Leadership by Failure: Can Failure Be the Trigger for Innovation?

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Igor Peremislov / DBA student, Argosy Univ., Phoenix
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Leadership by Failure: Can Failure be the Trigger for Innovation?

"I have not failed. I've just found 10,000 ways that won't work."
Thomas Edison, American Inventor (1847-1931)

This research is dedicated to failures, as drivers and accompanying factors of progress. A qualitative analysis, based on interviews with Semiconductor Manufacturing leaders, will help to understand the role of failures, learn valuable lessons from strategic errors, and analyze different leaders' approaches. Weil (2007) argued that mistakes avoiding is an impossible task, to err is human and the ultimate leaders test is admitting and learning from mistakes. Failure is not just an option, but is a necessary ingredient of success (McConoughey & Weinzimmer, 2012). The research goal is to analyze different leader's approaches and understand, how most successful of them deal with errors and failures. The research area will be limited by few Semiconductor and Electronics Manufacturers. The purpose of research is to answer the question: can failure be the trigger for innovation? According to the research hypothesis, successful leaders use failures as triggers for innovations; correct failure treatment prevents repeating events and provides long-term benefits. The research will help to leaders to accept errors not as their enemies, but as partners of progress and satellites of success.

Literature Review
What is similar for reality of leadership from any kind? What makes the difference between leadership theories and practices? What any leadership theories recommend avoiding and every leader will undoubtedly meet? According to McConoughey and Weinzimmer ( 2012), leadership is a learning process. As any learning process, leadership happens trough trial and errors. Therefore leaders and their followers need to try and, what is even more important, have to err (McConoughey & Weinzimmer, 2012).
There are many leadership theories and all of them have to deal with failures and errors. For example, well known theory of the Blue Ocean in business has direct relation to the opportunity to be the first on market, to be out of competition. However, first on market means highest chance to fail. According to Golder and Tellis (1997), 47% of the "market pioneers" failed and current market leaders are their followers. Such followers have three times higher rate of success, than businesses, decided to be the first on their markets by any price. "Blue Ocean" literature is just one example of focusing on the question what leaders should do. Such discussions are typical. Authors barely focusing on the question what leaders should avoid. Therefore, most authors prepare potential leaders to successes instead failures (McConoughey & Weinzimmer, 2012).
Another surprising idea is the conflict of culture of perfectionism and errors. Against common idea that failure is not an option, David Kelley, the founder of successful design and consulting firm IDEO, believes that failure is not just an option, but is a necessary ingredient of success (McConoughey & Weinzimmer, 2012). There are many classic examples and illustrations of turning mistakes into learning experience and opportunities. One of them related to the former IBM CEO Tom Watson. One of his executives made 10M$ mistake, related to risky investment. When this executive understood his fault and tendered resignation, Tom Watson told him that IBM just spent 10M$ for his education and declined resignation. Watson believed that culture of perfectionism can paralyze any progress (McConoughey & Weinzimmer, 2012).
However, IBM example is reminder that failures are expensive way of learning. Here is coming The Failure Paradox: every great leader makes mistakes, however the number of mistakes, which leaders can "afford" before losing his position and status is limited. Therefore, smart leadership is observation and learning from previous mistakes. Fortunately for leaders, many mistakes and possible failures are happened before and the art of leadership is to find and learn them instead repeat prior negative experience (McConoughey & Weinzimmer, 2012).
In a bright contrast with previous authors, Forbes Journal Business contributor Mike Myatt describes potential leadership problems without any word about ability to learn from mistakes and failures. His article "Business Don't Fail – Leaders Do" (Myatt, 2007) explains in great details possible scenarios of unsuccessful leadership related to the lack of character, lack of vision, poor branding, lack of execution, capital problem, risky investments, poor management, and more. However, this list of 15 major leadership problems, directly related to business fails, is missing leaders' ability to analyze failures and use valuable lessons from prior mistake. Once again this article offers to readers an example of recommendations, clearly focused on success and missing mistakes role.
