“Cruel Transparency”: The Brave Practice That Lets Innovators Learn from Their Mistakes
As readers of my book Built to Innovate may remember, one of the companies I’ve worked with as an innovation coach is Sabancı Holding, one of the biggest—and most innovative—business conglomerates in Turkey. The people at Sabancı do many things right, from developing an effective corporate structure to generate, explore, incubate, and commercialize innovative ideas to training hundreds of employees at various levels to become advocates and models of an innovative business culture.
But one of the most interesting and unusual things Sabancı Holding does to encourage innovation is taking time to focus on the things it does wrong.
In October 2022, I was fortunate enough to attend the annual management conference for Sabancı Holding. As always, I learned a lot from hearing the company’s leaders sharing their stories, ideas, and plans related to innovating. One of the best panels I attended had the intriguing title “Learning from Mistakes.” It featured several Sabancı Group Company General Managers from various businesses sharing personal stories of innovation failure and the lessons those experiences can teach.
One executive from Sabancı’s financial group talked about her team’s effort to create a tech-based consumer product with special appeal to younger customers. They started by launching a peer-to-peer money transfer system. To their dismay, the product flopped. Subsequent research revealed that existing features of the national banking system made a Venmo-like service appear superfluous to the young Turks it was supposed to attract.
Like any failed innovation, the flop meant a loss of time, energy, and money for Sabancı. But rather than simply bemoan the disappointment—or draw sweeping conclusions like “Young people in Turkey just aren’t a viable market for financial products”—the team conducted a post-mortem to tease out specific learnings they could be guided by in future innovation efforts. Realizing they needed an improved pipeline for product planning, they created an advisory board consisting of local college students to evaluate new concepts for fintech products. Based on feedback from this board, they switched their focus from peer-to-peer payments to pre-paid credit cards, and garnered a number of specific ideas about how to improve and customize these cards in ways that younger customers would find especially useful.
Other executives on the panel shared their own stories of innovation failure, from a struggling effort to crack the cement market in the USA to the difficulties that leaders of Sabancı’s operations in foreign countries had experienced in building a cross-culture team of innovation practitioners. In each case, thoughtful after-the-fact analysis identified the specific errors committed and pointed to better practices for the future.
Did every failure miraculously turn into a success? Not necessarily. But steady, progressive advancements happened. The cement unit in the USA developed a clearer understanding of local customer expectations, which gradually enabled it to build its market share from 8 percent to 21 percent; the executives operating in foreign countries dissected the cultural differences that hampered their team’s performance and designed better hiring processes to minimize the challenges going forward.
Learning from your mistakes takes a special kind of mental and emotional strength and a strong organizational climate of psychological safety. No one likes having their errors exposed in public, and analyzing the details of our slip-ups in meetings with our peers (and perhaps even worse, with our superiors) can be embarrassing and painful. But it’s also an invaluable source of insight. As we discussed in an earlier blog, middle managers play a critical role in giving everyone the permission to innovate and in creating a safe, supportive environment for this kind of transparent review of “misses.”
The Sabancı team members refer to the practice as “cruel transparency”—a somewhat paradoxical expression, a little like the “tough love” that parents must sometimes show. Sometimes, we have to do something that feels a little “cruel” to get results that will ultimately be “kind.” Panels like the one I witnessed at the annual gathering are held specifically at Sabancı to honor leaders with the courage and humility to embrace this cruel-but-kind practice.
If you’d like to boost your company’s innovative capabilities, consider making cruel transparency part of your own cultural toolkit.