"Who doesn’t look back and wonder what if? What if we begin each week with insight that keeps us from repeating our mistakes? What if we intentionally started each week with a ReSET? Newt Fowler’s biweekly column shares how CEOs refocus on what matters."

Fail Fast; Fail Smart; Fail Forward… All entrepreneurs have heard this mantra – that entrepreneurial organizations must embrace failure, that Silicon Valley is so successful because it rewards risk taking and sees failure as part of the innovation process, that venture capitalists fund executives who have experienced failure in past start-ups as having wisdom that others paid for, that organizations who don’t have a culture accepting of failure struggle, often blindly, to stay relevant.

Why Failing Sucks. Yet there is a huge gap between organizations that talk a mean game about embracing failure and those that actually embrace it. And for those individuals trapped in organizations where it’s ok to talk about failure until it’s actually experienced, a new study provides sobering insight. It presents a checklist of whether positive corporate messaging still has you living inside a risk adverse entity, some examples are:

  • Where “We’re innovative!” means as long as it’s doing what our competitors already do
  • “We embrace new ideas/thinking” and there’s a form for that, or a committee, or as long as it doesn’t require a budget
  • “We are lean / agile thinkers” as long as it doesn’t affect the approved project plan
  • “We embrace failure” yet no one can identify anyone still employed who has failed

The Laggard Curve.A recent study has established what is becoming known as the “Laggard Curve” which measures the risk intolerance of an organization on the creativity of its workforce and on its competitiveness. The gist of the study is the greater the disconnect between how an organization professes to embrace risk and failure and how it actually handles such behaviors, the less likely its workforce will actually take risk. If an organization claims to be innovative but isn’t, or says it embraces failure, but doesn’t, or professes to be creative in how it tackles problems but isn’t, the more likely the workforce is frozen – unwilling to take even a marginal amount of risk in their roles.

Mind the Curve. The Laggard Curve is most profound in organizations where the gap is great between the messaging and reality around risk taking. According to this study, the greater the Laggard Curve for a company, the more likely it will drift competitively and lose what talent it has. One lesson from this study is if you’re going to be an organization uncomfortable with risk and failure, then embrace your temerity, as you’re more likely to get something of value out of your team than an organization that pretends to be something it isn’t. Of course the real lesson is that you might be best served actually embracing the mantra you pretend to have and build a culture of risk taking. Makes sense, doesn’t it? Have a great April 1st.

About the Author

With more than 25 years’ experience in law and business, Newt Fowler, a partner in Womble Carlyle’s business practice, advises many investors, entrepreneurs and technology companies, guiding them through all aspects of business planning, financing transactions, technology commercialization and M&A. He chairs the Board of TEDCO and serves on the Boards of the Economic Alliance of Baltimore, and Big Brothers Big Sisters of the Greater Chesapeake.