Edmondson (2011) argued that wisdom of learning is undoubted, however organizations and leaders barely do it right. Edmondsond summarized 20 years of research and studies of different organizations from financial sectors, pharmaceutical industry, telecommunication, construction, design, and even NASA's Space Shuttle program. Surprisingly, such a different sectors or types of organizations have very similar problems, preventing learning from failures and limiting improvement of the future performance (Edmondson, 2011). Leaders and organizations understand importance of the failure analysis. However, frequent misconception says that learning from mistakes is straightforward process: usually postmortems and after-auction review focused on reflection of mistake and actions to avoid similar event in the future. Additionally, most executives believe that failures are bad thing (Edmondson, 2011). According to the author, questions about responsibility or The Blame Game (Edmondson, 2011) provide paradoxical results. Leaders believe that less than 5% of failures are blameworthy. For the next question, how many of them were treated as blameworthy, organizations' executives answers that over 70-90%! Post-mortems and failure analysis have built-in problems and low effectiveness. Many of them have stereotypical conclusions: "the market is not ready for our great product" or "the failure is caused due to not following procedures" (Edmondson, 2011, para. 3). Another problem is disability to close loop of improvement: many organizations fail to define effective corrective actions. In the rare cases when such actions were defined correctly, many leaders and organizations fail to organize correct implementation, control, and improvement analysis (Edmondson, 2011). Finally, Edmondson find that not all failures are bad things for organizations, some of them are inevitable and even good (2011). If most of organizations have these troubles and misconceptions, related to their own failure analysis, logic to expect that situation with analysis of prior failures of other organizations is even worse. Edmondson summarized her article by idea that failure analysis is anything but straightforward process. Errors should drive to innovations and effective preventive actions. Leaders and organizations need training to use this process effectively and avoid formal time-wasting procedures (Edmondson, 2011). Such training should be connected to academic research, analyzing successful leaders' approaches and proven methods of the failure analysis.
A similar position has Sullivan (2009). He introduced the notion of Leadership by Failure to emphasize importance of effective failure analysis. Repeating mistakes of leaders and organizations mean two things: they cannot identify the reason for failure or they cannot institutionalize proper solutions (Sullivan, 2009). Learning from failures process is complicated, "it takes skill, humility and discipline to learn from failure - and a good deal of tenacity, too" (Sullivan, 2009, para.4). Sullivan reminds that most effective failure analysis happens not when failure or error made by organization, but before this, when organization tries to identify potential failures and prior mistakes, made by similar organizations. Another interesting idea is offered by the executive from Brinker International: "Success comes from good judgment. Good judgment comes from experience. Experience comes from bad judgment." (Sullivan, 2009, para.7). Therefore, experience is a function of mistakes and failures. Sullivan believes that mistake and failures should be triggers for innovations and improvements.
According to Kellaway (2011), business leaders are worse than they think. Kellaway interviewed 60 top managers and business leaders. 58 out of 60 failed to find their weaknesses, others then perfectionism, "brutally honest", "being too trusting" or "being too forgiving" (Kellaway, 2011, para.1). According to Kellaway, this is not an example of dishonesty, business leaders do not know about their problems and weaknesses. Leadership theories connect self-improvement of leaders and potential success of their teams. True leaders should constantly work on self-improvement. Kellaway findings make questionable leaders ability to be successful. They clearly cannot recognize their problems and weaknesses. For example, one of the most frequent problems of top managers is their disability to listen. Statistics shows that over 30% business leaders suffered from this issue, however only one out of 60 interviewed leaders mentioned this.(Kellaway, 2011). Therefore, these leaders and their teams have low chances for effective leadership and successful failure analysis. Once again, this article shows that honest self-analysis and failure analysis are not an easy task and straightforward process, they demands research and proper training (Kellaway, 2011).
These researches may be concluded by few ideas. A part of literature focused on success and missing valuable role of failures and errors. Effective failure analysis or Leadership by Failure is not a straightforward process, but complicated combination of tasks, demanded experience and specific knowledge. Most effective and less "painful" process is failure analysis of mistakes, made by others. However, many leaders focused on their own failures only. Failures can and should be trigger for effective preventive actions and innovations, otherwise they will return. Many organizations and leaders fail to organize this process correctly and use time-wasting formal approach. Business leaders not just fail to organize effective failure analysis process, but in many cases cannot analyze their own weaknesses and limitations. This fact illustrates leaders' inability to organize effective failure analysis and decreases chances to successful Leadership by Failure.
