Innovation Tip: Design Your Failure System

I’ve written before about the importance of failure in organizations.   Well, not that our goal is to fail, but that innovation (trying anything new) has risk.   And without the willingness to accept some risk (and the possibility of failing), it is hard to imagine how any innovation can be possible.

Most of us can speak from experience (because most of us have plenty) that making mistakes, almost always creates a learning opportunity.  Anyone with kids can attest that when they make their own mistakes and have to live with an undesired consequence, they learn far better than from any lecture or lesson you could deliver.

So today, I want to explore this topic of failing in a little more depth.

If failure leads to learning, this is a GOOD thing.  So maybe . . . making mistakes is something we should be more deliberate about.    Maybe these are things we should showcase, talk about, and relish for the new insights they help us to see.   This seems hard in some organizations I see, where people feel they must hide them from view –engaging in their own mini cover-ups.

Why do we think mistakes are so bad, and failure is not a good thing?

It has to do with how we typically think about it. describes a mistake as “an error in action, calculation, opinion, or judgment caused by poor reasoning, carelessness, insufficient knowledge, etc.”      With that definition, why would it be permissible for anyone to make one?  Couldn’t we have been LESS careless?   If we had insufficient knowledge, weren’t we responsible for getting educated?

So we feel that failure is shameful, something to be dreaded. Over time, our fear of failing makes us so risk averse, that we only pursue small incremental changes and improvements, rather than reach for game-changing ones.  How unfortunate.

Wouldn’t it be better if we thought about failure in a different way?  When I speak to my son who works in Silicon Valley, he tells me he has met a number of people who have worked for a failed start-up venture, or perhaps have led one unsuccessfully.  Yet out there, there is no negative stigma attached to people who were in a failed business.  In fact it is kind of the opposite. These people who have experienced failure are highly sought after for the depth of their experience.

We need to think about, and manage failing in a more strategic way.

We need to make “Smart Failure” something we appreciate.

In most companies we recognize and reward those who succeed . . . as we should.  But why nor recognize smart failures as well.

In one story I read in the Wall Street Journal, an ad company executive took a bold risk when making a presentation to a client who made kitty litter.   She took a box of the company’s product and loaded it with droppings from her cat and pushed the litter box under the conference table without telling anyone.  When she finally pointed out what she had done, some of the client executives seemed “shocked” by the act, and actually stood up and walked out of the meeting.   Her employer, the ad firm Grey New York, awarded her their first quarterly “Heroic Failure” award—for taking a big, edgy risk.  In their case it seemed appropriate.   This firm talked often about their goal to always make a memorable experience.  Well, the litter box did this regardless of the outcome.

We need to stop thinking about innovation as a discrete event.

Engineers seem to like the idea that there is one “best” answer to any problem.  Perhaps we train MBA students to think similarly.   I don’t know if you think that even people like Steve Jobs just sit down and have an epiphany that produces an iPod that is a vast market success in one try.    It doesn’t really work that way.

Scott Anthony in his book The Little Black Book of Innovation describes that most good ideas come out of a process of trial and error.    If you read The Double Helix (story of the discovery of the DNA molecule) ,or saw  the movie The Social Network (the story of the creation of web tools that ultimately became what we know today as Facebook) you can see that innovation is more often messy, random, lucky, and filled with missteps and even near-death experiences.

Facebook didn’t start as Facebook. It started in October 2003 as Facemash, a simple tool that Harvard sophomore Mark Zuckerberg created to allow people to rate the relative attractiveness of pairs of students.  Then Zuckerberg created (or borrowed from the Winklevoss twins) the idea of a social network for Harvard students.  It expanded to other Ivy League universities and then other universities before finally branching out to a mass-market platform.  If you thought that Mark Zuckerberg and three of his best friends sat down one week and created it in one intense blitz you couldn’t be more wrong.

Sometimes successes are born from failures.   Consider the example of Sildenafil.    This was the result of a massive R&D effort by the pharma giant Pfizer that was seeking to develop a medication that could alleviate chest pains.  During clinical trials, in 1994, Nicholas Terrett and colleague Peter Ellis discovered that in many people, the drug had a very embarrassing and unanticipated side effect.   They were failing. Rats.   Four years later, Pfizer introduced the pill as the erectile dysfunction drug, Viagra.

The message here is that the failure wasn’t the story.   The real story was about what they learned from the failure and how they adapted.

Design little failures.

We need to think less about trying to prevent failure, and more learning to manage risk.  If our idea has risk, challenge your team to think about how to minimize the impact of a possible failure.  Don’t roll it out nationally.  Try a small test market first.   Built a prototype and test it, before committing to a full commercial version.  Try the idea in one work cell, not the entire operation. Then see what you learn, and plan your next phase based on how you now assess the remaining risk.

This is sort of the idea behind rapid prototyping.  Build a simple model. Test it. Improve it. Test again.

Reward BEHAVIORS as well as performance.

I am not generally a big fan of the performance management systems I see.  Often we focus heavily on results (generally metric driven), and that’s what gets recognized and rewarded.   At some point, of course, we all need to achieve intended business results.  But along the way, when you see employees ACT in ways that you want them to (like the ad agency litter box person) then why shouldn’t this be recognized as well.   The rewards don’t always need to be monetary, but if you want a culture in innovation, you have to accept that this sometimes involves experimentation, and sometimes failures. You want to send a strong message that “smart mistakes” are valuable and make sure your organization highlights them (in a positive way) and learns from them.

Other Related Articles

How to Encourage Learning By Making Smart Mistakes

Innovating Ones Approach to Failure can Reap Large Successes

Why Failure Drives Innovation

Better Ideas Through Failure

Here’s Richard Branson on Learning From Failure:


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