Your Greatest Asset? ROF: Return on Failure

Innovation and failure go hand in hand.  So, what is failure? When things don’t go according to plan or expectations, ending up with unexpected and/or undesired outcomes.  The key is ‘undesired’ – because if they were desired and not planned or expected, that would be great!  But, as we will see, failure is a terrific way to learn.  Maybe we could measure learning as Return on Failure: ROF.  And many of these learnings are intangible, but as the 21st Century is proving, it’s the intangibles that matter.

We’ve heard the phrase “fail often, fail cheap, fail fast” or “it’s ok to make mistakes, just make different ones.” So, can we do a better job of learning from failure?  We’re not built to do this easily, either by learning from others’ failures or our own.  There are many ways to learn from failure, so what I’m suggesting is just one way.

One way we could start learning from failure is through a simple 3-step process (bear in mind, simple ≠ easy!):

  1. Identification of the Failure(s)
  2. Analysis of the Failure(s)
  3. Iterative Experimenting & Prototyping based on the learnings from the failures

So, and check my ‘math’, ROF = Failure Identification + Failure Analysis applied over (and over…) Iterative Experimenting & Prototyping.  That’s the framework (for now).

Failure Identification is proactively identifying what went wrong, what failed.  Systems and processes can help capture this information for sharing with those who need to know now and in the future.  Feedback loops with employees, customers, and suppliers are also important (and who else?).  Most companies are complex entities which make getting and sharing information difficult.  Also, most cultures don’t tolerate failure too well so we learn to play the blame game.  And of course, there are a lot of other reasons we’ll get into in further posts.

Failure Analysis is not playing the blame game but discovering the Why.  When a plane crashes, the NTSB goes over every inch of the site.  They don’t blame; they use a formal, objective process to discuss, analyze and learn.  Try a model like this.  Be objective, don’t personalize or blame (not as easy as it sounds).  Organizations also succumb to confirmational bias; we become inured, not realizing we’ve fallen into that trap.  The “blame game” makes doing the necessary forensic work challenging because it can be hard to trust our colleagues.

Iterative Experimenting & Prototyping involves creating a well designed experiment so we can limit and test the variable (ideas) and prototype.  Test where we think we could fail, try what does and doesn’t work.  The more we experiment, the more we learn, the greater the chances of success.  Do small, inexpensive experiments and prototypes (they don’t have to be grand).  Do virtual and thought experiments.  There are many ways to experiment and prototype today that are not expensive or lengthy so try it.  Why don’t we? How many organizations are structured for experimentation? Not many (remember the scientific method? Bet not).  And culturally, we don’t incent, reward, recognize our people to experiment – we incent being right, not trying to be right!

What do you think? Does this make sense? Are you trying to learn from failure in your organization?  What have you learned that you’ve been able to apply?

Treating Start-ups like Adults? Wait!

Humans are one of the few mammals whose babies are not fully developed at birth. Unlike horses, whales, etc., human babies can’t stand, walk or forage on their own at birth. They are totally dependent upon adult humans for constant, continual support just to live.  We are used to this, we accept it, we don’t expect anything different.

Yet, when we discuss the birth and development of innovations and companies, it’s totally different. We expect an accelerated path from birth to adolescence to adulthood. It doesn’t need to as long as human development, but it’s rarely Google-speed.

We know innovation and entrepreneurs need nurturing and support, but usually just pay lip service. The similarities, and therefore lessons learned, between newborn babies and innovations/ideas are seldom applied.

Within companies, many innovations aren’t given the time or support (e.g., prototyping, experimenting, testing) to ‘prove’ their worth – they are subjected to processes (e.g., stage-gate) and reviews prematurely and are not given a chance to try to crawl let alone walk. While vetting is critical, vetting too early can be fatal to the company as a whole longer-term.

For startups, entrepreneurs usually have to grow up (too) fast if they want to get the funding to nourish their growth. As a mentor to startups, my role is paradoxical - to nurture and advise but also help push out of the nest.

As a partner in Glengary LLC, an early-stage VC firm, we provide the necessary support and network AND hold them accountable for milestones, without asking for meaningless data in business plans. It is always a balancing act.

So, as you are involved in innovation and with entrepreneurs, apply some of the lessons learned from raising your kids, if you have. Provide a path providing sufficient nurture and nourishment for growth that teaches self-discipline and self-sustenance for independence.

It isn’t easy to do as parents, and it isn’t easy to do in business, but few rewards are easy.