Notice that we didn't use the word "innovation" above. That's because we're tired of reading over-generalizations about it.

In a world of tags and keyword searches, it's easy for bloggers and big media to slap the "innovation" label on stories, because we know that readers are searching for white-hot takes on the topic. So it can be difficult to find true innovation stories that pertain to executives at midmarket companies. Usually, what we find are articles about invention or idea generation labeled as "innovation."

How refreshing it was to come across Doug Sundheim's post about increasing innovation on the HBR Blog Network. In it, the leadership and strategy consultant describes a realistic dilemma that a "medium-sized professional services" company confronted not long ago:

"Senior leaders of the firm were relentlessly making the case that they needed to innovate or they'd lose their footing. They shared specific places where they'd missed market opportunities and were now playing catch up. . . . The frustrating part was that, for the most part, people around the organization 'got it'--yet behavior still didn't change."

Sundheim's solution was for the organization to assess its treatment of failures. Here's why: "Innovation efforts are risky and can (by definition) fail. And failure can sting," Sundheim (@DougSundheim) explains. "So if you haven't figured out how to take some of the sting out of failure, you won't get innovation."

He provides three tips for managing the fear of failure. Here's a summary:

1. Start by defining a smart failure.
"Everyone in your organization knows what success is. It's the things you put on a resume: increased revenues, decreased costs, delivered a product, etc. Far fewer know what a smart failure is--i.e., the type of failures that should be congratulated," he writes. "These are the thoughtful and well-planned projects that for some reason didn't work. Define them so people know the acceptable boundaries within which to fail. If you don't define them, all failure looks risky and it will kill creativity and innovation."

2. Reward smart failures in addition to successes.
"An example is Indian conglomerate Tata Group's Innovista program in which they award the best innovations of the year and the best attempts. The latter is called the 'Dare to Try award' and goes the most thoughtful and well-executed failures. When they first launched the program in 2008, few teams entered the Dare to Try category. Then everyone saw the winners get congratulated on stage by the CEO alongside every other category. By 2011, 132 teams entered the category." (In 2013, the category received more than 240 entries.)

3. Make your approach to risk-taking transparent.
"As a leader, you've taken risks to get to where you are. You've had your fair share of successes and a few memorable flops. Share these with your people. Share how you approached both, how you made mistakes, how you learned to mitigate risks, how you dealt with the uncertainty, and how you succeeded. Let them see your decision process and how you weighed pros and cons. Let them know you'll support them as they experiment and learn to take smart risks."

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