3 Categories of Predictable Business Failures

We all fail from time to time, but what sets some organizations and individuals apart is how they respond to and learn from those failures.failure
In two previous posts, we discussed the importance of and the process for embracing failure in business, and in our second post, we noted that a key step in embracing failure is identifying the reasons behind it. Here, we’ll look at three specific categories of failure to help companies better analyze their mistakes.

Preventable Failures in Predictable Operations

In some cases, operations are predictable, so failure can be prevented. According to author and Novartis Professor of Leadership and Management at Harvard Business School Amy C. Edmondson in a Harvard Business Review article, “Most failures in this category can indeed be considered ‘bad.’” In these instances, failure most likely resulted from not following instructions, deviating from approved practices and specifications, or not adhering to prior training.

Unavoidable Failures in Complex Systems

Although complex systems can be a competitive advantage for organizations that allows them to achieve more efficient results than competitors, these systems can also pose inherent failure risks, which can range from a failure in a specific cog in the process or in the process as a whole.
“Triaging patients in a hospital emergency room, responding to enemy actions on the battlefield, and running a fast-growing start-up all occur in unpredictable situations,” says Edmondson. She adds that it’s important to quickly identify and correct small failures in these complex systems.

Intelligent Failures at the Frontier

Countless organizations deal with certain situations for decades or longer, and failing in these situations is usually inexcusable. But on the other end of the spectrum are failures that occur when an organization attempts to push the boundaries of science and expand its technology and processes to innovate, which are failures borne of experimentation.
“Failures in this category can rightly be considered ‘good,’” Edmondson says, “because they provide valuable new knowledge that can help an organization leap ahead of the competition and ensure its future growth.” She adds that “Duke University professor of management Sim Sitkin calls them intelligent failures.”
Not all failures will fit into one of the above categories, but most will likely fit into at least one of them. Understanding these categories will help in analyzing failures, learning from them, and preventing their recurrence.