Failure of Innovation Can Be Good

Failure is unavoidable for innovation teams, and the normal rate can be up to 80%.

But not all failures are bad. Some can have extremely positive consequences.

A good failure has the characteristic of teaching innovators something they didn’t know before. Usually, such lessons will have cost a small amount of money in development before a project is killed. And the best failures are those when this amount is the smallest possible. Good failures tend to be those when the team has cancelled a project early.

In an organisation that has a culture of celebrating good failure, the money that’s theoretically been wasted on a stopped project is seen as an investment that’s useful in teaching a team how to make something happen the next time.

In contrast, of course, a bad failure is one which hasn’t revealed anything new at all, AND has wasted a large amount of money by not being stopped early enough.

It is hard enough to celebrate a good failure, so you can imagine how difficult things become for innovation teams when they’re forced to explain how they allowed a series of bad failures to occur. In fact, a string of bad failures will usually result in innovation programmes getting cancelled altogether.

On the other hand, some organisations are excellent at accepting failure as success. These are the organisations that have developed sophisticated innovation processes that recognise that failure is inevitable.

Now, let’s do some math.

On average, if four of the five things tried goes wrong, then the one remaining thing that worked has to be good enough to pay for the others. Failure to manage this basic equation means that an innovation programme will never be able to justify itself financially.

So what’s the best way to ensure financial results from innovation? Clearly, by focussing attention on maximising the number of good failures – which are those that don’t cost very much.

The thing that follows from all this, of course, is that big investments in new things should be delayed as long as possible. The delay should naturally be used to eliminate as much risk as possible before big money is spent.