Encouraging Mistakes And Building A Culture of Innovation


Pixar’s team faced several difficulties while making Toy Story 1, A Bug’s Life, and Toy Story 2 movies. They had to redo the whole film from the beginning in the case of Toy Story 1 & 2. However, when they were making Toy Story 3, everything was going so smoothly. The leadership team could not believe it. At one point, Steve Jobs called Pixar’s CEO Ed Catmull to check in on the movie’s progress.

Ed told him, “It’s really strange. We haven’t had a single big problem with this film.”

Instead of being happy on hearing the news, Steve became cautious. He replied, “Watch out. That’s a dangerous place to be.”

Why It’s a Dangerous Place? -A project moving smoothly without any errors could mean one of the following things

  • People are not reporting mistakes or
  • Team members are not exploring any new ideas or
  • They are not trying hard enough or pushing themselves beyond their perceived abilities.

There could be only one reason behind all the above implications -People are scared -They are afraid of sharing their mistakes -They are not exploring new ideas because they fear errors and subsequent punishment.

DO BETTER TEAMS MAKE FEWER MISTAKES? -In the late 1990s, Amy Edmondson, professor at Harvard Business School, studied healthcare professionals to understand whether better teams make fewer medicational errors in the workplace.

Surprisingly, her research showed that highly effective teams made more mistakes in their work. She couldn’t believe it. Digging deeper, she realized that it wasn’t that better teams were making more mistakes. It was that they openly reported all the mistakes they made and owned up those errors. That was the reason how they became better teams in the first place.

And, there’s a critical reason for this behavior -The healthcare professionals could share their mistakes because their organizational culture didn’t punish or humiliate them for sharing their mistakes.

To build a sustainable business, a brand has to continuously develop and launch a breakthrough product or process or service. It necessitates a culture of risk-taking and exploration of new ideas. Original ideas mean uncertainty. Naturally, there would be mistakes. That means the organization has to encourage and tolerate mistakes and allow people to learn from them. Then it has to share those lessons of failures/successes across the company. Walmart’s founder Sam Walton used to share individual success and failure stories, learnings across the chain of stores.

A company that encourages mistakes fosters risk-taking culture, resulting in big picture ideas.

So, how to build a culture that encourages mistakes or failures in an organization?


The first and foremost challenge an organization faces in implementing a culture of encouraging mistakes is people’s mindset towards failure. The company may have the best-supporting leadership, but employee’s ingrained negative attitude towards failure could play a spoilsport. We cannot blame people for this perception.

From an early age, society and it’s social behavior norms have implanted the thought that failures are taboo & disgusting, deeply in our minds. If you didn’t score marks in a subject -it’s shameful because you didn’t prepare well, or you’re lazy, or you’re playful or you’re incapable. You were stigmatized as a failure by people.

In my tenth standard, I was a failure. I cried. I felt ashamed. I had a tough time seeing classmates, teachers, neighbors, relatives, and strangers who enquire about my results. Once, one of my neighbor’s daughter committed suicide when she failed in the tenth standard. It was painful.

When we fail or make a mistake, what we fear is not the event itself but perception of us in other’s eyes. Failures create a negative image of us in other’s minds. It affects our future opportunities and future behavior. It is a fact that sometimes, it would be difficult or nearly impossible to erase that negative association from people’s minds. One mistake could ruin everything in a relationship. No wonder why we condone failures!.

Don’t worry about looking good in other’s eyes -Worry about achieving your goals -Ray Dalio.

Unknowingly, we take the same mindset to the office. In the workplace, we fail to realize that our attitude of avoiding mistakes is jeopardizing the company’s future and our personal growth. It affects the projects we choose, the people we hire, and all our decisions.

Avoiding failure by out-thinking it — dooms you to fail -Ed Catmull.

How can you dislodge twenty years of strongly ingrained mindset in one day? It takes time to shake off those negative inhibitions about the failure or mistakes.


There are two parts to failure -There’s the event itself, with all its frustration, uncertainty, and ignominy, and then our reaction to it. It is the second part that a company could teach or help employees to control.

It is a leader’s job to create an environment that would help people feel safe to acknowledge and learn from problems.


START FROM THE TOP -As usual, the leader has to set the tone by admitting his own mistakes and weaknesses publicly. His/her behavior should reinforce that mistakes are a natural part of the evolutionary process. The leader has to show that there’s nothing to feel bad about mistakes as they provide an opportunity to grow in one’s career.

Ed Catmull, Pixar’s CEO, writes, “If we as leaders can talk about our mistakes and our part in them, then we make it safe for others. You don’t run from it or pretend it doesn’t exist. That is why I make a point of being open about our meltdowns inside Pixar because I believe they teach us something important. Being open about our problems is the first step toward learning from them. My goal is not to drive fear out completely, because the fear is inevitable in high-stakes situations. What I want to do is loosen its grip on us. While we don’t want too many failures, we must think of the cost of failure as an investment in the future.”

