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[Book Review] The Wisdom of Failure: How to Learn the Tough Leadership Lessons Without Paying the Price

Madanmohan Rao
3rd Apr 2013
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The Wisdom of Failure
The Wisdom of Failure by Laurence Weinzimmer and Jim McConoughey

10 chapters; 304 pages

2013 Jossey-Bass

‘Fail fast, learn fast’ is the mantra of the times for startups. This insightful book by Laurence Weinzimmer and Jim McConoughey addresses how companies can succeed by knowing failure, and offers a useful classification of the different kinds of organisational and leadership failures.

While many companies share their failure experiences internally, few share it externally -- and that is a useful contribution of this book: a compendium of failures in business, and how we can all learn from these failures.

The case studies, learnings and recommendations are based on a 7-year study of what almost 1,000 managers across 21 industries really think about lessons from failures. Interviewed managers are from startups, SMEs, conglomerates, MNCs and even government agencies.

Laurence G. Weinzimmer is a business advisor to numerous Fortune 100 companies, professor at Bradley University, and author of three books (including ‘Fast Growth’). His work has been translated into over fifteen languages. Jim McConoughey is an active fund manager for venture and early stage capital investments and a business advisor. He is CEO of the Heartland Partnership, and has been interviewed in a range of news media and business publications.

The book also has an online companion which offers three scales of self-assessment as free PDFs: Passive Aggressive Scale, Self Absorbed Leader Scale and Fine-Grained Scale.

Societies, cultures and organisations tend to value perfections and hide failure. “Companies pay their employees to succeed, not to fail. However, the more we talk about the valuable lessons that come from mistakes and honour discussions about failure, the less likely it will be such a taboo subject,” according to the authors.

The books has been hailed as “an instant business classic destined for the tablets and shelves of innovation economy leaders” by Larry Weber, CEO, W2 Group. Most of the case studies in the book are from the US, thus opening the door to other researchers to identify failures and learnings from other countries as well.

Learning from one’s own mistakes as well as the mistakes of others is a necessary part of the journey of effective leadership, and this book offers a useful guide to learning these powerful lessons. Even highly successful and profitable companies have made mistakes, and promising startups have floundered by being unable to recognise and recover from failures.

Much of the business literature heralds ‘best practices’ and ‘success stories,’ but ‘worst practices’ and ‘failure fables’ are few and far between. Leadership is not just about doing things right or doing the right things, but also about avoiding the ‘wrong’ things and being forewarned about blind spots, environmental change and managerial dysfunction.

There is a positive relationship between cultures where mistakes are accepted and both individual and firm-level performance; learning organisations use lessons from mistakes as a platform for growth, according to the authors.

The authors have come up with three categories of mistakes: (1) unbalanced orchestration at the company level: strategic errors that result in the misuse of company resources; (2) drama management at the team level: actions by a leader that encourage passive-aggressive behaviour and bullying, and (3) personality issues at the individual level: extreme personality traits, such as self-absorption, disengagement, and hoarding power. I have summarised the sub-categories of each of these three categories in Table 1, along with instances of these failures and recommendations for overcoming them.

Table 1: Organisational Failure Types and Examples

Sub-categoriesExamplesTips to avoid failures

1. Unbalanced orchestration

Inability to say no: greed, over-commitment, lack of coherenceMotorola’s Iridium project; News Corp’s mis-management of MySpace; Nokia’s smartphone bungles; L.A.Gear expanding from women’s shoes to men’s shoes;Stay focused on your products/services, keep alignment with your core values, watch industry trends, understand market segments, don’t be all things to all people
Roaming outside the box: aimless wanderingCoca-Cola’s New Coke; Netscape focusing on the enterprise market instead of browsers and Web sitesExamine your own backyard before wandering outside; look for internal synergies first; check for strategic validity
Putting efficiency before effectivenessPets.com not validating market for pet supplies; Webvan’s lack of deep insights into online groceries shoppingAnalyse the right data and real customer needs; improve efficiencies only after you have discovered the right area of effectiveness

