In 2012, a team of researchers at Google launched Project Aristotle as part of their ongoing quest to uncover the secrets of effective teams within the organization. Their investigation delved into various aspects, ranging from how often team members dined together to identifying common traits among top managers. Their goal was to understand why certain teams thrived while others faltered, whether it was due to shared traits, hobbies, or backgrounds.

The researchers didn’t discover a single, definitive pattern. Instead, they identified several key dynamics that were crucial for building successful teams:

• Psychological safety
• Dependability within teams
• Clear and structured job expectations
• Finding purpose in the work or its outcomes
• The subjective belief that one’s work makes an impact

Out of these factors, Psychological Safety emerged as the most crucial one. This concept was first introduced in a 1999 paper by Dr. Amy Edmondson, the Novartis Professor of Leadership and Management at Harvard Business School. Amy engaged in an in-depth conversation with our founder, Dr. Hitendra Wadhwa, to explore this concept further.

What Constitutes a Psychologically Safe Environment?

Amy Edmondson views psychological safety as closely associated with learning cultures: “I just don’t see how you can learn collectively — especially not as much individually — unless you’ve got psychological safety.” In today’s work landscape, most of our tasks are deeply interconnected with others. Merely staying in our own lanes, working diligently, and expecting rewards for our efforts is no longer sufficient. Whether you’re in B2B sales, drug development, or even creating and teaching a course, collaboration with others is fundamental. As Amy points out, “You’re doing it in such a way that their ideas — their expertise — are essential to making progress.”

Psychological safety revolves around the idea of harnessing collective intelligence. Collective intelligence inherently encompasses diversity, with individuals bringing different backgrounds, expertise, training, and ideas to the table. It’s this diversity that, when brought together, enhances the quality of outcomes.

Failures are also an integral component of a psychologically safe environment. Amy acknowledges that not all failures are beneficial, but she underscores the importance of discussing them. Without open conversations about failure, people may still feel uncomfortable about sharing what she calls “good failures.” By making clear distinctions between what’s termed a “smart failure” and a “dumb failure,” we can truly tap into the potential of intelligent failures.

Understanding Dumb Failures

Amy identifies two types of dumb failures. The first type involves individual blunders, as she illustrates with a personal example: “When I put the milk back in the cupboard, and the cereal in the fridge, that’s a dumb failure that I made all by myself, with no help.” 

However, the kind of dumb failure that Amy primarily studies occurs at the organizational level. It encompasses instances where organizations make what she calls ‘really stupid decisions.’ This could involve launching a product with glaring flaws or acquiring a company when the acquisition doesn’t align logically. While one might argue that these decisions result from uncertainty and lack of awareness regarding flaws or incompatibilities, a closer examination often reveals that within the team or organization, some individuals had significant concerns, but their voices went unheard. This transforms it into a collective dumb failure at the organizational or team level.

Amy emphasizes, “We don’t celebrate failure just to celebrate failure. We celebrate failure for its learning value.” Extracting this learning value requires a rigorous process of failure analysis. Unfortunately, this step is often performed superficially or overlooked entirely. Superficial analyses tend to produce self-serving conclusions, such as blaming customers for not embracing a supposedly fantastic product. This attitude shifts responsibility away from the organization. A more meaningful approach involves delving deeper to understand the organization’s own errors or missteps that contributed to the failure.

Smart or intelligent failures typically occur when you’re venturing into uncharted territory, without a pre-established playbook to guide you. Conversely, dumb failures occur even when you have access to all the necessary information, but, for various reasons, fail to utilize it effectively.

Smart Failure: An Example

To illustrate the concept of smart failures, Amy offers an example involving a business services firm. Recognizing increasing competition in their field, the top team at the firm begins to explore additional services they can offer, going beyond their usual offerings. They come up with a novel idea they believe could add value to their clients. With enthusiasm, they communicate their readiness to provide this service and receive a client request to proceed. Over the course of a few months, the project unfolds, but it ultimately fails to yield any positive change for the client. Despite the team’s dedicated efforts, the project didn’t achieve its intended outcomes.

Amy categorizes this as a smart failure because the team ventured into innovation. They sensed an opportunity, recognizing that clients required more than what they were currently offering. Following the failure, they go back and try to figure out what went wrong. This process reveals that many of their existing biases, rooted in their traditional service offerings, hindered the successful execution of this new service. Armed with this newfound insight, they make the necessary adjustments and give it another try. This time, it becomes a substantial portion of their business, accounting for about 40%. They had a sound hypothesis but were initially blinded by assumptions that required them to change their behavior to make it work. Once they made those changes, progress followed.

In contrast, a dumb failure would involve a company launching a new service, despite several senior team members knowing it was technically and staffing-wise unfeasible. However, due to the enthusiasm of the business development and marketing teams, they decide to announce it to the public. This decision disregards the concerns raised by operations and HR. The outcome is a flood of complaints and a myriad of issues. Amy labels this a dumb failure because “they could have known better had they listened to their own internal experts.”

Innovation Demands a Fast-Fail Mindset

Innovation has long been acknowledged as a fundamental driver of growth, performance, and company valuation. However, many businesses hesitate to encourage creativity and innovation among their employees due to a prevalent fear of failure. This fixation on the fear of failure often causes us to overlook the essential cycle of feedback, reflection, learning, and adjustment inherent in any new endeavor, which is critical for optimizing performance.

The only way to truly grasp the potential of a product or idea is through practical implementation. If you lack the confidence to fully commit, consider starting with a cautious approach, involving lower investments in terms of both energy and budget allocation. In our efforts at Mentora to help companies cultivate disciplined innovation, we emphasize the importance of gradual, staged investments while focusing on risk identification and continuous resolution throughout the experiment’s stages. All of these strategies can be effectively implemented by embracing a ‘fast-fail mindset’ within your organizational culture.

The next time you face uncertainty about the potential outcomes of a new business roadmap, create iterative cycles for testing, learning, and adaptation. Remain open to the possibility of pivoting in new directions as fresh insights emerge.