Innovation comes from failure, says Severine Le Loarne, senior professor of innovation management and entrepreneurship at the Grenoble graduate school. “All major product innovations and process innovations come from failure.” When it comes to companies, however, virtually all of them talk about innovation, but not all of them are open to risking three principles of management excellence: time, money, and reputation.
If a group of people within a company decides to make a disruptive innovation and tries to get the idea to the very end, they will have to go through an intense Via Crucis. In general, most companies suffer from the lack of visionary leaders who take the company and its employees to an important strategic position. And there are even those who have such leaders, but the middle managers are not inspired by them and continue to follow the rules laid down that are based on predictability and efficiency.
This is a suggested equation for most of companies which fears innovation: Loss of Time x Capital x Reputation – (Uninspired Leadership / Boss-Slave relationship)2 = less innovation. Many companies can not sustain themselves in the long run and disappear, not because they have not innovated, but for having had a culture of not embracing failure with a mindset and culture willing to fail to create something new and valuable in the eyes of the client with capacity to scale fast and the lowest possible cost. But how to do it without putting the existing business in jeopardy?
What is the solution to hack this equation so that the culture of embracing failure builds a more open path for a company to innovate and generate more value to their market? According to Salim Ismail, one of the co-founders of Singularity University, there is an immune system in the company, whose antibodies attack any attempt to innovate. According to Ismail, the external metabolism is faster than the internal metabolism of the company, which is based on business models that follow slow cycles of the market. In this way, accelerate the internal metabolism is absolutely a priority through the joining of small and thoughtful transdisciplinary teams, under the blessings of the high visionary leadership, with a massive transformative purpose, higher and ambitious than the company’s vision. Because MTP aligns the organization, it creates a shared sense of direction and attracts the people the company needs to achieve that purpose. Basically, intelligent and intentional leadership is essential to survival.
One of the alternatives to generate new business models and transformative opportunities is to create spaces where the failure is celebrated, or better, the attempt to kill their own business before others do. This model leads to experimentation to find a business model that leverages abundance, which creates the need for new tools and practices to manage this abundance. “Failure is a Gold Mine!” proclaims Ratan Tata when he established the prize for the best failed idea to spark innovation and keep the company from avoiding risks.
This space, however, may not be within the company. In fact, it can be physically away, an unknown place, with people dedicated to such an attempt. With this effort, the bad reputation that comes together with wonderful ideas and bad execution can be contained. The high availability of mothership resources are kept away (less money, less perks, less distractions, thus less invested money) and the ideas influx/development cycles can be reduced (focus on the problem to be solved). Time is also a real hard component to deal with, especially when doing something from scratch, but the willing to kill an idea as fast as possible can enable more learning. So, this iterative process may lead to a good idea execution. If an idea survives this and proves itself valuable for all stakeholders and the market, it can come back to the company’s core and be scaled with the resources, knowledge and brand reputation, either as a solution to something already in place or even as an option to create a new business line. Mater artium necessitas (the mother of the invention is the need) defines the essence of entrepreneurship. We must be aware of all historic bias people have in order to overcome a big fear of failure, which leads to another hard equation to be solved (outside of the purpose of this essay).
As long as companies do not embrace failure with a openness mindset, rewarding it for being innovative as quickly as possible without losing resources or reputation, without guidance based on a shared purpose and tools to create something highly valuable to their clients with reasonable costs, we will continue to witness people who are afraid of innovating and companies with their business model being shattered by numerous competitors and the ultimate disappearance of the them.
McGrath, Rita Gunther. HBR April 11, 2011. Failure Is a Gold Mine for India’s Tata. As seen in May 19th 2019: https://hbr.org/2011/04/failure-is-a-gold-mine-for-ind
Higginbottom, Karen. Forbes August 3rd, 2017. Why The Ability To Fail Leads To Innovation. As seen in May 19th 2019: https://www.forbes.com/sites/karenhigginbottom/2017/08/03/why-the-ability-to-fail-leads-to-innovation/#eb302bf36f60
Toreto, Tonny. HuffPost August 20th, 2017. 5 Non-negotiable Attributes of Visionary Leadership. As seen in May 19th 2019: https://www.huffpost.com/entry/5-nonnegotiable-attribute_b_11582196
Ismail, Salim (2018) Exponential Transformation 1st edition, Diversion Publishing Co, New York.