"Life itself is a process of trial and error... And those people who make no mistakes are those who make nothing."

What makes Silicon Valley so successful as the engine of high-tech growth is the Darwinian process of → failure. Commentator and author Mike Malone puts it like this, 'Outsiders think of Silicon Valley as a success, but it is, in truth, a graveyard. Failure is Silicon Valley's greatest strength. Every failed product or enterprise is a lesson stored in the collective memory. We don't stigmatize failure, we admire it. Venture Capitalists like to see a little failure in the résumés of entrepreneurs.' 

"At Dell Inc, innovation is all about taking risks and learning from failure," writes Michael Dell in his book Direct from Dell. "To tap into this kind of → innovation, we do our best to make sure that people aren't afraid of the possibility of failure, and we do a lot of experiments. For instance, one of our managers in the consumer group came up with the idea to offer installation service to consumers in order to reach people who might be apprehensive about setting up a new computer. The idea seemed like it would help out a group of customers, and it made a lot of sense from a cost standpoint as well.

We knew from our experience with business customers that when our staff installs a computer, the incidence of set-up failures is almost zero. The consumer team threw around the idea, did a pilot with one group of salespeople, and found out what worked and what didn't. Within two weeks, we'd made this service available to every consumer in the United States. I actually found out about this by accident – it wasn't something that we had a bunch of meetings about in boardrooms. → Incremental improvements and experiments happen all the time."

"Mobilize your people around a singe goal. A company of self-reliant "owners" sounds great in theory, but it can be chaos if the goals aren't clear to all," says Michael Dell. "At Dell, it's worked for us because we came up with a consistent → strategy and well-articulated objectives.

In his 10 Rules for Building a Successful Business, Sam Walton, the Founder of Wall-Mart writes: "Find some humor in your failures. Don't take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm – always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you.

Don't do a hula on Wall Street. It's been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools competition. "Why should we take those cornballs at Wal-Mart seriously?"... More

Sandberg told Page, who accepted her apology. But as she turned to leave, Page said, "I'm so glad you made this mistake, because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don't have any of these mistakes, we're just not taking enough risk." ... More

→ Inspiring People: 4 Strategies 

Communicating the message from the top that failure is part of the → innovation process has been something that, CEO and Chairman of Coca-Cola, E. Neville Isdell, did at their annual meeting, where he declared: “You will see some failures. As we take more risks, this is something we must accept as part of the regeneration process”. Isdell wanted Coca-Cola to take bigger risks, tolerate failures and change Coke’s traditional risk-averse culture. Failure is so important to the experimental process, without it there is no learning. The key is to have → intelligent failures, and preferably those that happen early and inexpensively, which then lead to new insights about customers.

Punishing for falling short of a stretch goal is counterproductive. "If the company aimed at 15 and made 12, celebrate. What's critical is setting the performance bar high enough; otherwise, it's impossible to find out what people can do," says Jack Welch, the former legendary CEO of GE.