2. Drama Management

Leaders who rule by bullying: overt and covert bulliesWashington State Senator Pam Roach, Al Dunlap of Sunbeam, Miranda Priestley in The Devil Wears Prada!Solicit feedback in your organisation, include reporting systems for bullying behaviour, be open to recognise and reform
Dysfunctional harmony: artificial peace, facade of utopiaManagers who recruit pleasers, Malden Mills keeping employees instead of downsizingEncourage constructive conflict, don’t confuse leadership with friendship, promote honest communication
Distracted purpose: too much internal competition, favouritismCustomers’ bad perception of car salesmen; Pioneer Seed’s ‘forced synergy’ with biotech leading to market loss and eventual buyout by DupontEncourage coopetition, avoid cronyism and cliques, don’t promote synergy just for the sake of synergy

3. Personality Issues

Hoarding power & responsibility: micro-managementJill Barad’s bungling of Mattel; Wolfgang Schmitt’s mismanagement of RubbermaidBuild trust in the management team; be a coach not a boss; empower employees, conduct frank internal assessments
Disengagement: misfits, burnouts, celebrity leadersCarly Fiorina and HP (buying a personal jet when 18,000 employees were dismissed); football coach Joe PaternoKeep continuous rapport with staff; ask yourself tough questions about image, control; be humble
Self-absorbed leaders: narcissism, arroganceEnron leaders Jeffery Skilling and Andrew Fastow; Larry Ellison of OracleDon’t talk big; avoid a sense of entitlement and infallibility; find a ‘truth teller;’ don’t become overly competitive

Leaders should analyse such typical error patterns in organisations and industries, identify warning signs, and devise strategies to navigate around these failures. “What we found was great leaders only make ‘original’ mistakes -- that is, they don't repeat the same mistake twice,” according to the authors.

“Real failure doesn't come from making mistakes; it comes from avoiding errors at all possible costs, from fear to take risks, and from the inability to grow. Being mistake free does not lead to success. Making mistakes -- or failing -- are part of taking healthy risk. They provide us with new ways of thinking and give us new insights into how we can improve as leaders,” the authors explain.

But there are only a limited number of mistakes that leaders can make, after which career options and opportunities dramatically reduce. At a time when the cost of failure is increasing and business pressures are mounting, it is important that companies and managers develop techniques and intelligence to learn from the failures of others as well.

Failure should not be seen as losing, but as a catalyst to future success provided the right conditions, attitudes and organisational cooperation are in place.

In sum, leaders who learn from mistakes are more proactive in deflecting potential problems, have a higher level of confidence when taking actions and making decisions, more accurately understand their environments, think more strategically, and are more creative, the authors conclude.

It would be good to end this review with some of the insightful quotes in the book:

“Mistakes are a precious and costly resource.” - Saj-nicole Joni, author, The Right Fight

“Never before has learning from failure been more important—to innovation, to learning, to strategy under uncertainty, and to the development of the next generation of leaders.” - Rita Gunther McGrath, coauthor, Discovery-Driven Growth

“Leaders become great only when they have overcome adversity.” - Jeff DeGraff, author, Innovation You

“Organisations that support ‘smart’ failure are more innovative, adaptable, resilient, and profitable. Acceleration is the new normal.” - Eric McNulty, co-author, You’re It! Lessons from Crisis Meta-Leadership

“Having a failure does not make someone a failure.” - Jim Estill, partner, Canrock Ventures

“Great leaders create their own luck.” – Jeff Hoffman, Priceline.com

“We can’t think outside the box unless we have a precise idea what the box is.” – Kirk Cheyfitz, author, Thinking Inside the Box

“Rowing harder doesn’t help the boat if it is headed in the wrong direction.” – Kenichi Ohmae, author, Mind of the Strategist

“The purpose of leadership is to produce more leaders, not more followers.” - Ralph Nader

[Follow YourStory's research director Madanmohan Rao on Twitter]

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