By Jennifer Ruzek Liebermann

In a world that celebrates success, the idea of rewarding failure may seem counterintuitive. Failure and the learning that comes from it from it are essential ingredients of success, something that innovative organizations understand. They create environments where failure is expected and the only “true failure” is a failure to learn when things don’t go as planned.

Throughout history, innovators and enlightened leaders have observed that failure begets success. “The fastest way to succeed is to double your error rate,” said Thomas J. Watson, founder of IBM, a company Fortune recently ranked one of the most innovative. “Success is 99 percent failure,” legendary car builder Soichiro Honda said.

I write and speak often about how organizations can create a culture of innovation.   Encouraging appropriate risk-taking is an important dimension of an innovative culture and organizations struggle with how to create environments where employees can learn from failure.  How can they take small, safe risks or even big and bold ones, but in controlled ways?

To an innovator, “Oh, that will never work” may be the five worst words in the English language. Few things chill innovation more than people who reject new ideas in their infancy. Innovative organizations understand the dynamics of failure – not only why people fear failure, but also why it’s important.  They value failure because of what they can learn from it. Employees are expected to take intelligent risks and are given the “air cover” from leadership to risk failure.

The technology industry long ago accepted the value of failure. Steve Jobs’ passing reminds us just how innovative people and organizations can be – and how important failure is to their success. Every idea, every product doesn’t take the world by storm. In fact, the technology industry may be the only industry that holds an annual conference to celebrate failures. Last week at Failcon in San Francisco (http://thefailcon.com), technology entrepreneurs, investors, and developers talk openly about how they failed and what they learned from doing so.

Health care has no counterpart to Failcon, perhaps for obvious reasons. There are certainly large differences between health care and technology.  Health care is more complex and sometimes involves matters of life and death. Consequently, health care is highly regulated, with safeguards in place to prevent experimenting at the front lines. I’m not advocating willy nilly experimentation at the sharp point of health care. But I am arguing that some well-intentioned regulations create risk-averse environments in which otherwise creative and intelligent people throw up their hands and say, “Oh that will never work.”

The Hard Work of Encouraging Risk-Taking

The health care industry has a lot to learn from other industries’ relationship to risk taking and failure. At Kaiser Permanente, we opened the Sidney R. Garfield Health Care Innovation Center five years ago to give our employees a safe space for taking risks and learning from failures. We’re not alone; the Mayo Clinic Center for Innovation (http://centerforinnovation.mayo.edu), CIMIT (http://www.cimit.org/) in Boston and the Danish health care system (http://www.regionh.dk/topmenu/omRegionH/denAdministrativeRegion/Koncern+IT/ITX.htm) have created innovation spaces of their own.  We’ve learned a lot through learning exchanges with the National Health Service (http://www.institute.nhs.uk/) in the United Kingdom and the Virginia Mason Clinic (http://www.virginiamasoninstitute.org/) in Seattle.  Both organizations have contributed significant tools to the innovation community that support appropriate risk taking in health care.

At the Garfield Center, we aim to fail early and often. We ideate, prototype, and refine new ways to deliver care in a safe, simulated laboratory setting. Wild ideas are encouraged and then rigorously tested to ensure that they don’t compromise safety, quality or regulatory requirements.

While all of this sounds exciting, encouraging risk taking takes some work that begins at the top. Leaders must provide emotional support to those willing to try something new, regardless of the outcome. Leaders must demonstrate that they are more interested in learning from failure than in punishing it. Most important, leaders must take demonstrable steps to actively support risk-taking. How?

• Talk openly about risk taking, failure and the learning process. It’s important for leaders to set the tone that when we try new things, there are benefits and risks.  Putting processes in place to systematically to learn from failures and successes are important.  Projects that don’t succeed shouldn’t quietly ‘disappear’. Instead, those failures are talked about and expectations are contrasted with outcomes and what was learned from the failure.
• Actively and explicitly support risk-taking. Leaders need to model the behavior or risk taking, telling stories about their own personal experiences.  Leaders gain credibility when they acknowledge what went well as well as what didn’t.
• Reward Failure. At Kaiser Permanente, our internal Innovation Fund for Technology recently gave an award to a project team that had failed in its attempt to improve the hospital discharge process. The award acknowledges just how hard it is to innovate. It was a proud moment for me to see our culture evolve in that award ceremony and I look forward to the day when we have an award for the team that fails the fastest and learns the most.

Even at Kaiser Permanente, there’s much work to be done to build our culture of innovation.   We are fortunate to have resources such as the Garfield Center and the Innovation Fund for Technology that promote appropriate risk taking.  Not every organization is so lucky, we learned not long ago.

During a tour of the Garfield Center, a visiting health care executive got a pale look on his face after hearing about a prototype that failed. We had tested a mobile computer cart with a medication drawer. His organization bought hundreds of them, and then spent a few million to retrofit the carts, only to later scrap the project entirely.

That was a painful lesson, but entirely avoidable. Supporting risk taking and a culture of innovation is hard work, often requiring investments of time, resources, and courage. But as organizations like IBM, Apple and my own will tell you, there’s no substitute for innovation or, for that matter, failure.

Jennifer Ruzek Liebermann has been the director of the Kaiser Permanente Sidney R. Garfield Health Care Innovation Center since it opened in 2006. The center, which is located in San Leandro, Calif., engages patients, clinicians and experts to ideate and test new technologies, facility designs and clinical workflows.