Companies often develop crisp stories about how they have nurtured a “culture of innovation.” They say that all their employees can be innovators, and even take some initiative to move their ideas forward. Not only that, they claim, but failures are tolerated, if not celebrated. Failure is, after all, an integral part of the innovation game.
That may be, but as Financial Times economics columnist Tim Harford points out in his new book, there is one small problem: Contrary to the gospel of open innovation and dorm-room programmers, failure is rarely free. In fact, it’s becoming more and more expensive.
When real dollars are at stake, there is a big difference between a bad failure and a good one. A bad failure is expensive and emotional; it results from a willingness to experiment without the discipline to learn. A good failure, by contrast, comes as quickly and as inexpensively as possible; it is managed through a rigorous process of testing clearly stated hypotheses.
It is not easy to run disciplined experiments. But a company without such discipline — and without a way to reward innovators for only good failures — is a company without a true culture of innovation. It is a company that spends money aimlessly in hopes of stumbling upon success, instead of one that smartly and swiftly adapts.
— Chris Trimble
An excerpt from Chapter 3 of Adapt: Why Success Always
Starts with Failure
Look at the world’s leading companies and consider how many of them — Google, Intel, Pfizer — make products that would either fit into a matchbox, or have no physical form at all. Each of these large islands of innovation is surrounded by an archipelago of smaller high-tech start-ups, all with credible hopes of overturning the established order — just as a tiny start-up called Microsoft humbled the mighty IBM, and a generation later Google and Facebook repeated the trick by outflanking Microsoft itself.
This optimistic view is true as far as it goes. Where it’s easy for the market to experiment with a wide range of possibilities, as in computing, we do indeed see change at an incredible pace. The sheer power and interconnectedness of modern technology means that anyone can get hold of enough computing power to produce great new software. Thanks to outsourcing, even the hardware business is becoming easy to enter. Three-dimensional printers, cheap robots and ubiquitous design software mean that other areas of innovation are opening up, too. Yesterday it was customised T-shirts. Today, even the design of niche cars is being ‘crowd-sourced’ by companies such as Local Motors, which also outsource production. Tomorrow, who knows? In such fields, an open game with lots of new players keeps the innovation scoreboard ticking over. Most ideas fail, but there are so many ideas that it doesn’t matter: the internet and social media expert Clay Shirky celebrates ‘failure for free.’
Here’s the problem, though: failure for free is still all too rare. These innovative fields are still the exception, not the rule. Because open-source software and iPad apps are a highly visible source of innovation, and because they can be whipped up in student dorms, we tend to assume that anything that needs innovating can be whipped up in a student dorm. It can’t. Cures for cancer, dementia and heart disease remain elusive. In 1984, HIV was identified, and the US health secretary Margaret Heckler announced that a vaccine preventing AIDS would be available within a couple of years. It’s a quarter of a century late. And what about a really effective source of clean energy — nuclear fusion, or solar panels so cheap you could use them as wallpaper?