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Four ways to harvest value from ‘failure’

This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab In business, mistakes come with the territory.

From large enterprises to startups, businesses of every size know that missteps have the potential to exact enormous costs. But as the old adage has it – the only real mistakes are the ones from which we don't learn. I firmly believe that a company's ability to extract tuition value from failure is fundamental to its success and that learning from, and even embracing failure is a strength I value in leaders on my team.

Developing an environment where failure is neither feared nor punished takes leadership courage. Done well, companies will find that mistakes become a valued resource for innovation. Consider Amazon. In the late 1990s, 12 per cent of the company's inventory was stored in the wrong place, leading to delays in orders, lost time and unhappy customers. These supply chain missteps provided integral tuition value for the Amazon team. Better software and facilities dropped that number to 4 per cent in 2002 – the first year in its history that Amazon posted a profit. Today, Amazon is a leader among global businesses in supply chain management. As CEO, Jeff Bezos, said recently, "If Amazon isn't making mistakes, it's not innovating."

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Here are four ways to bring tuition value to life in your organization:

1. Reward the blunt and the honest

Give people permission to speak up when things don't go as planned. Encourage your leaders to be mindful about the language they use; team members will respond to being coached versus being blamed. Be hard on the issues and the outcomes, but don't personalize it. Strive to create an environment where speaking honestly is accepted, encouraged and rewarded. The ultimate goal is thoughtful resolution and reinvention.

2. Make sure everybody has some skin in the game

Every Monday morning, I share a customer story with leaders across Telus. Half the time, these stories showcase an experience in which we've delighted our customers; the other half are challenging stories where we have let a customer down. The latter are humbling and can be hard to hear. In sharing these stories I ask our leaders to reflect upon our successes and our failures and, most importantly, to share and study them and create a constructive dialogue within their teams. Creating tuition value only works if it becomes everyone's responsibility.

3. Know when to fold them

We have heard many times that it's important to fail fast, and yet too many organizations take far too long to put a bullet in projects that are going nowhere. Organizational cultures with a low tolerance for failure create a context where people are encouraged to keep working on a lost cause. The public shame and potential career destruction pushes people to keep hoping, expending additional resources to try to salvage a project instead of recognizing that it is ultimately destined to fail. Today's innovative companies have turned this upside-down. They celebrate the battle scars and take great pride in quickly redeploying precious talent to new, important assignments. Churchill once said, "Success is not final, failure is not fatal: It is the courage to continue that counts."

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4. Pump up the volume of your customer's voice

Our highest tuition value comes from customer feedback. Traditional surveys and focus groups aren't enough in our hyperconnected, rapidly evolving world. We need real-time listening posts and experiential immersion. Your front-line team has the answers. After all, they deal with customers daily. Send your marketing, finance, HR, legal teams into the field and have them experience what it means to serve the customer first hand. Have them build a trusting and open dialogue with your store representatives, call centre and field agents. Harvest the depth of insight from social media, crowd-sourced comments and candid online reviews and ratings. Make this feedback and insight omnipresent in meetings and discussions and it will provide a navigation system for decision-making that improves customer loyalty, reduces support costs, and differentiates your company through your responsive and caring actions.

How an organization responds to its mistakes is a reflection of its resiliency, and ultimately, a leading indicator of its future growth and profitability. When a SpaceX rocket exploded last summer, CEO Elon Musk took it in stride. "Rockets are tricky," he tweeted – and then he and his team commenced mining the flight recorder for tuition value.

Mr. Musk's approach to failure demonstrates exactly the right cultural approach; ensuring that the emphasis is not just on what went wrong, but rather on what was learned. As a leader, if you can create an environment in which everyone is aware of the value of mistakes, you will harness the power of failure. In return, you'll have access to innovation and success.

Joe Natale is president and CEO of Telus.

@natale_joe

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