Robert Shapiro, when he became CEO of Monsanto, was surprised to know that employees saw every mistake/failure as a personal rebuke. He felt that that kind of perception hindered creative thinking, blocking the company’s growth. Shapiro asked his people to reframe every effort that led to failure as an experiment. He told them that he would consider a project as a failure only when the employee or team puts a half-hearted, careless effort. If you tried hard, yet it failed, it is perfectly fine and not a failure.

Shapiro, through his words and actions, encouraged failure. He spent time with people, listened to them, and gave them the confidence to explore new things. He openly admitted his mistakes.

HUMAN BEHAVIOR IS UNINTENTIONAL -A critical element that would help in changing the mindset is to realize the fact that most of the human behavior is unintentional and directed by various environmental factors. A leader has to learn this and remind himself/herself very often.

The prenatal environment each person had before birth, their childhood environment, traumas, their genetics, their gene promoters, hormones, neural wiring, and the individual life experiences play a pivotal role in influencing his/her behavior.

Before quickly jumping to a conclusion about a person’s behavior, the leader has to take a step back and think that a person’s past and present environment could have played a role in the person’s reaction. This thought process will help him/her to separate the behavior from the person. It would help him/her to have a favorable opinion on an employee and could change the way he/she interacts with the other person.

A leader’s behavior and actions can inspire people to acknowledge their mistakes in the workplace.

MISTAKES AREN’T EVIL -Some of us have found a way to overcome the resistance to failure by reframing mistakes as a necessary evil. Again, we only changed the color and not the meaning.

Evil means -Still, we associate it with shame, stigma, and disgust. The only thing is that we have found a way to tolerate it.

Again, tolerance hasn’t even partially eliminated the fear of making mistakes. It’s not allowing our mind to focus entirely on the failure lessons.

The best way forward would be to think about loving your mistakes. Once you like the mistakes you have made, you would begin to enjoy learning the lessons. You would be relaxed. Your mind could focus more and observe several subtle lessons.

So, it was essential to change our mindset -Instead of considering mistakes as evil, love your mistakes.


The way a leader reacts to a mistake/failure of an employee lays the cultural foundation inside an organization.

In the early part of Jack Welch’s career(in GE), on one night, his chemical experiments blew up a three-story office. Fortunately, no one was injured. However, a significant part of the building collapsed and resulted in an immense loss. The next day, he had to go and explain to a corporate group executive, Charlie Reed. Jack was afraid and felt guilty. He found it difficult to summon his confidence. He acknowledged that the company had every right to fire him.

START LISTENING -Anyhow, Jack went and met the executive. To his surprise, Charles Reed made him at ease, listened patiently to his side of the story & finally asked him, “Jack, so, what did you learn from the project?

Whenever a mistake happens, the leader or manager’s first step is to sit with people and patiently listen to all parties involved in that incident with mutual respect. Don’t show anger or any other emotion. Suspend any judgment or preconceived notions.

WORK TOGETHER TO LEARN THE LESSONS -Jack was pleasantly surprised by Reed’s behavior.

Reed helped Jack to self-reflect on the incident and discussed the failure lessons in logical and analytical terms. Both of them worked together to find solutions. That’s an essential part of handling failures or mistakes in an organization.

LEVERAGE THE PAIN OF GUILT -It’s natural for humans to make mistakes. Successful people learn from them and never repeat it.

Jack’s error caused him discomfort & he felt guilty. However, pain is an effective teacher. It could help a person to ponder over the reasons behind the failure. He/she would be the best person to find ways to prevent them in the future. Firing somebody who had experienced pain after a crash, would be a loss to the company.

So, a leader’s priority should be to help a person to learn the lessons from the failure.

FAILED PERSON HAS THE BETTER ODDS TO SUCCEED -Charlie Reed would have readily fired Jack Welch to make a point that perfection alone matters, but then GE would have lost a good employee who went on to become GE’s leader(Jack Welch became CEO of GE in his later years & he transformed their business). Imagine the loss for the company if they had fired Jack Welch.

A leader or manager has to understand that nobody can predict how a person would grow and benefit his/her company if the leadership provides the right environment. People who have faced failures become fearless in their pursuit of new ideas. The company could gain long-term value from them.

THINK ABOUT NEGATIVE IMPLICATIONS -Imagine what other implications would have happened if Charles Reed had fired Jack -it would have encouraged other employees to hide their mistakes. It would proliferate a dishonest culture. It would further paralyze the ability of employees to learn from mistakes and grow. Innovation would suffer.

DON’T BLAME PEOPLE, PRIORITIZE SOLVING THE PROBLEM -Pixar had almost finished the Toy Story 2 movie. They used Unix and Linux machines to store the thousands of shots of the film. Somehow, by accident, someone used a wrong command on the drives where the Toy Story 2 movie files were stored. The result -All of the movie data vanished in just a few seconds in front of their eyes. Two years of work were lost. The team was worried. Suddenly, one of them realized that they could restore the data from the backup. Then came the shock. The team discovered that the backup system hadn’t been working for some time. Another utter shock and a real panic set in.

