4 Reasons CEOs Should Plan For Failure and Encourage Risk-Taking

4 Reasons CEOs Should Plan For Failure and Encourage Risk-Taking

Every successful company leader will tell you that failure is a part of business, but far fewer will admit they plan for failure. Growing a business requires taking risks, and failure is a frequent outcome on the journey to achieving success.

In their best-selling book Switch, co-authors and brothers Chip and Dan Heath describe how world-renowned design firm IDEO (perhaps best known for its work with Apple) plans for failure during its design process. The company’s designers even created a process chart that factors in the excitement and hope at the beginning, the emotional lows of when things aren’t going as planned and the joy of victory at the end.

It’s a brilliant way to view risk-taking and how leaders can plan for failure while on the road to success. It’s an approach I embrace at Petra Coach and recommend to the member companies that we consult. Here’s how you do it:

  1. PLAN FOR FAILURE BY KNOWING THE RISKS
    When taking a risk, make sure it’s a calculated one. Evaluate the upsides and downsides and what they mean to your business. Have answers to key questions like: does the undertaking align with your company’s vision and mission? Do the activities and tasks support company goals and priorities? Did we plan for failure, and do we know how to respond if things go sideways? Remember, a failure that is aligned with your business’s goals is still a step in the right direction.
  2. LEARN FROM YOUR MISTAKES
    Every failure experienced will provide important lessons that can be applied to your business. Roll up your sleeves and find out what went wrong. Were your expectations incorrect? Did you misjudge market demand? Was your strategy not on target? Be brutally honest about the hows and whys, but don’t dwell on it or point fingers. Get your team together to determine the necessary changes and move forward.
  3. CELEBRATE FAILURE
    Failure is part and parcel of running a business, so don’t feel ashamed when things don’t go as expected. Failure means you’re taking action to grow your business. Celebrate each failure by publicly applauding team members who had the courage to take a chance and accept the consequences. Hold a “failure party” or create an award for the biggest risk taken. It will foster a positive attitude toward smart risk-taking.
  4. ENCOURAGE OPEN DISCUSSION ABOUT FAILURE
    All business leaders have failed at some point during their careers. To foster a culture of smart risk-taking, encourage team members to share their highs and lows about projects where they took a chance. Make it acceptable to talk about mistakes so team members are encouraged to share their experiences and ideas. It will create a more open and creative environment and help build healthier teams. In today’s world where business seems to move at the speed of sound, the biggest risk is not taking any risk at all. Few, if any, business leaders have succeeded by sticking to their original idea. A planned, detailed strategy to deal with failure will keep your team energized and in a positive mindset when they tackle the next big idea.

About Andy Bailey: As the founder of Petra Coach, Andy Bailey can cut through organizational BS faster than a hot knife through butter, showing organizations the logjams thwarting their success, and coaching them past the excuses we all use to avoid doing what needs to be done. Andy learned how to build great organizations by building a great business, which he started in college. It then grew into an Inc. 500 multimillion-dollar national company that he successfully sold and exited.