Failing Your Way to Success
Innovation has gone from being a Silicon Valley buzz word to necessary in corporate culture. If yesterday’s winning strategy could be described as “staying the course” or with the saying, “if it ain’t broke don’t fix it,” today’s would be “break and rebuild it or someone else will.” Grappling with what this truly means and how boards can support their organizations in pursuing it is a bit more nebulous. But it doesn’t have to be.
I define “innovator organizations” as those companies that foster new ideas; continuously improve existing processes, products, and services; and embrace failure as a key step to success.
The last point may seem counterintuitive, but it shouldn’t be. While disruptive innovation is absolutely a thing (think iPhones, Uber rides, and generative artificial intelligence), most innovation happens over time. Failures generate course corrections to incorporate customer and employee feedback, steering new ideas to their viable end-states.
Failure is critical to this process. It is where lessons about what is working and what is not come to bear. It is the great revealer of blind spots and miscalculations. It is business’s blessed redemption.
Simply put, most innovation fails…until it doesn’t. I call it “failing your way to success.”
The Role of the Board
Innovation won’t succeed without leadership support and proper oversight. Directors can help innovation thrive within a company in the following four ways:
Hire management teams and leaders who support innovation. It feels trite, but the most important thing directors can do to support innovation is hire leaders who understand and employ innovation theory and techniques, and then give them permission to pursue them. This means incorporating key questions in the hiring process that address innovation such as, How do you foster innovation? What is your perspective on the role of failure in innovation? Can you tell us about a time you used design-thinking to innovate? It also means supporting those leaders through expected rounds of failure and innovation.
Support failing fast. A key aspect of design thinking processes is allowing for rapid prototyping to answer key questions about whether a process, product, or service is meeting customer or user needs. Perfection is not the goal…progress is. Empower leaders to fail fast to learn fast to improve fast.
Treat failures with curiosity. Rather than playing the blame game when an initiative or product fails, approach it with curiosity. What drove the failure? Was the new product or process too early? Too late? Was it too expensive, or marketed to the wrong buyer? Did it fail to deliver value? Did it require too much support? Posing these types of questions to management when failure occurs creates a positive feedback loop. Failure, or even just deficient performance, yields lessons, lessons yield improvements, and improvements lead to success, one failure at a time.
Pressure test existing plans. Directors may want to consider shifting oversight into a higher gear for innovation projects, not because they fear failure, but because they should demand rigor alongside innovation. Natural innovators can sometimes be overly optimistic about their new or improved products or services. It is the board’s job to make sure these rose-colored glasses don’t oversell market feasibility or underplay real risk. Poke holes in market analyses, requirements, and business plans for each new product, process, or service before it launches.
No one wants to fail, but I’d argue that’s because we’re thinking about failure in the wrong way. By repositioning failure as a critical step in the innovation process, companies can fail all the way to success.
Alvarez & Marsal is a NACD partner, providing directors with critical and timely information, and perspectives. Alvarez & Marsal is a financial supporter of the NACD.