Flashpoint

By Greg Holden, Business Writer & Social Media Manager, IRI

The mantra “fail fast, fail often” has almost become cliché in industry, yet it is a concept that innovation leaders still struggle to implement effectively at their firms. It is not hard to see why. Failure is difficult for everyone, even when they are told it’s no big deal. Tony Singarayar, Founding Partner of Analogy Partners, LLC, touched on this during a panel discussion at an IRI meeting when he spoke about the problems that can arise when innovation leaders get moved up from a research position to a management role. He said, “What’s the cost of failing? Even though the company says, ‘Oh, fail fast, fail often. No problem. You’re an investment not a failure.’ It feels like a failure when you fail… so how do we really make these people feel like investments and not failures?”

At the Industrial Research Institute’s (IRI) CTO Forum in Littleton, CO, this year, the topic of discussion was discontinuous innovation, a term which describes the types of innovations that are truly grand and carry the potential to disrupt or redefine a market. Dan Abramowicz, CTO of Crown Holdings and one of the leaders in attendance at this year’s Forum, said in a post-meeting interview that, “[Discontinuous innovation] has higher risk and higher payoff, so the failure rate is much higher than for [other types of innovations]. If we can learn from our failures, we can increase our success rate.”

At the heart of a discussion on failure are these two very important factors: the risk and the aftermath of failing. Or, to put it differently, what’s in place before you fail and how do you handle failure once it happens? To analyze the topic of learning effectively from failure, a new Research on Research (ROR) working group is forming to explore ways of gaining more from failures. More on that later.

The Risk of Failure

Imagine a general stepping onto a field of battle, looking at the enemy lines and sizing them up for the conflict ahead. While deciding her strategy, do you think she only cares about the size and position of the enemy? Or do you imagine she factors her own troops, their readiness, their capabilities, and their morale into the equation? Obviously it’s the latter. Preparing for any undertaking requires understanding what your people can and cannot do. Risk of failure, as a concept to consider when evaluating new product and service innovations, relates directly to the readiness, the capabilities, and the morale of your organization. In short, it relates to your organization’s culture, the element that is already in place before ever taking a risk.

“Culture is the social behavior and norms of an organization,” said Tim Swales, VP of R&D and Chief Sustainability Officer at Johns Manville. “If a company’s culture is not open to its people to try new things and approaches in all aspects of their business, then they are very unlikely to succeed.”

Culture is a frequent topic of discussion at IRI, whether at meetings or as part of one of its research working groups, and the definition of an effective innovation culture continues to be tricky to pin down. What exactly makes an organization’s culture effective at innovating? And, what does it take to maintain that culture once established? According to Abramowicz, “You can’t do [just] one single thing to create an innovation culture. And, once established, you must continue to work to maintain it.”

For many innovation leaders, the culture of their firms is of paramount significance to their work, and failure plays a direct role in how their culture is shaped.  “It boils down to reward and recognition,” said Craig Robertson, VP of R&D at National Gypsum Corp. and another leader in attendance at this year’s CTO Forum. “You know, if one of your guys fails and then gets skipped over for a promotion, that resonates across the workforce and people start viewing failure as a career threat, so they stop taking risks.” Disney’s Michael Eisner once shared a similar sentiment when he said, “Punishment for failure will always lead to mediocrity [and] mediocrity is what fearful people always settle for.” But, it should be noted that it is not just individuals who make up an organization’s culture. A culture is also guided by the organization’s leadership decisions.

Dr. Robert Wolcott, professor at the Kellogg School of Management at Northwestern University, described how this is during a keynote address at a past IRI meeting. In explaining why he saw so many big, successful companies coming to the brink of failure, and even collapsing in some cases, he said, “Because all the power is in the core business, you make all your money in the core business and you’ve been doing it for 30 years. So you have 30 years of data that proves that doing this creates money. Then one of you jokers goes to the office with a new idea, how many years of data do you have to prove that that’s going to work? Nada. That’s part of the problem.”

Wolcott goes one step further. He says this behavior isn’t complacency, the term heard most frequently when discussing this phenomenon. He says it’s brought on by crisis. When a company is successful, it trudges along, business as usual. When it encounters a fiscal quarter where its numbers aren’t quite going to reach their targets, the instinctive reaction isn’t to innovate and take risks, it’s to cut costs and boost sales, which translates to the organization “getting better and better at what it already does,” Wolcott said. But what that company does is proving to be less and less successful. By the time it realizes this model isn’t sustainable, it’s often too late.

These companies aren’t complacent, they’re very good at what they do and they’re filled with hard working people. The problem is that their products and services are no longer the best solution for their consumers and it’s time for them to change. Fear of taking that step, that risk, is what they have to overcome. That fear is part of their culture; part of their self-assessment on what they’re capable of doing. How that fear shapes their decisions will then further shape the culture of their firm. Do they take the risks necessary to survive, or do they hunker down and focus on what they do best? There is no right answer here. It all depends on circumstances. However, recognizing the impact of decision paralysis in the face of extinction is an important step to take on the road to inspiring your organization to take on bigger, more ambitious projects, even if they fail… especially if they fail. Failure, in itself, shapes an organization’s culture. It all depends on how an organization responds to it.

