Failure Is An Option (Or Should Be!)

I've been reflecting back over my last few posts regarding innovation and the thought occurs to me, why don't more companies - large and small -  encourage failure?  My mother used to tell me that I will learn more from failing than by succeeding and I've repeated that mantra to my kids.  I've always felt, hey, lets go for it and if we fail we'll try again.   So what is it with failure and why are companies so anathema to it?

At the end of the day, I think many companies face tremendous internal inertia.  As Geoffrey Moore says:

... as more and more processes in an establishment become context [versus core - that which creates sustainable competitive advantages for a company, contextual items are everything else a company does] the total population of risk averse mangers beings to exceed that of risk-taking management. Now the ability of the organization to change strategy [innovate!] by embracing the next set of changes becomes seriously impaired.

Large enterprises may feel they don't have the luxury to fail because their categories have become so competitive and shareholders so demanding, that failure can result in lost market share or Wall Street confidence.  Let's be clear here, its not that these companies can't innovate, can't afford to fail...they can, but there is so much inertia built up in the organization that there is no way for the company to experiment, fail, innovate (shampoo, rinse repeat!). Why?  Because the company has the majority of its resources tied up in just keeping the lights on... couple this with risk aversion in the culture and you have a powerful anti-innovation anti-failure culture.

Small companies on the other hand may feel they don't have the luxury of failure because they are constrained from a human and financial capital perspective. Failure is deemed a waste.  Folks who have spent any time with startups though, know that they fail every day and that as my friend Charlie Federman likes to say, those startups that face their crises and failures and successfully navigate them tend to succeed, while those that ignore them will later fail because that crisis or failure magnifies over time if not dealt with quickly.

So does failure play a role in Market success? You betcha! Lets look at the market leaders.  From the Washington Post:

While Google places a premium on success, it appears to shrug off failure. The resulting culture of fearlessness permeates the 24-hour Googleplex...  Google employees are encouraged to propose wild, ambitious ideas often. Supervisors assign small teams to see if the ideas work. Nearly everyone at Google carries a generic job title, such as "product manager." All engineers are allotted 20 percent of their time to work on their own ideas. Many of the personal projects yield public offerings, such as the social networking Web site Orkut and Google News, a collection of headlines and news links.

Philip Remek, an analyst who follows Google for Guzman and Co., sees the many initiatives as a series of lottery cards. "A lot of them aren't going to work," Remek said. "Maybe there will be a few that take off spectacularly. And maybe they're smart enough to realize no one is smart enough to tell which lottery card is the winner five years out."

Google's success is clearly a result of failure being an option at Google. In fact, its expected.  Many of the ideas that employees work on never make it to market but with such a broad innovation base to draw from, its clear that they will continue to drive many innovative products to market in the years to come.  But many folks point to Google so lets look a formerly small company acquired by a large organization.

Linksys' (a leader in home networking, acquired by Cisco) product development model was to take a volume operations approach to product innovation.  Product development was completely out-sourced, thereby lowering the cost of product innovation but allowing the company to test many new ideas in multiple categories simultaneously.  When they failed, and they did many times, the strategy was to simply discard the idea and start again.  When they hit it, as they did with home networking, they quickly ramped up their sales channels to get product to market as quickly as possible.

Ok, one more.. this time from the medical device space.  Medtronic - the folks who gave me my insulin pump!  Medtronic is the world leader in the medical device market. And the company goes a long way to foster innovation and encourages failure as part of the outcome. The company even offers grants to employees who want to chase ideas. Winners get up to $50,000 for whatever they decide they need, including hiring outside experts or contracting with research universities, and they can devote part of their regular workdays to their project - very similar to Google's approach.

Those are three quick but powerful examples of embracing failure to drive innovation and ultimately category leadership. What we'll discuss in a follow on post are the practical steps that organizations large and small can take to move in the Failure Breeds Success direction.

Comments

[Larry Eiss]

1.

Great post and very much right on with regard to the issues faced by large organizations.

We learn by experience. We gain experience by failing. When failure is no longer an option, we can no longer learn and we begin to devolve.