When the risk of failure is high, we typically postpone making a decision until there is enough information to ensure a good outcome. On the other hand, if the risk of failure is low, we make the decision quickly, because the consequences of being wrong are minimal. Thus, it is the degree of risk involved in making a decision combined with the availability of useful information that determines our behavior.

The same is true in a corporate culture: The degree of risk, in combination with the amount of feedback, determines how decision-makers and the people who carry out their decisions react to failure. These key factors are represented by the Risk-Feedback Model, which identifies four organizational cultures. In this model, “risk” is the consequences of making a decision, and “feedback” is having access to enough information to make the right decision.

Presume Culture (High Risk/Low Feedback)

• • The list of high priorities seems never-ending.
  • Employees move from one crisis to the next.
  • People never know how well they are doing.
  • Problems require “bet-your-job” decision-making.
  • There are few opportunities to make a measurable difference.
  • Chances of continued success are limited.
  • Mistakes are not tolerated, and the cost of failure is high.
  • New ideas are modest improvements on what worked before.
  • “Innovation” means it was pirated from another organization.
  • The organizational norm is delaying action to avoid mistakes.

Process Culture (Low Risk/Low Feedback)

• • Limited risk is matched by infrequent feedback.
  • Resistance to change is strong.
  • Failure is viewed as a career-ending consequence.
  • Once an idea fails, there is no interest in trying it again.
  • People keep track of each other’s mistakes.
  • New employees are warned not to “rock the boat.”
  • Customer service is slow and unresponsive.
  • Complaints are expected as part of the job.
  • Change involves long periods of exhaustive planning by many people.
  • Ideas and suggestions are overly examined from every angle.
  • The organizational norm is maintaining the status quo.

Progress Culture (Low Risk/High Feedback)

• • People develop plans and creative concepts for the future.
  • Employees strive for success and take chances.
  • There is ample time to develop and test new ideas.
  • The developmental focus is on both the short and the long term.
  • Information is available through accessible sources.
  • Failure creates opportunities to test alternatives and does not keep people from trying again.
  • People are fluid, moving and changing positions and job duties often.
  • New projects are launched as soon as the pilot shows promise.
  • Customers respond to personal attention and frequent contact.
  • The more people put into the job, the more they get out of it.

Perform Culture (High Risk/High Feedback)

• • The relationship between risk-taking and feedback is balanced.
  • There is sufficient information to fully understand the risk.
  • Risk stimulates creative thinking and builds confidence.
  • The best decisions are made while the competition hesitates.
  • Everyone conducts research and looks for new information.
  • People know how to network with unique and varying sources.
  • Change is the natural way to sustain high performance.
  • The goal is to keep ahead of the competition.
  • “Innovation” means new ways of using existing resources.
  • Failure is used as a training and development guide.
  • Customer response time is an important performance factor.
  • New learning opportunities and creative processes are the norm.

The Meaning of Failure

In a functional workplace, the decision-makers’ challenge is to match the degree of risk with the right amount of feedback, and failure is the price to pay for success. In a dysfunctional workplace, the people tasked with making decisions are often deprived of critical information by people who avoid disclosure for fear of being wrong. The likelihood of failure increases, because the decision-makers are driven to make uninformed choices.

The functionality of an organization is determined by how decision-makers view failure. Overcoming the fear of failure empowers decision-makers to learn from it and gather sufficient feedback to ensure a better outcome in the future.

The Dysfunctional Cultures

Of the four corporate cultures, the presume culture is the most prone to dysfunction. Employees are tense, overreactive and crisis-driven. Decision-makers tend to be self-centered, closed-minded and confrontational. Succeeding in this culture is difficult, since both the risks of being wrong and the chance of failure are high. Economic collapse, takeovers and buy-outs are examples of what can happen to an organization that is stuck in a presume culture.

The process culture is also dysfunctional, because its people are nonreactive. It is a slack culture, slow-moving and crisis-resistant. The employees have good intentions but tend to be self-satisfied and status quo-focused. They don’t respond in a timely manner and, therefore, discourage creative solutions to pressing problems. Encouraging people to change, even when doing so is advantageous and justifiable, takes a major effort.

The Functional Cultures

The progress culture is a good place to be. Job satisfaction and high performance are the norm, so there may not be any reason to reshape this culture. However, if you want to move along on an organizational development track, the perform culture is the place to go next. Reaching this culture requires leaders to encourage higher levels of initiative, which means the chance of failure may increase. However, the amount of feedback already available should provide an incentive to take bigger risks with greater certainty of achievable outcomes.

Once the organization has reached a perform culture, the challenge is to stay well ahead of the competition. If the decision-makers are satisfied that where they are is where they need to be, they can use the Risk-Feedback Model as a framework to discuss, discover and determine how to keep the feedback flowing while they contemplate future risks.

The functionality of an organization depends upon how its decision-makers respond to failure. As you review the description of each culture, make note of how that culture might respond to failure, and compare it to what happens in your workplace. Better yet, make copies of this article, and invite your co-workers to join you in a discussion of which culture best describes where your organization is now and where it needs to be in the future. Who knows how such a discussion might trigger a move in the right direction?