Don’t be afraid of failure, says Oxford Innovation business advisor Dr Simon Gill. Learn from it and let it make you stronger
Failure. As business people we shudder at the thought of it. But as individuals it is how we develop – making mistakes, learning from them, adapting our approach and moving on. Harnessing this innovation cycle in business is crucial to ensure survival and continued growth.
Many successful companies have been founded on the basis of one innovative concept. Remaining successful however, requires continuous improvement and innovation. Companies who fail to change what they offer their customers and the way they do it often face situations that are difficult to overcome. They can be derailed by external events or overtaken by competitors who gain market share by embracing a development in technology or exploiting a new business model.
The challenge is to sustain the entrepreneurial spirit in a growing company whilst acknowledging that with innovation comes failure. Entrepreneur Steve Blanks coined the phrase “Do you know what they call a failed entrepreneur in Silicon Valley? Experienced.” Learning from failure need not cost you your business – it can be achieved at much lower cost if the right elements are considered:
Google provides “20% time” whereby staff spend 20% of their time on new ideas; staff at WL Gore (creators of GoreTex) spend half a day per week in “dabble time”; and at 3M (from where the Post-it Note originates) staff are given “slack time” in which all staff members are encouraged to trial new concepts. This is done with recognition that most ideas will have no benefit, but amongst them will be a successful one.
We may not be able to devote as much resource to this initiative but we should spend time exploring new products, marketing strategies and ways of doing things. We must remember such initiatives require commitment to invest time and money and a policy of rewarding experimentation as well as success.
Yahoo have an incubator called “The Brickhouse” where staff are free to experiment with new product proposals before being screened by management. This allows ideas to be identified, explored and developed or dropped very quickly. In our own experimentations we must be sure to identify when we have failed in our new initiatives, and do it rapidly. Before beginning, set reviews so that when ideas reach a certain point they are tested against the pre-determined criteria. If the idea meets this target it goes to the next stage of development and if it does not, it is stopped.
Fail on a manageable scale
Forward3D, a web search marketing company, looks for gaps in the market by exploring popular internet search terms for products that fail to attract online advertising. They discovered one of these terms was “parrot cages”. Once identified, a small website is created offering the product for sale and hits to this site are monitored. When sufficient demand is detected, a business is set up to sell the product which is how they became the UK’s largest importer of parrot cages! The websites they create are cheap and as most fail to demonstrate demand this minimises the cost of each failure. Failure should be managed so that it does not cause resource or economic problems for the business. It is important also not to forget that the cumulative cost of multiple failures can be high.
By innovating in this way and taking risks with new ideas we will experience failure. But if we can learn lessons along the way and ensure that this failure can be quick and cheap, the resulting successful idea will assure our place in a rapidly changing business world.
This article first appeared in the August/September 2011 issue of Business Cornwall magazine