Never Let a Failure Go to Waste
- Reiner Hengstmann, Global Director, Sustainability, PUMA
- Jacklyn A. Sturm, Vice President and General Manager, Global Supply Chain Management, Intel Corporation
- Christine Bader, Human Rights Advisor, BSR, Author, Girl Meets Oil: The Evolution of a Corporate Idealist. (Moderator)
Failure is inevitable; all companies are caught off guard at some point. What really matters is how a company learns from its failures to ensure that it does better next time.
Companies that fail well have moved beyond ad-hoc responses to develop systems and have created a culture that appreciates the power of learning from mistakes.
Talking about failure makes us vulnerable. It is important to create environments that allow teams to be vulnerable and open, without fearing reprimand, in order to understand a failure’s root cause.
“No one gets rewarded for what doesn’t happen in this space. A lot of what we do is prevent bad things from happening … but how do you reward for that and make that an explicit part of the job?” —Christine Bader, BSR
“Being open, being transparent: this has allowed us to understand the failures that we have made, and to learn how to avoid repeating them.” —Reiner Hengstmann, PUMA
“You can’t solve a problem systematically unless you get to the root cause … You need to drill down into the details, and they [the team] are the only people who can really share them. You can deal with it later from a performance standpoint.” —Jacklyn Sturm, Intel
Jacklyn Sturm kicked off the discussion by pointing out that companies must plan to learn from their failures, or they won’t be prepared to take any big risks or manage the different issues that may arise when a team misses its targets.
Stern said that Intel has formal systems in place to learn from different types of failures. The company performs an after-action review in response to large mistakes. This post-mortem review is designed to be blameless and objective so that participants feel free to have an open discussion to learn from mistakes. Intel also encourages failure in the design of experiments, during which teams innovate through iteration, failing often and quickly to reach the next, better stage of design. Most importantly, Intel encourages teams to contemplate failure, emphasizing that mistakes don’t have to occur for the teams to learn from them. Intel teams take failure into consideration when designing business-continuity plans. Identifying what can go wrong in advance means that they can react quickly and well in the face of an emergency.
As an example of a failure that the company has learned from, Sturm offered the case of how Intel first developed its approach to eliminating conflict minerals from its supply chain. The company experienced early success in managing the flow of tantalum from conflict regions within its own supply chain. But when Intel tried to introduce its approach to the tin industry to broaden the impact, the company quickly failed to gain support, and negotiations fell apart.
Intel conducted a post-mortem review to discover what went wrong. Sturm reflected that the company initially felt so buoyed by success that it went into negotiations “like a bull in a China shop,” failing to recognize the tin industry’s very different processes and needs. After this experience, the company was able to correct its mistakes and improve its ability to partner in order to manage this important issue. Sturm argued that this early failure allowed the company to succeed later when developing similar partnerships for tungsten and gold.
In reviewing PUMA’s approach to failure, Reiner Hengstmann offered the example of how the company was caught off guard by a labor relations challenge at one of the factories that it sourced from in Mexico a decade ago. “Overnight the CEO and I received over 3,000 emails, from nasty to very nasty,” he said. “We had no idea how to solve this problem.” While the team reacted quickly to open discussions with the labor unions involved, they recognized that there had been a systemic failure in how the company interacted with its suppliers and other stakeholders on an ongoing basis. Rather than considering this a one-off issue, the company took the lesson seriously and established an annual forum for dialogue, in which it speaks openly with NGOs, unions, and other stakeholders to learn from them more effectively. This annual dialogue has not only improved relations between PUMA’s stakeholders and the company, but has also helped identify emerging issues before they erupt into a full-blown crisis.
Christine Bader pointed out that both companies have succeeded in institutionalizing a process for analyzing and rectifying instances of failure so that their reactions are no longer ad-hoc. This has allowed them to prevent issues that they may not have identified otherwise. Other success factors include offering employees rewards for taking risks and making progress in difficult situations, as well as keeping a strong institutional memory of the crisis alive so that management continues to support the process when they are not facing any crises.
In the Q&A session, the audience offered examples of how their own companies have learned from failures, which revealed that some companies have used these experiences to become stronger. One company conducts post-mortems, not only after instances of failure, but also after successes, so that the post-mortem exercise is not strictly associated with failure.
November 5, 2014