So how does an organization best handle failure?

The Aftermath of Failure

Learning from failure is the key to handling failure, but to do so organizations must possess (and actively cultivate) a culture that can accept failure as normal because it provides them with a chance to learn and grow. As Swales said, “Failure is a very negative word especially for those attempting to push the boundaries of innovation. I prefer to use the word ‘learnings’ or the phrase ‘learn fast’.” The new IRI research working group looking to explore failure is considering the distinctions between productive and unproductive failure.  Is every failed project a learning opportunity?  How can we capture learning from every project, regardless of its outcome?

Many examples of “brilliant failures” exist throughout history. A presentation delivered at IRI’s 2017 Annual Meeting by Pushpa Manukonda, Technology Innovation Strategy Manager at John Deere, provided several such examples. She told the story of Aquavit, a flavored spirit produced in Norway. In the nineteenth century, the makers of Aquavit shipped a batch around Africa to sell in Asia. It failed. Five barrels were even shipped back. When it returned, the producers of Aquavit noticed it had a richer flavor. To this day, the spirit is produced in Norway and then loaded into sherry casks and shipped around Africa and back in order to enrich the flavor. It continues to be a successful brand.

Manukonda also spoke about famous examples like 3M’s Post-It Notes, derived from a glue experiment that failed years earlier; James Joyce’s novel A Portrait of the Artist as a Young Man, written over a period of twelve years, rejected by multiple publishers, and at one point completely erased and rewritten from scratch; and, Viagra, a drug initially developed for angina, chest pains, and high blood pressure. It failed to effectively treat any of these symptoms, but all test users noticed a particular side-effect. The researchers immediately began using it in clinical trials to treat erectile dysfunction.

The role of a researcher is to take risks. As Manukonda pointed out at the beginning of her presentation, “If we knew what we were doing, we wouldn’t call it research.” Risk-taking is inherent to this field, but any negative reaction to a failure that results from a taken risk can lead to mediocrity, as Eisner said.

The acceptance of failure starts at the top according to those in attendance at this year’s CTO Forum, and requires creating a culture that allows for grassroots risk taking and leadership. Abramowicz highlighted a quote from another CTO Forum attendee that he found telling: “Innovation driven from the bottom is chaotic and smart while innovation driven from the top is organized and dumb.” Clearly it takes a combination of the two. It is important for top brass to express gratitude for the efforts of those at the bottom, to try and catch them doing great things, and to celebrate failure in big, loud ways that focus on positive learnings gained from that failure, avoiding the negative take-aways and finger pointing that inevitably accompanies such events. This is what Manukonda meant when she talked about “brilliant failures.” A failure that goes by unremarked, unanalyzed, and forgotten is a waste of an opportunity to inspire risk taking and innovation across the organization. As Abramowicz said, “If we can learn from our failures, we can increase our success rate.”

One approach to reviewing failures, developed in conjunction with research into how hospitals handle failure (usually the preventable death of a patient), is to replicate a hospital’s Morbidity and Mortality conference (shortened to M&M). In an M&M conference, a doctor, or group of doctors whose patient died for potentially preventable reasons, will present a case and offer all evidence to back up the decisions made. The doctors in attendance review the case, then ask questions, offer arguments and counterarguments, and in general discuss and diagnose what could have been done differently and whether it would have mattered.

Two very important features are present in an M&M conference. First, attendance is contingent upon accepting that no legal responsibility or liability can come from the findings or discussions from the conference. This means all doctors involved are free to discuss their case without being sued for what they say or what they did during the case. Second, an influential moderator must be present to keep the discussion focused on positive learnings and to avoid open hostilities and finger pointing, which are both inevitable at such a meeting where emotions are high and the doctor presenting “feels like a failure,” in Singarayar’s words. The purpose of an M&M conference is to learn from a mistake so other doctors don’t repeat it. It creates a safe space in which to fully analyze and diagnose failure.

The paper that presented the idea of post-mortem meetings, similar to these M&M conferences, being held at new product companies also noted the most common excuses given by innovation leaders for why they are not. They included lack of time, oppressive workloads, “no value in looking backwards,” technical problems too complex for a single discussion, and lack of knowledge into how to actually conduct post-mortems. But, the article’s authors noted that an “objective post-launch review or postmortem replaces hunches and finger-pointing with an open discussion of what happened and what to do differently next time. Even when reviewing a successful new product, people should regularly ask what went well, what went poorly, and what needs improvement, and how they might create an even greater success next time.” Ideas similar to the M&M conference included “celebratory wakes,” prizes for the failures that lead to the most learning in the organization, among others. Effort must always be put into transforming failures into Manukonda’s idea of “brilliant failures.”

The Future of Failure

Failure will always be with us. That is the future of failure. But if we can understand how to organize our companies to better prepare for and handle failure, we can advance the effectiveness of our respective innovation cultures. Learning from failure is critical. IRI wants to help. Our ROR working groups explore myriad topics every year. This year, we are presented with an opportunity to dive into this all-too-relevant topic of dealing with failure and how to transform our failures into “brilliant failures” that help us learn and grow. Interested in participating? Contact Lee Green at green@iriweb.org.