather than shot. Celebrate the value of the news first and then figure out how to fix the failure and learn from it.

ACKNOWLEDGE LIMITS

INVITE PARTICIPATI ON

Being open about what you dont know, mistakes you have made, and what you cant get done alone will encourage others to do the same.

Ask for observations and ideas and create opportunities for people to detect and analyze failures and promote intelligent experiments. Inviting participation helps defuse resistance and defensiveness.

SET BOUNDARIES AND HOLD PEOPLE ACCOUNTABLE People feel psychologically safer when leaders are clear about what acts are blameworthy. And there must be consequences.

DETECTING FAILURE
Spotting big, painful, expensive failures is easy. But in many organizations any failure that can be hidden is hidden as long as its unlikely to cause immediate or obvious harm. The goal should be to surface it early, before it has mushroomed into disaster. The slogan Fail often in order to succeed sooner would hardly promote success in a manufacturing plant. Total Quality Management and soliciting feedback from customers are well -known techniques for bringing to light failures in routine operations. High-reliability-organization (HRO) practices help prevent catastrophic failures in complex systems like nuclear power plants through early detection.

ANALYZING FAILURE
Once a failure has been detected, its essential to go beyond the obvious and superficial reasons for it to understand the root causes. This requires the discipline - better yet, the enthusiasm - to use sophisticated analysis to ensure that the right lessons are learned and the right remedies are employed,; free from fundamental attribution error and beyond first-order reasons. The job of leaders is to see that their organizations dont just move on after a failure but stop to dig in and discover the wisdom contained in it. Analyzing organizational failures requires inquiry and openness, patience, and a tolerance for causal ambiguity.

PROMOTING EXPERIMENTATION
The third critical activity for effective learning is strategically producing failures - in the right places, at the right times - through systematic experimentation. 70% or higher of which will fail ! Too often, pilots are conducted under optimal conditions rather than representative ones. Thus they cant show what wont work. In short, exceptional organizations are those that go beyond detecting and analyzing failures and try to generate intelligent ones for the express purpose of learning and innovating. Its not that managers in these organizations enjoy failure. But they recognize it as a necessary byproduct of experimentation. dramatic experiments with large budgets. A small pilot, a dry run of a new technique, or a simulation is sufficient for this. Those that catch, correct, and learn from failure before others do will succeed. Those that stumble in the blame game will not.

Articles Digest:
The ingrained attitude that all failures are bad means organizations dont learn from them.
Failures can be categorised into three categories- preventable, complexity related and intelligent failures. Although learning from failures requires different strategies in different work settings, the goal should be to detect them early, analyze them deeply, and design experiments or pilot projects to produce them. But if the organization is ultimately to succeed, employees must feel safe admitting to and reporting failures. Creating that environment takes strong leadership.

A (2)

Good people often let bad things happen. Why?

Managers routinely delegate unethical behaviors to others, and not always consciously.
The vast majority of managers mean to run ethical organizations, yet corporate corruption is widespread. Part of the problem, of course, is that some leaders are out-and-out crooks, and they direct the malfeasance from the top. But that is rare. Much more often, we believe, employees bend or break ethics rules because those in charge are blind to unethical behaviour and may even unknowingly encourage it. The article points out that how biases can cause even the most ethical person to slip into an unethical position. Its often not the clear-cut decision between good and evil that trips us up. Rarely is it that simple, clear, or visible.
CASE STUDY: FORD PINTO..

Five barriers to an Ethical Organization:

1. Ill-Conceived Goals. Inadvertently setting goals that promote a negative

2.

3.

4.

5.

behaviour. E.g. The pressures to maximize billable hours or revenue per customer are both examples of goals that can promote negative behaviour. Motivated Blindness. We overlook the unethical behaviour of others when its in our interest to remain ignorant. E.g. Baseball officials ignoring the spread of steroid use in their game is a good example of that phenomenon. Indirect Blindness. We hold others less accountable for unethical behaviour when its carried out by a third parties. E.g. A drug company deflects attention from a price increase by selling rights to another company, which imposes the increase. The Slippery Slope. We are less able to see others unethical behaviour when it develops gradually. Auditors may fall prey to this if a companys questionable practices accumulated over time, rather than all at once. Overvaluing Outcomes. We give a pass to unethical behaviour if the outcome is good. E.g. A researcher whose clinical trial saves lives is considered more ethical than one whose fraudulent trial leads to deaths.

Remedies to these five barriers:

1. Ill-Conceived Goals.
2. Motivated Blindness. 3. Indirect Blindness.

4. The Slippery Slope.

5. Overvaluing Outcomes.

Articles Digest:
Companies have poured time and money into ethics training and compliance programs, but unethical behaviour in business is nevertheless widespread. Thats because cognitive biases and organizational systems blind managers to unethical behaviour, whether their own or that of others. All these serve to derail even the best-intentioned managers: Goals that reward unethical behaviour Conflicts of interest that motivate people to ignore bad behaviour when they have something to lose by recognizing it A tendency to overlook dirty work thats been outsourced to others An inability to notice when behaviour deteriorates gradually A tendency to overlook unethical decisions when the outcome is good. Surveillance and sanctioning systems wont work by themselves to improve the ethics of your organization. You must be aware of these biases and incentives and carefully consider the ethical implications of every decision.

A (3)

WHY LEADERS DONT LEARN FROM SUCCESS

Failures get a postmortem. Why not triumphs?

