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Seems like you guys are talking past another a little bit and just having a semantic debate when you both largely agree.

You're both describing the same concept -- taking a 'non-success', learning lessons from it, and then using those lessons to do better things in the future.

It's just one of you is OK with continuing to describe that situation with the term 'failure', with all the existing negative connotation baggage, while the other prefers to find a new word to describe it.