True innovation requires leaders to adopt a venture capital mindset, accepting that roughly nine out of ten initiatives will fail. This high tolerance for failure, mirroring professional investment odds, is a prerequisite for the psychological safety needed for breakthrough results.

In operations, failure is a problem to be eliminated. In innovation, where new ground is being broken, failures are expected and necessary. Instead of being viewed as mistakes, they must be reframed as valuable data points that provide crucial learnings to guide subsequent experiments and decisions.

To achieve breakthrough work, leaders must embrace spectacular failure. A mediocre "6 out of 10" idea is worse than a "1 out of 10" born from an ambitious attempt at a "10." Mediocrity signals a culture of playing it safe, which kills innovation.

To accelerate growth for talented individuals, give them responsibility where their failure rate is between one-third and two-thirds. Most corporate roles are over-scaffolded with a near-zero chance of failure, which stifles learning. High potential for failure is a feature, not a bug.

In a new technological wave like AI, a high project failure rate is desirable. It indicates that a company is aggressively experimenting and pushing boundaries to discover what provides real value, rather than being too conservative.

Leaders like LinkedIn's Reid Hoffman and Netflix's Reid Hastings view a lack of failure not as perfection, but as a red flag for insufficient risk-taking and slow progress. They believe making mistakes is a necessary byproduct of innovation and achieving ambitious goals.

At his first company, Hastings learned that treating software development like a manufacturing process with rules to reduce errors led to declining talent density. High-performers thrive in an environment of inspiration and creativity, not rigid processes that drive them out.

The most successful people, from Nobel laureates to elite athletes, fail more often than their peers. Their success is a direct result of their willingness to take smart risks and push boundaries, knowing failure is a possible outcome. They adopt a mindset of playing to win rather than the more defensive posture of playing not to lose.

To foster an innovative team that takes big swings, leaders must create a culture of psychological safety. Team members must know they won't be fired for a failed experiment. Instead, failures should be treated as learning opportunities, encouraging them to be edgier and push boundaries.