By Erin Moran, Executive Director, Dr. Nancy Grasmick Leadership Institute

My palms were sweating. My heart raced. I knew what I had to do—walk into my boss’ office and submit my resignation. I was newly promoted into a leadership role at a former organization and had made a decision that cost my company an obscene amount of money. I thought there could only be one outcome after a mistake this big.

I walked in, braced for what I thought I deserved: his irate yelling, followed by an escort as I packed my things. And yet, that’s not what happened. My boss didn’t even read my resignation. Instead, he looked at me and said, “You’re not going anywhere. We just invested a lot of money in your growth and development. I know you’ll never make that mistake again—and now you’ll lead in a way that prevents your team from making it, too.”

That moment is seared in my memory as a powerful example of how a great leader trusts their employees to fail and helps them learn to become even better in the future. When we think about the times when we’ve grown the most as a person, it’s usually when we’ve made a huge mistake. We’ve all heard the mantra: “Fail fast. Fail forward.” In theory, it sounds like a call to bold innovation, indicating that if you’re not failing often enough, then you’re playing it too safe and not growing. But for many leaders and employees, the reality is more complicated. If one mistake could cost an obscene amount of money, as in my situation, is there really room to fail?

The answer is yes—if you’ve built a culture of trust, psychological safety, and clear boundaries. At the Dr. Nancy Grasmick Leadership Institute anchored at Towson University, we work with organizations every day to help them develop leaders who don’t just tolerate mistakes—they use them as catalysts for individual and organizational growth. But doing this well requires intentional leadership development, clear expectations, and courageous conversations.

Define Your Water Line

One of the most useful tools we teach leaders is the concept of defining the “water line.” Imagine your organization as a canoe. Drill a hole above the water line and you’ll get a little wet—but stay afloat. Drill a hole below the water line and you’re at risk of sinking the whole operation.

Leaders must clearly define what’s above and below the water line for their teams. Where is there room to experiment, try new approaches, or take a calculated risk? And where are the non-negotiables that require consultation, sign-off, or oversight?

Without this clarity, employees are left to guess—which often leads to risk aversion or, worse, disastrous missteps. With it, they are empowered to act decisively, knowing where they have autonomy and where they need to pause and align.

Deconstruct, Don’t Blame

When a mistake happens—and it will—how a leader responds can either build a stronger team or break trust completely. Leaders must resist the urge to react with blame or fear. Instead, they should deconstruct the mistake collaboratively. I like to call this the Acknowledge-Analyze-Apply review. Openly Acknowledge that the mistake happened, which helps normalize that well-intentioned mistakes occur and establishes a growth mind-set culture. Analyze- how did this decision get made and were their other sources of data or input that would have made the decision even more informed. And Apply what we’ve learned to avoid making a similar mistake in the future.

This type of post-mortem doesn’t excuse failure—it learns from it. The team collaborates to view mistakes not as signs of incompetence but as opportunities for collective growth. Innovation, after all, is impossible without risk-taking and mistakes. What matters most is that the same mistake doesn’t happen twice.

Model Mistake-Making

Perhaps the most powerful way leaders can build this kind of culture is by modeling it themselves. That means owning your mistakes—out loud—and sharing what you’ve learned.

That dramatic moment early in my career when I really messed up reshaped my view of leadership. I realized that mistakes, when handled well, are not failures—they are investments in our collective growth. My former boss didn’t just salvage my confidence; he set me on a path to become a better, more empathetic leader.

Guardrails, Growth, and the Grasmick Leadership Institute

Creating a culture of trust and calculated risk-taking doesn’t mean eliminating consequences. It means putting up guardrails that support responsible experimentation—and knowing how to support employees when things go awry.

At the Dr. Nancy Grasmick Leadership Institute, we help organizations do just that. Through our custom leadership development programs, we equip leaders to create environments where mistakes lead to mastery, and failure is framed as fuel for innovation.

Mistakes can be powerful catalysts for growth, but only if you’ve built a culture of trust, psychological safety, and clear boundaries. At the Dr. Nancy Grasmick Leadership Institute, we see every day how intentional leadership development, clear expectations, and courageous conversations equip leaders to turn setbacks into breakthroughs. Great leaders build teams where mistakes don’t sink the ship, but help it rise. They fail fast, fail forward—together.

Erin Moran is the Executive Director of the Dr. Nancy Grasmick Leadership Institute. Anchored at Towson University, the Institute offers comprehensive leadership development opportunities for organizations of all sizes. Learn more at https://www.towson.edu/grasmickleadership/.