"Success is the ability to go from failure to failure without losing your enthusiasm” ~often attributed to Winston Churchill.
If your organisation has innovative profitable momentum, is failure often the evidence? Consider Acacia Bank, no failed financial products, nil failed experiments, with no initiatives abandoned. Contrast this with Red Oak Capital, 10 experiments, seven didn't work, two were mediocre, but one became a major new business. Which is more innovative?
Failure is a word streaming with the tears of emotion. In business, how many times do we admit – “I failed”? There is an addiction to ‘looking good’ stories of success, but the daily reality is that we are often mistaken, constantly making course corrections.
Avoid failure is conventional management wisdom. But can you build a sustainable business without making some inevitable disappointing flops? Is the management problem to eliminate failure – or transform failure to being cheap, fast, intelligent and informative?
Elite performance in sport is a game of managing failure. Tennis star Novak Djokovic, at his peak, won only 48 percent of his points. Success isn't about perfection, but about the ability to take hits, learn, and maintain a mindset, despite frequent setbacks.
Reframe
Perhaps we need to reframe failure. Is disappointment the opposite of success, or is it part of the creation process? An organisation that never fails may simply be a place that never experiments.
Innovation requires assumptions to be tested. Probability suggests some business assumptions will be wrong. Some experiments must fail. Question is not “Did we fail?” but “What did we learn that changes what we do next?”
Success creates false confidence. A product takes off, revenues grow, and management believes that its assumptions must be correct.
Then the market shifts, forcing an organisation to confront reality. Success rewards yesterday's thinking. Failure provokes tomorrow's thinking.
As a value proposition, failure exists on a continuum. Big difference between Sh500,000 experiment that flopped and Sh130 million strategic mistake. Prototypes, pilots, MVP – minimal viable products and customer experiments are the way to go. Failure is simply the cost of learning. Does the smart manager ask: “What did this project deliver?” or “What did we learn for the money we spent?”
Don’t repeat
Real failure is repeating a catastrophic error. Making a mistake once is experimentation. When things don’t work it makes sense to ask: What will we do differently because this happened? If the answer is “nothing” the failure was probably wasted.
Reward well-designed experiments, disciplined risk-taking and honest reporting of bad news. A manager who admits “Our best guess hypothesis was wrong, and this is the evidence,” is more valuable than one who hides the problem, until it becomes a crisis.
Enigma of success
Paradoxically, often the biggest business failures begin as successful ideas. Kodak didn't fail because it couldn't make film. Kodak invented digital photography, yet they sat on the innovation because they believed it would destroy their traditional products and market.
Similarly, Nokia didn't fail because it couldn't make phones. In 2007, Nokia had a 40 percent plus global mobile phone market share before things collapsed with the introduction of the smartphone. In Kenya, notice that many of market leaders of 20 years ago, either disappeared, or are a faint shadow of their former selves.
Many incumbent organisations struggle because the very capabilities that created their success become constraints. Sometimes what made you successful, is precisely what prevents you from adapting.
Don't ask staff to ‘think outside the box’. Give them permission to challenge the box. There is no shortage of intelligent people in organisations, but they often suffer from the contagious ‘organisational conformity’ virus.
Staff soon pick up on “That's not how we do things here.” Predictable result is that everyone optimises the existing business, while competitors experiment with the future.
The so called ‘strategic plans’ can become beautifully designed failure machines when organisations are obsessed with predicting certainty five years ahead. A detailed plan assumes that management knows enough about the future to specify what should happen several years from now.
But constant uncertainty makes that assumption questionable. Like a leading edge tech giant, better approach is to consider strategy a learning system, rather than a ritual document that gathers dust on a shelf. Intelligent approach is set the direction, based on a hypothesis, experiment, examine the evidence and adapt, leading to the next [small bets] experiment.
Intention is not to maximise success. Real aim is to increase the rate at which the organisation discovers what works.
Does one ask: “How do we make sure this succeeds?” or inquire “What is the cheapest, fastest and smartest way to discover whether this will work?”
David J. Abbott is a director at aCatalyst Consulting. [email protected]
Unlock a world of exclusive content today!Unlock a world of exclusive content today!
