Is failure a bad thing? For most people, the gut reaction would be: "Of course!" But those of us who have been paying attention to entrepreneurs through the years have a slightly different perspective.

Many of the entrepreneurs who support the BYU Center for Entrepreneurship had failures before they developed the businesses that became their major successes. And I believe that the things they learned through failure provided the foundation they needed for success.

When I visit with former students, many of them talk about the major blunders they made on tests or class projects. If I ask them about things they did correctly, they often can't recall any. That suggests to me that we might learn more effectively through our mistakes, and not the things we do right.

Of course, how you react to failure is critical. If you find a scapegoat for a failure and fire the designated scapegoat, then the message is loud and clear that failure is not tolerated. People will react by not trying new things that might fail.

But a major source of ideas and innovation will dry up as a result.

If you react to failure by learning from it, you build a foundation for future success. This can be really tricky, however. You need to let people know that failure is something to be expected when you are trying to be innovative, and that failure does not lead to the destruction of a career.

Of course, stupidity that leads to failure should not be tolerated and may lead to termination. Distinguishing between stupidity and innovative oversights is not always easy.

Xerox's first manually operated copier, the "Ox Box," was slow, messy and nearly impossible to use. Most businesses stayed with the old carbon paper. Learning from the factors that caused customers the most grief led to modifications that transformed office work.

Similarly, McDonald's tried a cheese-topped pineapple on a bun for people who avoided meat on Fridays, and it was a dismal failure. But the interaction with customers led to the Filet-O-Fish, which is still a McDonald's favorite. And the Apple Lisa simply did not sell, but Lisa's graphical user interface led to the very popular iMac.

If it can be done with humor and protecting the egos of the people whose work led to the failure, discussing and learning from a failure can be an extraordinarily valuable learning experience. Understanding the technology that did not work and why it did not work will help others avoid similar mistakes. Understanding why customers did not like a particular innovation helps product developers better understand customers and their needs.

Simply talking about the failure with humor and understanding sends a powerful message to workers that failures are to be expected when innovation is important to a company. It can create a climate of a friendly, forgiving workplace that truly encourages innovation.

I have found that some of our best classroom discussions are when we cover business cases that resulted in failures. Understanding how the mistakes were made and why decision-makers overlooked important clues from customers, suppliers and competitors often lead to great insights for students. Knowing where your potential blind spots are can help a company avoid bigger and more costly mistakes. Covering up mistakes can lead to hypocrisy and more mistakes, since decision-makers may miss out on the valuable learning that may come from understanding past errors.