Most leaders don’t like talking about failure. It feels uncomfortable, unprofessional, even dangerous in front of boards or investors. Success gets the spotlight; failure gets buried in footnotes.
But here’s the uncomfortable truth: failure isn’t an exception in strategy – it’s the norm. Parts of your strategy will not go to plan. The real differentiator is not whether you fail, but how quickly you notice, how you respond, and whether you can use failure to sharpen the next move.
Why we repeat the same mistakes
If the causes of strategic failure are well known – survivor bias, overconfidence, vague problem definitions, weak execution – why do organizations keep falling into the same traps?
The answer lies in human nature and organizational behavior.
- Human biases like sunk-cost fallacy and overconfidence lead leaders to double down on bad bets instead of letting go.
- Organizational dynamics – silos, politics, short-termism – make it hard to course-correct when reality shifts.
- External shocks – regulation, technology, competitors – can upend even the most carefully designed plans.
These aren’t random mishaps. They’re predictable patterns. And because they’re predictable, they can be anticipated and managed – but only if leaders are willing to treat failure as data rather than disaster.
Failure as a feedback system
Think of strategy like product development. No company would launch a product without testing, iterating, and learning from what doesn’t work. Strategy deserves the same discipline.
Organizations that outperform don’t avoid failure – they institutionalize feedback loopsto learn from it quickly. They make it safe for teams to surface bad news early. They set “kill switches” upfront, so shutting down an initiative feels like discipline, not defeat. And they reallocate resources boldly, instead of letting underperforming bets drain energy.
This approach turns failure into a steering mechanism. Instead of asking “How do we avoid mistakes entirely?” the better question is “How do we make sure mistakes teach us something before it’s too late?”
The danger of hiding failure
Too many companies treat failure as something to be covered up. Problems are buried in reporting layers, dressed up in PowerPoint slides, or disguised as “delayed wins.”
The result is predictable: employees lose trust, leadership decisions become disconnected from reality, and resources continue to flow toward initiatives that are already doomed. By the time the truth surfaces, the costs – financial, reputational, and cultural – are far higher.
Ironically, the fear of admitting failure creates the very thing leaders are trying to avoid: bigger, more destructive failures later.
Three practices that change the game
So how do organizations turn failure into a source of strength? From our work and research, three practices stand out.
1. Build deliberate feedback loops
Don’t wait for annual reviews or lagging KPIs. Create recurring forums where teams are expected to share not just progress, but problems. Frame these sessions as opportunities to learn, not trials to defend.
Pre-commit to “kill switches” before an initiative starts: clear conditions that, if not met, trigger a pivot or shutdown. When stopping is framed as discipline, not defeat, people are more willing to surface reality.
2. Reallocate boldly
Treat your strategy like a portfolio of bets. Some will outperform, some will flatline. The biggest mistake is letting underperformers linger because of pride, politics, or sunk costs.
High-performing organizations move resources quickly to where traction is strongest. They don’t wait for every initiative to be “fairly tested.” They invest like venture capitalists – doubling down where momentum builds, pulling back where it doesn’t.
3. Celebrate useful failures
This may sound counterintuitive, but it works. Recognize the teams that surface uncomfortable truths early. Make it visible when an assumption was disproven in time to save money, capacity, or reputation.
When people see that raising a red flag is valued, not punished, they are far more likely to speak up next time. Over time, this builds a culture where learning from what doesn’t work is just as natural as celebrating what does.
The paradox of failure
he paradox is this: by treating failure as inevitable, you actually reduce the odds of catastrophic failure. By institutionalizing learning, reallocating decisively, and rewarding transparency, you prevent small missteps from snowballing into full-blown derailments.
This doesn’t mean being reckless. It means accepting that some bets won’t pay off, and using them as tuition for better decisions next time.
Closing thought
Strategy isn’t about designing a perfect plan that will succeed without flaws. That mindset belongs to textbooks and conference keynotes, not the messy reality of organizations.
Real strategy is about making bets, knowing some will fail, and building the discipline to learn from them faster than competitors. The companies that consistently win are not the ones with flawless foresight – they are the ones that metabolize failure and keep moving.
For leaders, the real question isn’t “How do we guarantee success?” but “How do we make sure that when parts of our strategy fail – as they will – we come out stronger, not weaker?”
Written by Sixten Schultz, Jonathan Bellinger, and Leonie Schröder.
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Closing thought
Strategy isn’t about designing a perfect plan that will succeed without flaws. That mindset belongs to textbooks and conference keynotes, not the messy reality of organizations.
Real strategy is about making bets, knowing some will fail, and building the discipline to learn from them faster than competitors. The companies that consistently win are not the ones with flawless foresight – they are the ones that metabolize failure and keep moving.
For leaders, the real question isn’t “How do we guarantee success?” but “How do we make sure that when parts of our strategy fail – as they will – we come out stronger, not weaker?”
Written by Sixten Schultz, Jonathan Bellinger, and Leonie Schröder.