Success can breed failure by hindering learning at both the individual and the organizational level. We all know that learning from failure is one of the most important capacities for people and companies to develop. Yet surprisingly, learning from success can present even greater challenges. CASE STUDY: Lessons from Ducati

SUCCESS BREEDS-FAILURE TRAPS

Fundamental Attribution Errors: When we succeed, were likely to conclude that our talents and our current model or strategy are the reasons. We also give short shrift to the part that environmental factors and random events may have played. Research study: How Power Causes Us to Ignore Advice 2) Falling prey to the Overconfidence Bias: Success can make us believe that we are better decision makers than we actually are. Overconfidence inspired by past successes can infect whole organizations, causing them to dismiss new innovations, dips in customer satisfaction, and increases in quality problems, and to make overly risky moves. Research study: How Success Makes Us Less Reflective 3) Failing to Ask Why: When youre confronted with failure, its natural to ask why disaster struck. Unfortunately, success does not trigger such soul-searching. Research study: The Challenge of Discounting Easy Successes 1)

FIVE WAYS TO LEARN:

1.

2.

3.

4.

5.

Celebrate success but examine it: When a win is achieved, the organization needs to investigate what led to it with the same firmness and analyze it might apply to understanding the causes of failure. Institute systematic project reviews: Like military, business organizations can too hold after-action reviews (AARs) irrespective of the outcome, to generate specific recommendations that can be put to use immediately. Use the right time horizons: Having an appropriate time frame for evaluating performance, organization can identify the factors that led to success or failure. Recognize that replication is not learning: Factors under your control can remain part of your winning formula. But you need to understand how external factors interact with them. If it isn't broke, experiment: Experimentation is one way to test assumptions and theories about what is needed to achieve high levels of performance. And it should continue even after a success.

Articles Digest:
Virtually all leaders recognize the need to learn from failures, but amazingly few try to understand the true causes of their firms successes, which helps explain why great companies fail into decline. The reality is, success can breed failure by hindering learning at both individual and organizational levels, in three ways: 1) When we succeed, we tend to give too much credit to our talents and our model or strategy and too little to external factors and luck. 2) Success can make us to so overconfident that we believe we dont need to change anything. 3) We have a tendency not to investigate the causes of good performance. Recognizing that these barriers exist is a big first step in practices also can help: systematic after-action reviews, tools like six sigma, and experiments that test assumptions about what is needed to achieve great performance.

B (1)

An alternative to ignoring failure is to foster intelligent failure.

HOW CAN FAILURE BE USEFUL?

Keep your options open.
Learn what doesn't work Create the conditions to attract resources and

attention Make room for new leaders Develop intuition and skill

Putting intelligent failure to work

Decide what success and failure would look like before

you launch an initiative Convert assumptions into knowledge Be quick about it fail fast Contain the downside risk fail cheaply Limit the uncertainty Build a culture that celebrates intelligent failure Codify and share what you learn

B(2)

How to Avoid a Catastrophe ?

Most business failures, such as engineering disasters, product malfunctions, and PR crisis are preceded by near misses-close calls that, had it not been for chance, would have been worse. Recognizing and learning from near misses isnt simply a matter of paying attention; it actually runs contrary to human nature. In this article, we examine near misses and reveal how companies can detect and learn from them. By seeing them for what they are instructive failuresmanagers can apply their lessons to improve operations and, potentially, ward off catastrophe.

Organizational disasters ?

Latent errors + Enabling conditions = Organizational disasters

Case studies
Bad apples
Speed warnings Jet black and blue

B (3)

I Think of My Failures as a Gift

- An Interview with A.G. Lafley by Karen Dillon

Former CEO of Procter and Gamble, A.G. Lafley is considered as one of the most successful Chief Executive Officers in recent history. However, Lafley explains that some of the biggest lessons learned have come from making mistakes. Lafley carefully studied P&Gs past 30 years of unsuccessful acquisitions and identified five reasons for their missteps. Lack of strategic reason Slow integration Expected synergies that did not evolve Incompatible cultures Company leaders who could not work together

C (1)

Articles Digest:
Failure is one of lifes most common traumas, yet peoples responses to it vary widely. Some bounce back after a brief period of depression; others descend into depression and a paralyzing fear of future. Thirty years of research suggests that resilience can be measured and taught and the U.S. Army is putting that idea to the test with a program called Comprehensive Soldier Fitness. The aim of CSF is to make soldiers as fit psychologically as they are physically. A key component of CSF is master resilience training for drill sergeants a form of management training that teaches leaders how to embrace resilience and then pass it on, by building mental toughness, signature strengths, and strong relationships.

Optimism is the key to immunize people against learned helplessness, against depression and against giving up after failure. Comprehensive Soldier Fitness (CSF) initiative by U.S. Army:
Testing for Psychological Fitness Online courses Master resilience training

Building mental toughness Building signature strengths Building strong relationships

C(2)

A Race off a Cliff The first cross border takeovers by Chinese company ended in failure. That hasn't prevented them from trying again- with a whole new approach. The failure is not about falling down but about refusing to get up.

Chinas M&A mistakes

Pursuing inexpensive deals such as unprofitable

businesses. Such targets usually require large investments of time and money to turn around. Focusing on financials and ignoring intangibles such as systems, people, processes and brand values while evaluating targets. Skipping key steps in M&A processes.

 Picking up companies whose values consisted mostly of

brands, system, people and culture which are difficult to integrate cross borders. Failing to figure in advance how to use acquisitions products and services in Chinese market. Trying to handle knotty integration issues without the right capabilities or people.

THE REVAMPED APPROACH

A shift to hard assets: buying physical assets such as oil

fields and natural resources rather than intangible ones such as brands. A quest for high tech: looking for companies and organizations that possess state-of-the-art technologies and global R&D facilities. The pursuit of growth at home: using overseas takeovers to strengthen the companys position in Chinese market rather than foreign markets.