Effects of Company Attitudes on Failure

How leaders deal with significant failure depends to a great extent on the company culture and industry in which they lead. Until relatively recently, some industries had done so well for so long that failure was an anomaly; there was a certain arrogance among companies in these industries, a sense that failure was what happened in other organizations. As a result, any leadership failure was dealt with in the harshest way possible, and people were so terrified of messing up that they did everything they could to avoid taking risks. Companies at the top of a business cycle, such as Internet companies in the late nineties, can also disdain failure and not be prepared for it when it arrives.

Though few companies have emerged unscathed from the economic downturn of the last few years, some still harbor an arrogance toward and intolerance of failure. Not only is this attitude unrealistic but it discourages leaders from learning a single thing from failure except to deny, deny, and deny some more.

Companies like GE that have enlightened attitudes, however, give people second chances if their failures were business-related (rather than values-related) and encourage the reflection and dialogue that creates a learning environment. At GE, people who had failed in major ways were invited to speak at their Crotonville training facility and tell present and future leaders that there was indeed life after failure. Although no organization can survive by treating mistakes and setbacks with unlimited forgiveness, it can increase the odds of thriving by recognizing failure as a natural part of the leadership life cycle. Essentially, the best attitude is when companies communicate something along the lines of the following: “You made a major mistake, but we believe you still have a great future as a leader. Prove us right by taking the time and making the effort to learn from what went wrong. And don’t make the same mistake again.”

Organizations often bemoan that some of their most talented leaders are stuck in their ways and unwilling or unable to change, even though they’ve been encouraged to do so. Despite coaching, training, and outright threats, they refuse to change their leadership style or adjust their attitudes. It seems nothing will motivate them to change—until they fail. This shakes up even the most confident people and forces them to examine all their assumptions and practices. In many instances, significant failure is a once-in-a-lifetime opportunity to change and grow as a leader, and companies should create an environment in which people are encouraged to take advantage of this opportunity.