Rewarding Risk Taking: Nice to Say, But Really Hard to Do

The Wall Street Journal this week has one of those stories that pops up now and then but leaves you wondering, “how many time have I heard that nonsense before?”

It’s about the notion that “companies reward employee mistakes to spur innovation,” and while I’m sure that there are places where that’s true, in most of the business world, employee mistakes seem to only be rewarded with a boot out the door.

Yes, I’ve heard all the claptrap about how you need to make mistakes to really innovate, be creative, and all of that, yadda, yadda, yadda. And, I’ve heard legions of managers and executives that I have worked for say the same thing.

Risk taking is a risky business

But what sounds good in the abstract seems to go off the rails when you encounter it in the real world. Yes, bosses and executives everywhere SAY there is no such thing as a bad idea, or that you need to be able to make mistakes, but they also say things like “my door is always open,” and “people are our most important resource,” too. Does anybody REALLY believe any of that management baloney?

The fact is, people who say they want employees to be risk takers and able to make mistakes usually never really say what they mean by that. In the abstract it all sounds good, but the people who say that probably have a much different sense of what making a mistake on the company’s dime should look like than Joe Average employee who is being actively encouraged to do it.

And when Joe Average’s perception of taking a risk and making a mistake doesn’t match the notion of it coming from the corporate suite, old Joe is the one who gets shown the door. Sorry Joe; we didn’t mean you could make THAT kind of a mistake.

I’m all for innovation and creativity. We have far too little of it in America today, and that’s probably why we get dumb remakes of Charlie’s Angels and brain-dead rip-offs of the Mad Men concept like The Playboy Club. Or, why when one company comes out with a new hand sanitizer, or a daily deal-like coupon service, 30 other companies come out with a version of the same thing.

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My experience is that most business executives are no more enthused about making mistakes than they are about truly being creative and innovative, because those things can be terribly costly and time consuming. Better to take the safe approach and churn out your own version of that hot new product everyone else is also churning out. It’s got a lot less downside to it.

A concept that sounds good — in the abstract

So, read this Wall Street Journal story with caution, because although it sounds good, my guess is that the notion of encouraging employees to make mistakes to spur innovation is one of those concepts from business school that seems smart but that far too few business leaders actually have the cojones to really try and do.

From the Journal‘s story:

Amid worries that we are becoming less innovative, some companies are rewarding employees for their mistakes or questionable risks. The tactic is rooted in research showing that innovations are often accompanied by a high rate of failure

“Failure, and how companies deal with failure, is a very big part of innovation,” says Judy Estrin of Menlo Park, Calif., a founder of seven high-tech companies and author of a book on innovation. Failures caused by sloppiness or laziness are bad. But “if employees try something that was worth trying and fail, and if they are open about it, and if they learn from that failure, that is a good thing.”

For more of this story, click here.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at, connect with him on LinkedIn, or follow him on Twitter @johnhollon.


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