Should You Tolerate Mistakes?

New studies show how effective leaders embrace ''intelligent risk taking'' and move beyond the notions of success and failure.
Lisa YoonSeptember 10, 2002

Leadership through intimidation, as we all know, can be detrimental to growth and innovation. The only good criticism is constructive criticism that helps employees learn. Likewise, praising staff for good work bolsters confidence and encourages high performance. Right?

Actually, maybe not. New studies discussed in last month’s special issue of the Harvard Business Review, devoted to innovation, shows that effective leadership goes a step further by actually holding back on praise. In fact, moving beyond the notions of success and failure altogether encourages employees to think creatively and do their best work, contend authors Richard Farson and Ralph Keyes, authors of the new book Whoever Makes the Most Mistakes Wins: The Paradox of Innovation.

“Failure-tolerant leaders” embrace mistakes that result from “intelligent risk taking” and foster corporate cultures that are verdant for innovation. A few probing questions about a failed project can distinguish a good failure (for example, a project that didn’t work out but teaches valuable lessons just the same) from a bad one (say, making and selling faulty car tires).

How Startup CFO Grew Food Company 50% YoY

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This case study of JonnyPops’ success highlights the unusual financial and operational strategies that enabled rapid expansion into a crowded and highly competitive frozen treat market. 

Not all successes are the same, either. Some are indeed the result of a methodical and diligent process, but others are happy accidents. Thus, say Farson and Keyes, it might be wise to analyze successes the same way you analyze failures.

In fact, “analyze,” is the operative word, not “praise.” Praise is less likely to motivate your staff than thoughtful analysis — but, note Farson and Keyes, it’s more likely to demotivate your staff when withheld. It may not be a great idea to go cold turkey on the compliments, but as you begin to ask more of those probing questions and show a genuine interest in employees’ work, the need for praise declines.

Think of management as collaboration, not supervision. This style of management does have its risks, not least of which is the threat to a manager’s authority. “The more involved you get with employees, the harder it becomes to reprimand them when necessary,” say Farson and Keyes. But learning to balance involvement with healthy distance — that is, not buddying up with your staff — is a challenge that could yield untold dividends.

CFOs on the Move

>> S. Douglas Hutcheson was promoted to the CFO post of Leap Wireless International Inc. Hutcheson was SVP of San Diego-based wireless-communications company … Michael P. Donahoe appointed as EVP and CFO of The Restaurant Co., operator of Perkins Restaurants. Previously worked in various senior financial positions with Cracker Barrel Old Country Store and Shoney’s … Keith Middleton named corporate controller of institutional-food distributor Performance Food Group. Previously worked at Perdue Farms Inc. …Architecture and engineering firm HLM Design Inc. said Vernon B. Brannon replaced William S. Shropshire Jr. as CFO. Shropshire was named finance chief last week, replacing acting CFO Brannon. Company gave no explanation of the flip-flop.

(Editor’s note: Examine the performance of these companies with the CFO PeerMetrix interactive scorecards.)