7 Types of Failure

John Spacey, updated on May 19, 2023

Failure is an inevitable part of business and the human experience in general. Some organizations hide it and have a culture of celebrating success and ignoring failures. Others actively manage potential failures as risk with mature models that predict failures for a particular strategy or investment. A third type of organization embraces failure as a sign that people are pushing hard to change and create value. Business failure comes in several varieties:

The Failures Of Others

There is something about the pain of experiencing failure that makes learning more vivid. Nevertheless, it is far safer to learn from the mistakes of others than your own.

Historical Failure

A common theme of education and learning is to examine historical failure in the hopes that it not be repeated. People may also learn from fictional failure as dramatized in movies and books.

Fast, Cheap And Safe

If you're going to fail, it's best to fail fast, cheap and safe. In many cases, an initiative can be designed to fail this way. In other cases, it's just luck. Failing fast, cheap and safe means that resulting knowledge is potentially more valuable than the cost of failure.

Slow Expensive And Dangerous

Failing slow, expensive and dangerous is symptomatic of big thinking and all-or-nothing approaches. It also results from optimism bias such as the irrational belief that that failure isn't an option. Many organizations have no culture of openly managing failure and it is seen as something that must be prevented at any cost.

Creeping Failure

Creeping failure is when something initially looks like a success but is revealed as a failure with time. It is typically the most costly type of failure as losses may go unnoticed for years or decades. For example, a new medication may be discovered that reduces the symptoms of one condition. However, after a decade of public use it is discovered that the medication causes a far more serious condition with time resulting in loss of life.

Catastrophic Failure

A failure that has an extremely negative and broad impact. In many cases, catastrophic failures are creeping failures such as a novel chemical that is released into the environment, only to discover decades later it has caused widespread environment destruction. Catastrophic failure can potentially be prevented with the precautionary principle.

Passive Failure

Passive failure is a negative event that occurs as the result of inaction as opposed to action. People tend to associate risk with action but it frequently results from inaction as well.