Following a key-note I had just given at a large conference, I was one asked by an attendee if my work in the field of ethics and compliance had been influenced by Dan Goldin. “Of course it had” I responded. Having failed to stump (read embarrass) me in front of his peers, the attendee quietly walked off. Daniel Saul Goldin, was NASA’s ninth Administrator (1992-2001) and is generally credited with the management innovation known as “faster, better, cheaper”. Goldin recognized large, complex organizations, NASA for example, were often good at doing remarkable things. However, mission accomplishment was typically achieved at the expensive of speed and efficiency. Goldin changed that. He pushed his team to innovate by making low risk mistakes (usually experimentally in controlled environments) in search of fast, economic solutions to complex problems.

However, cutting corners and repetitive failure does not run in the blood of many CEOs. One of the obvious obstacles of course is ethics. Instinctively, the question ethicists frequently ask is how far can one push before pushing one’s self (or team) over the line? If reading carefully, you will have ready recognized the answer: by making low-risk mistakes (usually experimentally in controlled environments). That’s right, it is not the making of mistakes that is the problem—it’s the making of the wrong kind of mistakes that screws us up. The airliner which last carried you to San Francisco did not crash because the caterer failed to provision enough omelets for First Class nor did satellites fall from space because NASA changed its logo from the “blue meatball” to the hated, “red worm.” No, real consequences result only when one or more of the wrong kind of mistakes occur. Ethics and compliance programs (by design) impose guardrails to help prevent us from making those kinds of mistakes. Innovation ceases when those guardrails are mistaken for road blocks.

Successful organizations strike a balance between innovation and mistake-making by encouraging risk-taking in a controlled environment. These organizations recognize that occasional failure is a component of successful innovation. They accept some risking-taking by employees but enforce ethical boundaries in order to keep team members from leaving the reservation. Here is an example.

A previous client of ours is a manufacturer gourmet ice cream, arguably some of the best. A component of the luxuriousness of the product was the amount of cream it contained; the more cream—the more supple the product. The USDA however limits the amount of cream manufacturers can add. Production employees (not those in the test kitchen) experimented with ingredients making ice cream for their own consumption. But within the USDA limitations they discovered a new recipe that eventually revolutionized the ice cream industry. Though they had wasted (er, consumed) much product and time in the search of an exciting new flavor and texture, the rocky road they chose lead to a manufacturing innovation that even the USDA could not get enough.

Ethical behavior and compliance limits on the amount of cream do not need to be an obstacle to innovation. Ethical innovation is sometimes just a good mistake, made for a good reason which eventually leads to a good outcome. “We could all use a little more of that,” said Cherry Garcia (no pun intended of course)  🙂