On Monday, we examined the risk-taking lessons Cardinal Health, a $103 billion healthcare services company with 30,000 employees worldwide, has learned as it works to shift the company's perspective on the stigma associated with failure. Cardinal Health first defined where failure was welcome and where it was not, and then realized the next step was to re-evaluate its thinking.
Its second lesson was to shift from “binary thinking” to “beta thinking.”
Typically, projects are judged on a binary basis. They are either on time or late, on budget or over budget, a success or a failure. This “A or B” approach has its merits, but it does not leave much room for innovation or creativity. Instead, firms that want to succeed can draw a powerful lesson from the technology sector. Software firms introduce new programs in “beta” form all the time. The program might not be perfect, but users help find the bugs, which are then fixed in the next release.
This type of iterative thinking and rapid prototyping does not just allow for early failures, it counts on them to build a better final product. Thinking of initiatives as “betas” or “pilots” often that don't need to be absolutely perfect on launch can help employees understand we are seeking overall and ongoing improvement, not instant perfection.
We have found that creating some positive, in-house competition can jump-start creativity and begin to change attitudes. Last year, for the first time, we held an innovation workshop with employees. We challenged our teams to come up with new ideas that vied for funding.
One of the winning ideas was to take the third-party logistics services that we offer to our customers and make them available to our suppliers and manufacturing partners, letting them benefit from our global supply chain and best-in-class logistics. We recently launched this offer, and it is gaining traction, giving our partners access to our traditional third-party logistics services along with other services, such as access to our consolidated replenishment and sample center. We showed our employees that we were serious about innovation by having a formal review process and putting real money behind the winners.
A third lesson was to reward failure, once its lessons had been applied for better results.
Look for examples within your company of experiments that initially failed but ultimately succeeded. Use a company town hall or annual awards program to recognize employees and teams that failed on the road to ultimate success. I would not suggest highlighting outright failures that have not yet become successful – at least not initially, because employees will not be comfortable being singled out for failure. Wait until their efforts have borne fruit.
Check back on Friday when I will share our final lesson.
Shelley Bird is EVP for public affairs at Cardinal Health.