How to achieve more profit and innovation with a positive error culture.

Experimentation Mindset "Mistakes are part of the game". 

The realization that a positive error culture is desirable seems to be there. Nevertheless, studies show that the road ahead for companies is long and rocky. For example, Germany ranks second to last out of 61 countries surveyed in terms of error tolerance. 

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"Most experiments will fail. The first step is that it must be okay to fail. It must be allowed to experiment and test ideas... If people are afraid to fail, they won't try new things, there will be no innovation, there will be no breakthrough growth, you won't discover anything new."

- Morgan Brown, Vice President of Growth at Spotify

In this article, we would like to provide suggestions on how each person can individually contribute to a positive error culture in their company.

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Possible reasons why we do not cultivate a positive error culture

Why this is the case can sometimes be explained by our individualistic society. Failure researcher Olaf Morgenroth says that where performance and success are closely linked to personality, failure is a threat to self-esteem.

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To avoid losing self-esteem, most people sweep their mistakes under the carpet or blame them on external circumstances. For example, it has been found that politicians and parties usually blame the weather in the event of a defeat for why not enough people went to the polling station. With successes, on the other hand, it is not simply luck or the nice weather, but clearly people. 

Humans by their very nature would actually have a great love of experimentation and therefore a high tolerance for mistakes. What child doesn't fall over X times before they can walk? Unfortunately, the joy of experimentation, which reaches its peak in children at the age of four, is stifled early on in our school system. We learned early on that we can get far if we "do everything right". So why should it suddenly be any different in everyday working life?

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Innovation and a positive error culture go hand in hand.

Companies are made up of people. An error-tolerant environment starts with each individual and their thoughts. 

Professionals have the following fears when it comes to failure:

• 49% fear the loss of recognition
• 42% fear that their failure could be communicated negatively - loss of face
• 41% believe that failure could hinder their career - existential fears

Over 80% of respondents wanted more tolerance for mistakes and felt their employers were not innovative enough. (These figures come from a study by HR consultancy SThree, which surveyed 1,243 German employees in 2018 on the consequences they feared in the event of failure).

However, a culture of error should be massively promoted, above all for economic reasons, as according to error researcher Michael Frese, profitability and innovation are impaired if this is not present:

"In companies with a low tolerance for mistakes, there is less innovation, less learning and more blaming; others are made to feel guilty for their own mistakes. In addition, mishaps tend to be swept under the carpet and hardly communicated. Profit decreases in such companies. There is clear scientific evidence of this."

- Michael Frese, psychologist and professor

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Company X has a very inspiring error culture. The Moonshot Factory does not avoid project failures, but tries to bring them about and reward them as quickly as possible. How do they do this? They first deal with the critical assumptions that could bring the project down and test them. For example, in the Vertical Farming project, the critical question was whether staple foods would grow, as this was the only way to really solve the hunger problem. They failed to grow rice and grain and consequently killed the project. When a project fails, there is applause and bonuses.

Astro Teller, X's Captain of Moonshots, takes you on an exciting journey to experiments that have failed in his TED Talk on "The unexpected benefit of celebrating failure":

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How can you and your company achieve a "mistakes are part of the game" mindset?

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1. put on the researcher's hat. Ask why something went wrong. Analyze without judging. Goal: Learn from it.

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When we put on the researcher's hat, we take a step back. This helps us to look at the situation from an outside perspective and find out more objectively what led to a mistake. Science uses the principle of the trial-and-error method. Here, failed attempts point the way to knowledge. Accidental mistakes also advance research. Probably the most famous example is the discovery of penicillin. "The most exciting sentence in science - the one that announces new discoveries - is not "I've got it!", but: "That's funny!"." According to biochemist and science fiction author Isaac Asimov.

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Tip: Try to internally reprogram the reflex "Ah interesting, why did it go like that?" instead of judging yourself and others.

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2. don't immediately assess things as right or wrong. Reality is negotiable.

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"I have failed, but I am not a failure. Admitting mistakes but not linking your own self-worth to success - that's the trick."

- Tim Harford, British author and journalist. From the book Trial and Error.

