If you say you want innovation, but you punish people for failure, you are sending mixed messages, and your employees will follow your actions more quickly than they will follow your words.
By its nature, innovation requires people to try new, untested ideas and see if they work. Some will, some won’t. If you reward people for successes and punish them for failure, you’ll encourage your employees to play it safe, perhaps just tweaking existing ideas to maximize the chance of success, but only getting you some incremental gains rather than something truly innovative. Over time you may see some evolutionary change, but nothing revolutionary. Growing firms need to do new things; otherwise, they don’t grow. Sometimes, those new things fail.
When we talk about failing, we don’t mean failing due to inattention or negligence. If people fail because they ignored indications along the way – say, technological limitations or market realities – or if they fail because they don’t really put in any effort and just try to throw something together at the last minute, then that’s not something you want to encourage. On the other hand, if people fail because they have a reason to think something has a good chance of working, and they work hard at it, and then it ends up not having the effect they want, well, that’s part of the creative process. If they put out a product that has a good chance of success, but it flops, well, those are the breaks. If they put out a product that they know to be faulty but they are just trying to get it out there, then that’s another story, and you probably should take some action to discourage that in the future.
Let’s be honest: this is a challenge in Asia. Traditional cultures, including educational experiences as well as family life, tend to discourage the idea of failure. Not only are kids told to be successful, the adults above them – teachers and parents – are often judged based on how successful their kids are. This needs to change. While it might seem appropriate to discourage failure in certain jobs (do you really want your airline pilot to try to do a loop in an Airbus if you’re on it?), it is useful for people to be able to manage risk and be comfortable taking chances on the things that might improve their organization. Having a rejection of failure in a knowledge-based firm is going to severely limit what you can do.
You probably cannot have a lot of impact on the social culture in your market, but you CAN create an organizational culture that allows for failure. You will need to help your employees transition from risk-aversion to risk-acceptance, and the policies and processes you put in place will help with that transition. The first thing you need to do, though, is decide for yourself if you are going to allow your people to fail. If not, you may way as well turn off the lights and let your competition move ahead.