For example, the desire to avoid a repeat of the Iraq War profoundly influenced the U.S. strategy in Libya in 2011. The Obama administration tried to make Libya the opposite of Iraq by constructing a broad international coalition, gaining support from the United Nations and the Arab League, and rejecting nation-building with U.S. ground forces. But the U.S. war plan in Libya also neglected the possibility of future loss, including the collapse of civil order following a rebel victory. In 2014, Barack Obama said: “we [and] our European partners underestimated the need to come in full force if you’re going to do this.” The lessons of Iraq were extremely prominent—except for the lesson that the war plan itself might be too optimistic.

How do we reconcile the visibility of past failure with the invisibility of future failure? The answer is that people are assessing different domains. In general, when people survey the world around them, including past events, they highlight negative information. But there is an exception when people judge their own personal capabilities and future prospects, when they are prone to overconfidence.

Are these biased ways of thinking about failure dangerous? Fixating on past negative experiences may produce under-learning, where officials suppress painful memories. For example, following the Vietnam War, the U.S. military tried to forget the entire experience of battling guerrillas, and failed to institutionalize the lessons learned. Another danger is over-learning, where officials try to avoid a repeat experience at any cost. Negative memories of the humanitarian mission in Somalia in 1992–1994 deterred Washington from acting to stop the genocide in Rwanda in 1994. Under-learning and over-learning might seem to be contradictory effects, but they are similar to an individual’s experience of trauma producing either amnesia or phobia.

Downplaying the possibility of future loss in war games and military planning is also hazardous. Of course, confidence is integral to military leadership and can encourage officials to persevere in the face of adversity, sometimes producing ultimate success. But overconfidence may also raise the odds of conflict. The belief in an easy victory can lead officials to initiate a campaign of choice like the Iraq War that might otherwise be avoided. Furthermore, the assumption of rapid success means that policymakers may be unprepared for negative contingencies like an insurgency and forced to improvise. The risk of being unready for a worsening mission is particularly noteworthy given that recent wars in Vietnam, Afghanistan and Iraq all deteriorated unexpectedly.

ONE SOLUTION to these problems is to take inspiration from the school of “intelligent failure” in the business world. Of course, the military and corporate realms are very different. When planning for war, the stakes are higher—life and death. But there are also important similarities. In both the military and business arenas, decisionmaking occurs in a highly competitive and uncertain environment, where leaders face the possibility of psychological bias. And business decisions can certainly have a major impact. One-third of the companies in the Fortune 500 in 1970 no longer existed just thirteen years later.

The school of intelligent failure promotes the effective anticipation and handling of negative experiences. In 2008, the nonprofit group Engineers Without Borders Canada created an annual “failure report” to document ventures that did not work. The following year—with consummate timing given the great recession—entrepreneurs set up a conference known as “FailCon” to exchange stories about mistakes that they (and other start-ups) had made. In 2011, the Harvard Business Review devoted an issue to the art of failing well: “Failure is inevitable and often out of our control,” noted the editors. “But we can choose to understand it, to learn from it, and to recover from it.” Groups like “Fail Forward” help organizations to handle failure more effectively and become more resilient. Entrepreneurs have even distributed “failure resumes” or descriptions of projects that tanked. Meanwhile, a number of recent books like Megan McArdle’s The Upside of Down argue that failure is essential to success in business and provides the wreckage for gains.

Of course, the goal of intelligent failure is not loss itself. Rather, the objective is to encourage a growth mindset where negative outcomes—if dealt with appropriately—can generate innovation and hardiness. We can consider specific lessons and tools that are relevant for military scenarios.

LOSS IS a major opportunity—and sometimes the only real chance—for big institutions to make fundamental reforms. Organizations are often slow to evolve in response to changing environments, partly because vested interests try to maintain the status quo. Here, success may encourage businesses to stick to a winning formula, triggering complacency and risk aversion. For example, one study of the airline and trucking industries found that past success led to greater confidence in the validity of current strategies, persistence in the face of environment change and a subsequent decline in performance. Although the negativity bias and the tendency to fixate on past loss is dangerous, it can also be utilized for progressive reform. Failure is disruptive. It draws attention to issues, encourages experimentation and allows organizations to break through the barriers to change.

National security officials should therefore seize the upside of down. Difficult military campaigns are a critical chance for leaders to challenge accepted wisdom, think creatively and even embrace a radical new approach. Following World War I, the winning coalition of Britain and France expected the next war to resemble the last, and favored a defensive doctrine based on fortifications like the Maginot Line. By contrast, the defeated state, Germany, was more open to innovation and created a new model of armored warfare known as Blitzkrieg.

OFFICIALS MUST systematically investigate the causes of good performance as well as bad. A major problem in business is the tendency to examine the data only when things go wrong. In the wake of success, enterprises often decline to ask tough questions, and simply move on to the next challenge. But a positive outcome does not mean the process was fundamentally sound. Perhaps the organization got lucky because a competitor unexpectedly made a misstep. Or success might be due to factors the organization would not want to replicate. The animation studio Pixar, for example, had a string of movie hits in the 2000s, but rather than simply celebrate each accomplishment, the studio engaged in tough reviews of what to copy and what to avoid.

The U.S. military can also interrogate success with the same urgency as failure. In 2012, the Joint Staff issued a major report on learning lessons but chose to only examine struggling U.S. counterinsurgency missions in Iraq and Afghanistan. The report could also have explored more successful missions during the post-Cold War era like the Gulf War in 1991 and the air campaigns in the former Yugoslavia in 1995 and 1999. These earlier cases could inform several of the core issues highlighted in the report, such as improving coalitional operations.

IN BOTH the business and military realms, there is the danger of under-learning, or avoiding difficult experiences because they are acutely painful. Therefore, loss must be confronted. The review of army education in 1971 concluded: “A strong element of every curriculum should be historical studies which frankly analyze unsuccessful American military efforts…[including]…an objective discussion of what we did, what went wrong, and why.” The challenge is that organizations also face the opposite danger of overlearning, where the most recent debacle dominates analysis.

The answer is to situate the last failure in a broader sample of cases, including successes (see above), additional cases of failure, as well as the experience of other actors. For instance, the U.S. military tends to disdain learning from other countries. During the 1960s, the Joint Chiefs of Staff dismissed the relevance of the earlier French defeat in Vietnam: “The French also tried to build the Panama Canal.” However, the experience of other countries that faced insurgent adversaries, like Israel, India or the Soviet Union in Afghanistan, may offer valuable instruction.

THE SCHOOL of intelligent failure encourages senior business figures to set the tone by acknowledging their own personal failures and how they learned from them, and by making clear that mistakes are opportunities for improvement that can allow for—and even facilitate—career advancement. After taking over at Ford in 2006, Alan Mulally asked the managers to color code their reports: green meant good, yellow meant caution and red meant there were problems. Unsurprisingly, the first set of reports were all green. Mulally reminded the managers that the company was losing billions of dollars. When a brave manager offered the first report that was coded yellow, the room went quiet, until Mulally broke into applause. Reports were soon submitted in the full spectrum of colors. Indeed, personal knowledge of loss is deemed to be so valuable that some venture capitalists will not invest in a new project unless the entrepreneur has experienced failure.

Leaders in the national security community can also emphasize that failure is not an automatic indication of unfitness. After all, loss could result from environmental factors or a willingness to take risks, whereas a string of apparent successes could be a sign of incremental innovation. Therefore, rather than declaring that they cannot spell the word “failure,” generals might discuss their own mistakes and the lessons they learned, host a convention on failure or even issue a failure CV.