Failing Smart Drives Innovation


When it comes to launching innovative products or programs, failure is one word few executives want to be associated with.  But in reality, failure can be a significant catalyst for innovation.  The key lies in how the organization treats the failure and then learns from it.  Benefiting from failure is more than a cliché; there is solid academic thinking and corporate experience that backs it up.

Baba Shiv, a Professor at the Stanford Graduate School of Business, conducted research at how people deal with failure.  According to Shiv, all organizations consist of two types of people.  The type 1 mindset is fearful of making mistakes and is risk-averse.  They associate failure with shame and pain. Most individuals within corporations display type 1 thinking. In a firm dominated by type 1 personalities, innovation is generally nothing more than incremental change. Conversely, the type 2 mindset is fearful of missing out on opportunities. For them, failure is not viewed as bad; it can actually be helpful. From so-called “failures” emerge those “aha!” moments of insight that propels forward the innovative process and leads to breakthrough change.  

Outside of overhauling the employee base, how can companies make the shift towards a type 2 mindset?

Use rapid prototyping

One approach to overcoming risk-averse behaviors is to engage teams in rapid prototyping – a process whereby brainstormed ideas are quickly developed into a physical model or a mock-up of a solution. Moving rapidly from concept to something more concrete allows individuals to visualize the outcome of their ideas as well as more richly engage customers or other parts of organization.  Since few prototypes end up as the final solution, rapid prototyping teaches that failure is actually a vital part of the process and not a negative outcome. This rethink helps the brain associate “failure” with more positive emotions and propels forward the course of innovation.

Rapid prototyping is a powerful tool but it has its challenges.  For example, individuals may become wedded to certain prototypes and be reluctant to jettison them.  Moreover, working through multiple iterations can end up being an exhaustive practice.

Provide a license to fail

Companies like P&G, 3M and Google expect and often want poor concepts to fail as quickly as possible. Their management systems are designed to filter out poor or unrealistic ideas while providing additional resources to support higher potential concepts.   These firms also create an innovation culture based on trust, open communication and critical thinking.  They do not penalize failure but expects individuals and the firm to learn from it.  Understanding that breakthroughs are often unexpected, environments like this allow and incentivize scientists and line of business managers to reset their assumptions around the concept or technology, either reframing its appeal or helping it be leveraged to other solutions. 

Institute Desperation

A powerful yet reluctantly deployed strategy towards institutionalizing type 2 thinking is to implant a sense of “desperation.” The two most common ways to trigger desperation is by cutting resources or reducing lead times.  When an atmosphere of desperation is created, individuals are forced to be more innovative to achieve their goals.  In other words, necessity becomes the mother of invention. In one example, Anheuser-Busch InBev successfully uses desperation by reducing advertising budgets to drive media effectiveness and efficiency. Following a period of desperation, the team is spurred to look at new, less expensive ways of communicating its message. 

In most companies, managers use strategies that are opposite to desperation, such as inspiration, incentives and incubators, to stimulate innovation. Conceptually, this approach makes sense but it often doesn’t work in practice. While innovation is often stimulated, its path usually ends at the desk of a risk-averse type 1 manager. Furthermore, fostering desperation can be a risky endeavor.  Individuals may never come up with the desired solution or results.  As well, a sense of scarcity can incite internal strife.

It is time organizations relooked at their approach to innovation. The sooner firms realize that failure is not bad, the quicker they will be on their way to breakthrough innovation.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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3 comments so far

  1. […] and that real breakthroughs took a long time. This required both management and researchers to exhibit patience – having the time to do what was necessary – and to be practical, working on things with a commercial focus in […]

  2. […] pivot came in late 2003. Importantly, LEGO did not jettison its innovative culture.  Instead, it learned from its failures.  The most valuable lesson was that a disciplined organization and management system was critical […]

  3. […] pivot came in late 2003. Importantly, LEGO did not jettison its innovative culture.  Instead, it learned from its failures.  The most valuable lesson was that a disciplined organization and management system was critical […]


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