Fortunately, one of the members remembered that she might have a movie backup on her computer. She had been working from home for the last few months as she recently had her second baby. To simplify her work, she had set up a system that automatically copied the entire movie file on her computer once a week. It was a miracle. The team rushed to her home and brought the desktop to the office. And, finally, the team successfully retrieved the Toy Story 2 files.

After restoring the film, Pixar’s team fixed the backup systems and worked on to improve precautionary measures against accidental deletion.

If you strictly observe, you could notice that the Pixar leadership team’s priority was to solve the problem. They didn’t waste their time to find the person who accidentally deleted the file or who designed the computer safety system or who failed to check the backup system. They didn’t play the blame game. They focused on solving and improving things.

TWEAK THE ENVIRONMENT -Ross, head of trading, Bridgewater Inc., forgot to put in a trade for a client. The money just sat there in cash and by the time the mistake was discovered it had cost the client a lot of profits. Later, the company compensated the client. Ray Dalio, CEO Bridgewater, writes, “It was terrible and Bridgewater could have fired Ross to make the point that nothing less than perfection will be accepted. But it would have been counterproductive. We would have lost a good man and it would have only encouraged other employees to hide their mistakes.”

It is natural for people to forget things. A lot of environmental factors play a role. In the case of Ross, Bridgewater modified the organization structure and systems so that the repetition of errors won’t happen in the future.

When a mistake happens inside an organization, the first thought should be to check whether the incident is due to an environmental factor.

And, if you study deeply, most of the mistakes are due to environmental factors. So, tweak the environment.

TREAT SUCCESS AND FAILURE SAME -Robert Shapiro, the former CEO of Monsanto, treated the success and failure the same.

Rudyard Kipling said, “If you can meet with triumph and disaster, and treat those two impostors just the same; yours is the earth and everything that’s in it.”

Whenever an employee made a mistake, Shapiro would sit with him/her, discuss, and analyze the issues in a nonjudgmental manner. He would avoid criticism. In the same way, whenever an employee succeeds, Shapiro would sit with him/her, analyze the steps that played a pivotal role in the success.

Richard Farson and Ralph Keyes write in their HBR article, “New ideas are most likely to emerge in the workplace when managers treat steps in the innovation process — those that work and those that don’t — with less evaluation and more interpretation. They don’t praise or penalize; they analyze.”

Pixar analyses not only the project/movie failures but also film successes. They call it as Postmortem -The team meets and explore what did and didn’t work and consolidate the lessons learned.

Ed Catmull writes that postmortem is a fabulous way of passing on the positive and negative lessons to other people and the newcomers.

We have to self-reflect and learn during successes also.

REWARD EFFORTS -It is inevitable that some ideas would fail, resulting in losses for the company. For innovation culture to prevail, the leadership team has to reward the efforts rather than the results.

When Jack Welch was working as General Manager at GE, one of the teams under him developed ‘Harlac’ light bulb that lasted ten times longer than the typical light bulbs at a fraction of energy but expensive to buy. Unfortunately, consumers did not buy the light bulb & the project failed. GE lost more than $50 million.

Jack didn’t punish those people for the failure -That would have created a culture of fear and stifled people’s creativity. Then, nobody would try any new ideas. What did Jack Welch do? He rewarded the Harlac team’s exceptional efforts by handing out cash awards and promoted several of them to new jobs.

Why do we need to reward efforts? One of Daniel Kahneman’s research showed that we highly underestimate the impact that luck has in many situations, and we massively overestimate the effects of our actions. In many cases, some executives with a lesser effort got great results as luck went their way & many, even after wild attempts, could not reach their goal due to circumstances beyond their control. So, an idea’s failure could be due to reasons beyond the team or person’s control. That’s the reason we need to analyze every success or failure. We need to interpret them.

See the Work in a Bigger Context -For evaluating efforts, Jack observed the team’s reasoning process, thought procedure, working methodology, applications, and output. He always compared a project’s lessons to the company’s goals, core values, and the possible long term benefit for the organization. He saw the work in a bigger context.

Spending time with the Harlac team had helped Jack to understand how they worked passionately and diligently to execute the project. He also could realize the personal improvement the team had made.

Based on his observations, Jack reasoned that it would be extremely demotivating to Harlac team members if they didn’t get recognition for their extra effort & at the same time, they had to witness their lesser competent colleagues receiving both cash awards and promotions.

Jack says that leaders must focus more on the effort of employees than on just their results. That would encourage employees to be fearless in pursuing new ideas.


Failing is painful & succeeding is a joyous one. It requires character, courage, grittiness to analyze one’s failures and take efforts to improve, and then succeed. A company that encourages mistakes would be in the forefront all the time.

Success after facing a failure would be grander and sweeter than winning in the first attempt.

REFERENCES: Creativity, Inc. by Ed Catmull, Principles by Ray Dalio, Straight From The Gut by Jack Welch, The Fearless Organisation: Interview by Amy C. Edmondson, Made in America by Sam Walton, The Failure-Tolerant Leader -A HBR Article by Richard Farson and Ralph Keyes.

Secular Humanist, Business Growth Consultant, Design Thinker, India. Reach me at mmshah8@gmail.com. or https://www.shahmohammed.com

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