All of us in R&D can readily appreciate that things do not usually go exactly as planned or hoped for. We will agree that one should expect higher level of mistakes when trying to be more innovative, whether it be in new product or process development, new business process, or whatever. This was said well by Fortran pioneer John Backus (recently deceased) in his 1983 Achievement Award address to the Industrial Research Institute research, failure is the partner of success. Consider just the following example. In the 1980s global contingent of coatings companies sponsored by the U.S. Navy commissioned search to optimize an anti-fouling coating that would release toxic chemicals to prevent barnacles from attaching to the surfaces of ships. The proclaimed goal was squeaky clean surface. One of the approaches was ruled mistake after it immediately grew an ugly slime, and was completely and permanently abandoned by the review team from the sponsors and the Navy. However, one of the reviewers was biological scientist who could see the learning in the He continued to work on it independently while running his own company. He looked at the potential benefits of naturally occurring-slime approach (like on fish), and today the same technology that grew the unwanted slime is being commercialized in breakthrough non-toxic anti-fouling coating that is environmentally friendly and promises to last many years. Unfortunately we don't have word in English that means a well-reasoned attempt that didn't meet expectations, so I will be using mistake in its place. How does your organization handle this type of mistake? I'll get back to this issue in moment. The Innovative Environment Of the ten dimensions that describe an innovative environment (1), Freedom and Risk-Taking are two of the most critical since together they can either ignite or effectively extinguish the spirit of innovation in the workplace. In my experience, the way in which an organization handles mistakes is the single biggest factor determining how this will play out. Do your policies and practices promote Freedom and responsible Risk-Taking? Do your policies and practices restrict individual decision-making and Freedom, and are people so afraid of the consequences of failure that Risk-Taking is just concept? Referring to the systems thinking causal loop diagram on the following page, note that it all starts with an idea. Someone has an idea about how to do or make something--a new product, process improvement, new marketing approach, or new business model, just to name few. This person is usually the one to take the next step, which is to take action on the idea. In perfect world, the action would always result in success, but we don't live in perfect world, and more times than not, the action results in only partial success, sometimes called non-success, or mistake, or at worst failure. Looking at the mistake route, the person who took the action is now in charge of deciding if he/she will openly discuss it with the boss and others, or will he/she conceal it from them. The level of Trust and Openness between the person taking the action and the boss will help that person decide whether to openly discuss the mistake or to conceal it. If the mistake is concealed, there can be no organizational learning, since few if any other people know about it. If, on the other hand, the person has high level of Trust and Openness with the boss, then chances are very good they will openly admit the mistake. [ILLUSTRATION OMITTED] Now, once the mistake is out in the open, the leaders must decide how it will be handled. Clearly it can't be ignored, especially if it was costly mistake. Many leaders shoot from the hip, moving quickly to discover all the guilty parties and then fire off blame and punishments. When asked why this approach was taken, I have been told that people must be held accountable--more about that later. …