Research Problem and Hypothesis
The literature review showed that authors connect failures and improvements. Real businesses and real leadership illustrated by researches as a complex process of errors, failures, lessons learning, and innovations. These innovations should to prevent similar failures in the future. Authors are mostly agreeing that ability for improvement and innovations are critical exam for leaders and leadership. However, the mechanism of the Leadership by Failure is complex and demands additional research and better understanding. For example, some leaders use prior failures and case studies, this way they minimize negative impact and pricey experience of doing their own mistakes. Other leaders successfully use every failure or error, as a trigger for comprehensive innovation process. Such innovations are not just preventing identical failures in the future, but improve system globally, organize "close loop" of controlled changes and, as result, provide long-term prosperity and continuous improvement. However, other examples show repeating failures and strategic errors, lack of leadership, misunderstanding and misconception about failures roles, blaming and punishments instead analysis and preventing.
This research is dedicated to the connection between failure, innovation, and leadership. The research and interviews analysis will focus on finding similarities and differences in leaders' reaction to failures. The research question is Can Failure be the Trigger for Innovation? According to the researcher hypothesis, successful leaders use failures as triggers for innovations; correct failure treatment prevents repeating events and provides long-term benefits.
The research field is limited by large Semiconductor Manufacturing companies and their leaders. To provide realistic and useable information the interviews will cover not just success stories, but economic disasters, wrong decisions, incomplete improvements, and repeating events. The research is not limited by some specific leadership theory, reality shows that all organizations and all leaders make errors and have failures. Therefore, this issue is relevant for all kind of leaders and all type of theories.
Research Methodology and Target Population
The research of Leadership by Failure is a quantitative research, based on analysis of interviews with Semiconductor Manufacturing managers and leaders. As mentioned above, the research question is Can Failure be the Trigger for Innovation? According to the researcher hypothesis, successful leaders use failures as triggers for innovations; correct failure treatment prevents repeating events and provides long-term benefits.
An identical questionnaire will be offered to the representatives of similar semiconductor manufacturers and semiconductor equipment companies: Intel, Nymonix, Micron, Applied Materials, and ASM. The target population is department managers, engineering project managers, and production or manufacturing managers.
The structure of research and interviews is similar to the research and interviews of 60 companies' leaders, described by Kellaway (2011). However, Kellaway's research was focused on the leaders' self-analysis and ability to define their weaknesses and potential problems. Kellaways argued that self-improvement is a vital part of successful leadership and self-improvement starts from self-analysis. Kellaway connected low effectives of self-analysis and low chances for successful and effective leadership (2011). This research will use similar method, however the goal is different. The research and interviews analysis will focus on finding similarities and differences in leaders' reaction to failures. Particularly, it is interesting to compare opinion of representatives of different companies and different positions. For example, manufacturing or production managers may see role of failures in improvement process differently, than project managers or engineering group managers. Indeed, these individuals have different roles and responsibilities, different scope of work, and, most probably, different vision.
The questionnaire will be offered to the researcher's former co-workers and individuals with similar positions from semiconductor production and equipment companies in Israel and USA. This fact provides additional opportunity to compare cultural differences or similarities. Few manufacturers have very similar or even identical products, however different locations. They have identical equipment, identical production plans, and identical quality requirements. The interview process will help to outline cultural differences between leaders from virtually identical manufacturing units with different location and national culture.
Development of Capture Methods
The research of Leadership by Failure is a qualitative research, based on analysis of interviews with Semiconductor Manufacturing managers and leaders. As mentioned above, the research question is Can Failure be the Trigger for Innovation?
To reach the research goals the interview questions will be separated to three parts:
1. Personal experience about Leadership by Failure
2. Company official policy about Leadership by Failure
3. General and Demographic data
A personal experience and company official policy, supported by examples of successes and failures, could help to understand the role of failures. A demographic data could help to find communality between experience and Leadership by Failure and understand cultural differences between Israel and USA leaders. Particularly, these parts should test the hypothesis about successful leaders and ability to use failures, as triggers for innovation.
