Purpose: To highlight an unconventional way out of the “innovation dilemma,” relevant to many business organizations, innovative management and risk friendliness are necessary, but the way in which failure is handled and the resulting fear of making mistakes block the (innovative) efforts of specialists and managers.Design/methodology/approach: The paper draws on theoretical as well as empirical work: first, the seemingly crystal‐clear concept of “error” is elaborated and the rare category of “creative errors” is introduced. Second, illustrative findings from a case study in the automotive sector are reported.Findings: Suggests that a culturally exacerbated antipathy towards errors leads ultimately to a situation of pronounced innovational incompetence in which creative behavior is avoided. Points out, that not an “absolution of mistakes” is required, but a tolerance for legitimate errors which should only occur under exceptional circumstances. Underlines, that fairness in dealing with errors is considerably more important than a misguided attempt to create or maintain harmony. In addition to the philosophy and potential of this unusual incentive system, possible practical implementation problems are considered.Research limitations/implications: Generalization is limited because the findings are based on only one case study. However, because of the vital importance of the so‐called “innovation dilemma,,” the exploratory findings of the study may trigger further empirical research on “creative errors.”Practical implications: An initiative like the “Creative Error of the Month” may help to bring about cultural change towards a climate of trust and confidence in which innovative commitment is treated fairly even if it does not in fact succeed.Originality/value: Common approaches to enhance organizational innovativeness reward “success stories” or praise “zero‐based cultures.” This case study suggests that a sophisticated initiative revolving around the “hidden” innovative potential of “creative errors” and “tragic failures” might prove to be a successful off‐beat attempt at stimulating creativity and innovative behavior in enterprises.