As a company grows, often it becomes more averse to risk and failure. Mature companies are almost desperate for tried-and-true techniques to implement. The goal of fast-growth companies should be to learn from (and not to repeat) failures rather than "not to fail."

A company that cultivates a culture in which it is OK to fail has a distinct competitive advantage, because we learn so much more from our failures than we ever do from our successes. When we succeed, we often apply 20-20 hindsight to rationalize our decisions and reasons for our success. As the saying goes, "Success has many parents, but failure is an orphan." That is, many people will jump at the chance to take credit for success, but very few will accept responsibility for failure when it happens. That group-think dynamic is what holds many companies back.

Dr. Astro Teller currently oversees Google[x], which he describes as "Google's moonshot factory for building magical, audacious ideas that through science and technology can be brought to reality." In his Wired article he explains that:

It's often easier to make something 10 times better than it is to make it 10 percent better.

Yes … really.

Because when you're working to make things 10 percent better, you inevitably focus on the existing tools and assumptions, and on building on top of an existing solution that many people have already spent a lot of time thinking about. Such incremental progress is driven by extra effort, extra money, and extra resources. It's tempting to feel improving things this way means we're being good soldiers, with the grit and perseverance to continue where others may have failed--but most of the time we find ourselves stuck in the same old slog.

I've never been a fan of "fast follower" companies, but the idea that it's easier to make something 10x better than 10 percent better seemed counterintuitive. The 10x efforts are about fundamentally changing the world--space travel, self-driving cars, wearable technology, and all the amazing ideas that win our hearts and minds. To accomplish these giant leaps forward, we not only have to be willing to fail but also "own" failure so that we can learn from it.

Rather than pay lip service to creativity, innovation, and substantive change, true leaders must be willing to own their failures, lead by example, and be brave enough to fail publicly. Jim Collins, in his bestselling book, Good to Great, noted that leaders of great companies tended to "look in the mirror" when dealing with problems (or failure) while "looking through the window" to give credit for success. In this way, leaders of great companies were the first to take responsibility for failures, rather than waste time looking for someone to blame. Likewise, these companies were also quick to point out others who were driving the success of their company.

If you want to ensure your long-term growth and sustainability, your company needs to adopt a culture of calculated risk. Playing it safe is a path toward "me too" products and irrelevancy. The alternative is to fail your way to the top. By embracing the insights and key lessons that come with failure, we open new doors and new possibilities. Only by blazing your own trail and learning from your own unique failures will you discover your true path--a path that leads to sustainable growth.

Published on: Oct 28, 2014