The interview questionnaire:
Part 1. Personal experience about Leadership by Failure
1. How would you define leadership?
2. How would you define failure?
3. How would you define leadership by failure?
4. In your opinion, what is the relationship between leadership and failure?
5. In your opinion, what is the relationship between leadership and innovation?
6. In your opinion, what is the relationship between leadership, failure, and innovation?
7. Do you believe that successful leaders use failures as a trigger for innovations?
8. From your personal leader's experience, which failures were typically used for innovation: your/your team or prior failures, made by others?
9. Do you encourage your employees to be open about their failures and mistakes, to analyze them, to offer lessons learning process for other team members?
10. Do you encourage your team to use standardized methods of failure analysis and future prevention, like RFC (Request for Comments), post-mortem, or other typical "lessons learned" procedures?
10.a Do you believe these methods are effective?
10.b What kind of "close loop" is in use in your team?
10.c How do you measure improvement?
11. Are you tending to focus on punishment or improvement, when you discover some error or failure, made by your team member?
12. Do you believe that failures and errors are vital elements of progress?
13. Is it right that failure treatment provides long-term benefits and prevents similar events in the future?
14. Do you agree that every repeating event indicates incorrect or incomplete reaction to the prior failure?
Part 2. Your company official policy about "Leadership by Failure".
15. Do your personal and official company policies about "Leadership by Failure" are similar?
16. Do your managers share your values about the role of failures?
17. Does your company mainly focusing on punishment or failure analysis and prevention?
18. How frequently happened that major company innovations or improvements were started from failure or serious error?
19. Do you believe that company failure analysis process encourages openness and effectively prevents future repeating events?
Part 3. General and Demographic data
20. Company Name and Country (USA or Israel)
21. Interviewee's Position
22. Managerial experience in years (0-5, 5-10, 10-15, longer than15)
Methodology execution and testing
A methodology execution and testing are important phases of the research. This process provides opportunity to improve questions, to develop better methodology, and collect feedbacks from representatives of target population. The interview process included questions from these three categories: general and demographic information, personal experience about Leadership by Failure, company official policy about Leadership by Failure. Identical questions were offered to Intel Israel site Engineering Group Leader (Gennady L.) and Intel USA site Installation and Qualification Team Manager (Brian T.). Both managers have over 15 years of managerial and leadership experience, both are working for a similar manufacturing semiconductor plants in Israel and USA. The interview with Gennady was by phone. The interview with Brian was face-to-face meeting.
Preliminary feedbacks are optimistic; however the process and questions need some improvement. First of all, these leaders are very busy and time-consuming interview process may impact quality and results of the research. Both managers preferred to get printed version of the questions before the actual interview, this way they would have an opportunity to think about the research issues and, probably, answer some questions by mail before the actual meeting. This idea will be used for next interviews as well.
Second issue is the questionnaire. Some questions should be simplified and clarified. An expectation to get deep answers with explanations and examples is not always doable. Some relatively short answers describe leaders' position without complicated explanations and details. Actually, this is not impacting the quality of research. Oppositely, to analyze short and focused answers is faster and more effective way than to work with long explanations. Easiest way to get short and focused answers is to rephrase the questions accordingly.
Third thing is the correctness of target population and relevancy of these questions to this category of leaders. First results look optimistic and promising: the issue of Leadership by Failure is relevant and important to this kind of managers. They were glad to discuss it and actively answered the questions. Undoubtedly, both leaders though about the role of failures long time before we met and each one had firm position and clear vision.
Conclusions regarding the interview process: the process is doable and interesting for both parts (the researcher and the target population representatives). The interviews and, especially, post-interviews analysis is time-consuming and complicated process. The questionnaire should be simplified and it is important to show questions to interviewees some time before the actual meeting.
First interviews analysis showed that Semiconductor manufacturing leaders believe in the Leadership by Failures conceptions. They mostly accept errors and failures as satellites of progress. According to their opinion, failure can and should be a trigger for innovations, what proofs the research hypothesis. However, rewards and punishments system, accepted by these organizations, is not always support employees' openness, successful "lesson learning" process, and proper repeating events prevention. Opposite, in many cases management tend to connect failure to individuals and punish them to prevent similar events. Future researches may add valuable information about connection of punishment and failure analysis, punishment and innovations, or punishment and long-term improvement in large organizations.

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