Failing Forward: The Competitive Advantage of Intelligent Failure
In today’s dynamic business environment, failure is inevitable. Yet, how we relate to it—how we learn from it—can mean the difference between stagnation and sustainable growth. For many leaders, the word “failure” still evokes discomfort or signals risk. But not all failure is equal. Some types, particularly intelligent failure, are not only necessary—they’re critical for innovation, learning, and high performance.
At PeopleScape, we believe that fostering a culture where intelligent failure is embraced, not punished, is one of the most powerful enablers of people experience, commercial performance, and psychological safety. Let's explore why.
What is Intelligent Failure?
Intelligent failure is a concept championed by Harvard Business School professor Amy C. Edmondson, who defines it as “failure that occurs in the pursuit of goals where the outcome is uncertain, but the experiment is thoughtfully designed, and the risk is justified.” These failures are small, contained, and purposeful. They are learning-rich experiences that occur when teams try new things, test assumptions, and explore novel solutions.
Unlike avoidable failures caused by inattention or repeated mistakes, intelligent failures are:
Hypothesis-driven (based on a question or experiment)
Occurring in new or complex territory
Properly scoped to minimise harm
Learning-oriented
In Edmondson’s seminal work on psychological safety, she argues that without the freedom to fail intelligently, teams struggle to innovate, speak up, or challenge the status quo—conditions that erode engagement and commercial agility.
Why Intelligent Failure Matters to Organisations
In a world shaped by rapid change, complexity, and ambiguity, the organisations that thrive are not the ones that avoid failure, but those that learn how to fail well.
Failure, when intelligently managed, becomes a strategic asset. Research from Rita McGrath, author of The End of Competitive Advantage, shows that companies that create safe spaces to experiment are more adaptable and resilient. They’re quicker to respond to changing markets, customer needs, and technological shifts. McGrath calls this discovery-driven learning—the idea that strategic innovation depends on continually testing, learning, and adjusting in real time.
The cost of avoiding failure altogether is far higher: missed opportunities, groupthink, stagnation, and disengaged talent. A fear-based culture suffocates creativity, increases burnout, and stifles potential.
Intelligent failure enables:
Faster learning loops
Increased trust and collaboration
Agility in the face of disruption
Stronger psychological safety
A more engaged and resilient workforce
And as research from Google’s Project Aristotle has shown, psychological safety is the number one predictor of high-performing teams.
When Done Well: The Impact of Intelligent Failure
Organisations that build environments conducive to intelligent failure enjoy a range of benefits. They cultivate cultures where curiosity is rewarded, where challenge is seen as a sign of commitment, and where people feel safe to test, reflect and iterate.
Done well, intelligent failure leads to:
Innovation that sticks – because it’s built on real-world insights, not assumptions
Reduced risk over time – because learning is embedded in the system
Stronger teams – because people aren’t hiding mistakes, they’re sharing lessons
Growth mindset cultures – where learning, not perfection, is the goal
Neuroscience supports this too. Learning from small failures activates reward systems in the brain when failure is framed positively. It fosters dopamine-driven motivation and resilience—critical traits for leadership and adaptability.
A Case Study in Action: Intuit
A compelling example comes from Intuit, the global financial software company behind TurboTax and QuickBooks. Intuit actively promotes “intelligent failure” through initiatives like “failure awards,” which celebrate failed experiments that generated valuable learning.
When one team attempted to introduce a new payment feature that ultimately didn’t land with customers, instead of punishing the team, leadership held a “learning review.” The team documented what they learned, shared it company-wide, and used the data to pivot and launch a new, more successful product iteration.
This approach has contributed to Intuit’s consistent innovation, high employee engagement, and customer-centric culture.
How to Build a Culture That Supports Intelligent Failure
At PeopleScape, we work with growth-minded organisations to build psychologically safe environments where people can learn, perform, and thrive. To embed intelligent failure into the fabric of your business, here are five tangible strategies:
1. Create Clear Boundaries for Experimentation
Make it safe to test new ideas within scoped environments—pilot programs, prototypes, MVPs. Define success and learning metrics.
2. Model It From the Top
Leaders must share their own intelligent failures. It humanises them, removes the shame barrier, and models curiosity. Brene Brown’s research on vulnerability shows this builds deeper trust.
3. Celebrate Learnings, Not Just Outcomes
Create rituals for reflection—after action reviews, learning huddles, or retrospectives. Reward those who share lessons learned, not just those who “get it right.”
4. Reframe the Language
Talk about “learning loops” rather than “errors.” Ask: “What did we learn?” instead of “What went wrong?” This primes a constructive mindset.
5. Invest in Development
Training teams in growth mindset, innovation thinking, and psychological safety creates a resilient culture that doesn’t fear failure, but leverages it.
PeopleScape’s Offering: Intelligent Failure Workshops
We’ve designed a series of immersive workshops that help leaders and teams understand, embrace, and operationalise intelligent failure:
Real-Time Strategy – Using the LEGO® SERIOUS PLAY® method, this session helps teams surface assumptions, test strategic options, and explore risk safely.
Real-Time Change – Focused on embedding a culture of agile learning, this workshop builds change readiness through safe failure experiments and reflective practice.
Real-Time Growth – Aimed at unlocking individual and team potential through mindset work, psychological safety tools, and group coaching on experimentation.
Each workshop is grounded in behavioural science, systems thinking, and business psychology, tailored to your growth stage and team dynamics. They're designed to foster trust, spark curiosity, and build the internal capacity to experiment, learn and perform—without fear.
Final Thoughts
Failure doesn’t have to be feared. When harnessed with intelligence, intention, and care, failure becomes the most powerful tool for transformation. It unlocks new thinking. It fuels innovation. And it shapes cultures where people feel safe to be bold, learn fast, and grow forward.
In the words of Amy Edmondson: “Failure is inevitable. But learning is not.”
The opportunity lies in what we choose to do next.
Interested in learning more about our intelligent failure workshops or how to create a culture of psychological safety and experimentation in your organisation?
Visit www.peoplescapeconsulting.com or reach out to us at hello@peoplescapeconsulting.com to begin your journey.
PeopleScape – Designed for people. Built for performance.