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Who actually says what is right and wrong? The truth often lies somewhere in between. It depends on the narrative. 

Serial entrepreneurs are particularly good at this, as they have already built up many companies and have repeatedly fallen flat on their faces. Serial entrepreneurs know how to learn from their failures and turn them into something great.

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A good example of a serial entrepreneur is Richard Branson. At the age of 20, he founded a mail order business for vinyl records. The Virgin Group now owns over 200 different companies. For every successful Virgin company, such as Virgin Atlantic and Virgin Music, there are also many unsuccessful Virgin companies, such as Virgin Cola, Virgin Brides 😂, Virgin Vodka and Virgin Clothing.

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"I am sure that I will make many more mistakes this year and that I will learn valuable lessons from every mistake. Anyone who says they don't make mistakes has just made one."

- Richard Branson, serial entrepreneur and founder of Virgin Group

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We don't want to deprive you of a female entrepreneur from the German-speaking world. You can find out how entrepreneur and podcaster Vera Strauch deals with mistakes and what she advises companies to do in the Female Leadership Podcast.

3. focus on the solutions and not on the problem.

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When we focus on solutions, we move away from spiraling around the problem. As described in detail, many experiments will fail until one takes hold. 

Experiments are attempts to find solutions. Many experiments will fail; it is correct to assume this and important for a high error tolerance. 

Successful companies conduct thousands of experiments every year. At Booking.com, there are over 10,000 every year, most of which will fail. Only a few will achieve something big. However, if they didn't test so many solutions, many successes would also fail to materialize.

4. perfection does not lead to higher performance. Instead, live the Pareto principle and focus on the essentials.

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No study confirms the connection between perfectionism and performance.

What can be proven, however, is that anxiety, depression and burnout correlate with the desire to be perfect. 

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Tip: Break out of the desire to be perfect.

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It can help to know that perfection is not worth it. The Pareto principle states that around 80 % of the results are due to 20 % of the work. In the business world, there are many examples of the 80/20 principle that have stood the test of time. 20 percent of products usually account for about 80 percent of sales. The same applies to 20 percent of customers. As a rule, 20 percent of customers also account for around 80 percent of a company's profits. So you have to ask yourself where it is worth investing time. Will every perfect sentence really be put to the test in your next pitch? Hardly. Even for solution approaches, those experiments that promise the highest impact should be given higher priority.

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If you are further interested in the topic of perfectionism, the following podcast is worth listening to: "Goodenoughism" by Sabine Meyer and Feli Ambauen - Beziehungskosmos.

5. your imperfections make you unique and approachable. Transparency about your own mistakes creates a space of psychological safety for your team. 

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"Those who have a strong sense of love and belonging have the courage to be imperfect."

- Dr. Brené Brown, researcher and professor

The conversation between Elizabeth Day and Brené Brown on the subject of imperfection and vulnerability is inspiring: How to Fail: Brené Brown Podcast with Elizabeth Day

It is human not to be perfect. As a leader in particular, it helps to make your own imperfections and mistakes visible to the team. This promotes the general error culture the most because it creates a space of psychological safety. An illusion of perfection, on the other hand, creates barriers and separates us from others. 

Tip: Share your mistakes, laugh about them and keep experimenting. No prongs will fall out of the crown, the crown will get bigger.

So what can you do to promote a positive approach to mistakes?

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Internalize the 5 mindset shifts:

1. Put on the researcher's hat.
2. Don't judge things as right or wrong.
3. Focus on the solutions and not on the problem.
4. Don't strive for perfection, but live the 80/20 principle.
5. Don't hide your mistakes, they make you approachable.

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And four more tips on top:

1. Experiment!
2. Try something completely new. Maybe a high diving course?
3. Get out of your comfort zone. For example, with an improvisational theater course.
4. Make a list of what you've done and write "It's good. It's enough."

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With all tips, you will learn in a playful way and with little pressure that you only learn by making mistakes.

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We wish you happy failing and happy experimenting! You are super!
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I would love to hear how you deal with mistakes!
Contact me directly via Linkedin or email.

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