Members of the congregation file into the room and sit in rows. The officiant stands before them, wearing a cardboard collar and holding a large book. He addresses the group: "Dearly beloved, we are gathered here today to confess and celebrate the failures of ourselves and our colleagues."

Welcome to the Church of Fail. It's the invention of NixonMcInnes, a 15-person social-media consultancy in Brighton, England. The exercise was conceived three years ago at an off-site, as groups of employees brainstormed ways to improve the business. "One group decided they wanted to make it OK to fail, because the more we fail, the more we can innovate and succeed," says co-founder Will McInnes.

That group included operations manager Matt Matheson, who saw a connection between the failure mandate and the art of improvisation, his hobby. In improv, he says, "We celebrate our failures and learn from them." At the off-site, Matheson's group was working in an oak-paneled room. It had "an old church feel," he says. Inspired, the group set up a pulpit and designated a comfort zone where people could confess their mistakes. The rest of the staff loved the conceit.

And so the Church of Fail became a monthly ritual. (McInnes stresses that no disrespect for religion is meant.) The officiant--Matheson or someone else--invites people to stand and confess their mistakes. Some blunders are small, such as a dispute with a colleague. Others are more significant: an error that cost the business money or annoyed a client. Employees must describe how they dealt with the situation and say what they will do differently next time.

After the confession, the room explodes in wild applause. That's another improv practice: It helps performers equate vulnerability with celebration. "The applause makes you feel very uncomfortable but strangely euphoric," says McInnes. "You have gotten something off your chest."

Most important, the experience encourages employees to make bolder suggestions. McInnes recently adopted one employee's idea to create the company's first-ever conference for businesses. "Making failure socially acceptable makes us more open and creative," says McInnes.