There has been a lot written about the notion that a company that fears failure will never be innovative. I think that’s true. The underlying belief is that if a company doesn’t experience a few failures as it develops new products it probably isn’t pushing the envelope far enough. To put it another way, it is isn’t venturing into new areas or exploring new concepts. Randy Bean, CEO and managing partner of the management consultancy NewVantage Partners, is apparently a proponent of this thinking. He writes that he started thinking about the relationship between innovation and failure when he viewed a “tattoo on the forearm of the eventual champion [of the 2014 Australian Open tennis tournament], Stanislas Wawrinka of Switzerland. It read: ‘Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.’ This quote, from the 20th century Irish novelist, poet, and avant-garde playwright, Samuel Beckett, offers an apt metaphor for the disruption and resulting innovation that Big Data is bringing to traditional data and analytics approaches.” [“Big Data Innovation: Fail Faster. Execute Smarter.” Wall Street Journal, 18 February 2014] He also cites, “Paul Saffo, technology forecaster and managing director of San Francisco-based Discern Analytics, [who] observes ‘failure is the foundation of innovation'” and “John Bottega, … one of the first executives to assume the emerging role of chief data officer, … [who has stated], ‘Failure is informative.'” Taken to the extreme, the idea that failure is good for a company would lead one to believe that failure should actually be pursued as a goal. Frankly, that’s a crazy notion. When you are involved in innovative activities, failures will occur whether you want them to or not — you don’t have to actively pursue them. Not fearing failure and actually looking to fail are very different concepts.
Sometimes you read things that would make you believe those concepts aren’t so different. For example, Brian Amble writes, “The world’s most innovative companies welcome and harness failure to help them devise more successful ideas. That’s according to a new report from the Economist Intelligence Unit examining what it is that characterises the most innovative companies.” [“Innovative companies don’t fear failure,” Management-issues.com, 6 November 2013] I sincerely doubt that most innovative companies welcome failure. I do, however, agree with the notion that innovative companies “harness” or learn from failure. Nevertheless, it’s something that is much easier said than done. As Matt Hunt asserts, “Our brains automatically try to distort, deny, or manipulate our sense of reality to make failure less damaging to our ego.” [“Hey Leaders: Failure Isn’t a Dirty Word,” Linked 2 Leadership, 6 November 2012] He adds, “In manufacturing, the goal is to eliminate failure from the processes by driving toward zero defects — a goal based on the routine nature and highly probable outcomes of the process. … Failure is a possible (and sometimes more probable) outcome from work in driving innovation. If we decide to ignore our failures, sweep them under the rug or run in the opposite direction, we will never have the opportunity to learn from our mistakes.”
I have repeatedly noted that there is a natural tension between “organization” (whose goal is standardization) and “innovation” (whose goal is change). Innovative companies manage to find a balance for that tension. Bean believes that Big Data analytics can help keep that tension in balance. “Big Data,” he writes, “enables innovation by putting imperfect data into the hands of marketers, product developers, researchers, and strategic planners fast and easy, and enabling data scientists and business analysts to accelerate the speed at which they test-and-learn and iterate through new hypotheses.” Although Big Data analytics can accelerate innovative activities, they can’t eliminate the possibility of failure (or less than successful outcomes). As Hunt reminds us, “Work with a high degree of uncertainty comes with a need to tolerate — and even expect — failure. This kind of work, such as innovation, should be understood for what it is: Research and Development.” He continues:
“Rather than talking about failure as a worthless initiative, talk about it as an experiment from which valuable knowledge and experience is gained. When discussing failed innovation projects, I focus on three questions:
- First, what was the group able to accomplish?
- Next, what did they learn?
- And finally, what would they have done differently?”
So what does it mean to fail? Not all failures are catastrophic in the sense that they don’t work. When Ford introduced the Edsel, the car worked as well as any other; yet, it was considered a failure because the public didn’t buy it. Today, of course, that makes it a collectors’ item. Big Data can help with those kinds of failures. Amble reports, “Fifty-four percent of the top innovators … surveyed [by the EIU] said they pour over customer comments – be they positive or negative – and scrutinise customer data for clues to effective future innovations. They recognise that collecting many ideas is the first step to identifying the great ones.” Surprisingly, however, “almost half the respondents to the survey said that their companies have no system in place that helps them learn from failures.” There are no redeeming values associated with failure if lessons can’t be learned from them.
Since failure for failure’s sake is not the goal, Accenture analysts, Adi Alon and Ken Hooper, recommend applying risk management techniques to the innovation process. [“Fostering Innovation through Effective Risk Management,” InnovationManagement.se, 3 January 2014] They write:
“Companies typically need innovation to grow. While companies recognize this, many have established environments that discourage, rather than encourage innovation. … Instead of a fast, agile process, some companies wind up with a slow, linear grind that rarely contributes to meaningful growth. These companies can also be hampered by backward-looking tools that are inadequate for identifying the real value of an innovative idea. … Our research and our own experience with helping companies encourage and accelerate the innovation process indicates that many organizations would be better served by applying risk management tools and approaches in managing their innovation portfolio. Risk management can provide visibility; analytical insights and governance that can help companies better manage and optimize their innovation portfolio.”
They recommend applying three principles when engaged in innovative activities: flexibility, control, and speed. They explain:
“The first principle is flexibility. … Companies may want to consider building a portfolio of early innovation investments that act as options.
“The second principle is control. … Controls … are typically intended to increase risk tolerance by creating a culture that embraces the logic of intelligent mistakes and bridges two organizational mindsets that are often at odds: finance and operating units.
“The third principle is speed. Companies can use rapid experimentation and agile development to increase their chances of filling new innovation portfolios with new products and extensions, with the risks well-managed. As an iterative approach closely linked to customers and markets, agile development may draw attention to risks and integrate such risks into decision-making.”
Engaging in “rapid experimentation” is smart for several reasons. First, “experiments” that don’t succeed aren’t generally labeled as failures. They are learning experiences or, as Thomas Edison might have stated, they are just necessary steps in a process leading to success. Second, experiments are easier to stop than programs. Killing a “project” can be a difficult thing to do; especially, if the project has a senior champion. Finally, everybody expects to learn from experiments. There are generally formal programs in place to ensure that lessons are learned from any experiment that is conducted. When it comes to innovation, success, not failure, is the goal.