What I see in service businesses is a management paradox.  A lot of businesses try to hide failures from customers and I see so few that run towards them or even encourage failure. 

The paradox occurs  when I see organizations that hide failures have customers come after them and force resolution with reputation lost and costs increasing.  The opposite effect of what they wanted to happen.  The focus on costs always increases them. 

Conversely, I find those organizations that seek out failures are on a better path than those who hide them.  We encourage an outside-in approach by measuring failure demand (demand caused by a failure to do something or do something right for a customer) at the the points of an organization where customers come to transact business.  This measure is only the beginning, but is an important one for improvement.

Looking at failure demand leads management to understand that the system (structure, work design, technology, measures, management, etc.) is more important than the function.  Measures from a customer perspective (like failure demand) tells us how well the organization is performing.  Financial and productivity measures do not.

And the best organizations seek the failures too,  but they take this a step further by encouraging failure through experimentation with method that leads to innovation.  Breakthrough performance and an improved culture result as work becomes more interesting when you can learn and grow.  There are so few of these organizations.

How does your organization handle failure?  Do you hide it, seek it or encourage it?

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.