Winter
2014
Point of View: Theodore Forbath
FAILURE
IS AN INEVITABLE outcome
of operating in an uncertain environment, which is why so many attempts at
innovation go awry these days. However, some of the most successful
organizations have embraced this fact — and the opportunity to learn from
failure, thereby improving their innovation track records.
Leading
organizations, from Apple to Google and beyond, have learned from
early-stage failures. A classic example is Apple’s Newton PDA tablet in the
1990s, a flop whose core concept eventually found its way into the iPad. Or the predictable user furor over nearly any
new Facebook feature, which eventually gets re-cast
by the company as ‘market research’ or ‘design validation’.
Learning
from failure isn’t a new idea. A decade ago, when Henry
Chesbrough of the Haas School of Business at UC Berkeley wrote his
groundbreaking book Open Innovation, he showed that corporate
failure can lead to fresh opportunities. Still, in today’s business culture —
where the predominant goal is often to avoid failure and reward success — it
can be difficult to view failure as something that adds value.
A new
breed of organization is emerging that embraces failure as
an actual goal. For example, the Generic Infusion Pump project, a
collaborative effort between the University of Pennsylvania and the Food
and Drug Administration, recently designed a drug-delivery system ‘in reverse’: they
initially concentrated on brainstorming as many potential failures as possible,
and then pivoted to designing ways to avoid them.
Harvard
Business School Professor Amy Edmondson —
one of the world’s leading researchers on the topic of organizational failure —
categorizes it into three types:
•
Preventable,
•
Complexity-related, and
•
Intelligent.
In this
essay I will focus on intelligent failure and
show that it is an essential component of the R&D process.
Experimentation
for the purpose of learning and innovating — a mandate central to the concept
of intelligent failure — allows for the intentional allocation of resources for
exploring product and service opportunities. Failure in such cases can be seen
as an acceptable by-product of innovation, and businesses that are able to
quickly assess and learn from these failures will be more innovative than those
that don’t.
Intelligent
failure was originally described by Sim Sitkin of
Duke University as a process akin to the scientific method. Other academics are
finding it to be a key element in the innovation process. Edward
Hess and Jeanne Liedtka, professors at the Darden
School of Business at the University of Virginia, report that in their combined
17 years of innovation research, organizations known for their successful inventions
understand that failures are a necessity “up to 90 per cent of the time.”
In most
organizations today, various facets of the product development processes
manifest the concept of intelligent failure. However, they are often
re-contextualized outside the sphere of failure as ‘pilot product launches’, ‘beta
software releases’ or ‘customer feedback sessions’. For its part, the company I work for [frog]
has embraced the concept of ‘intelligent design’, frequently using rapid prototyping
as a mechanism for validating product or service concepts so that failures can
be identified and addressed iteratively and early in the product definition process.
Recently,
we have been rapidly prototyping new mobile money services in Africa and Asia.
This process involves bringing an interdisciplinary team of strategists,
user/design researchers, designers and technologists into the field in the earliest
part — the generative stage — of the innovation process. The team uses ethnographic and immersive
research methods to gain insights about user needs, behaviours and motivations
that inspire new ideas. These are translated into low-fidelity prototypes that
can then be evaluated with endusers. With
an interdisciplinary team, this process of insight generation, concept
ideation, prototyping and evaluation is transformed from a sequential process
into an iterative process repeated on rapid, daily cycles.
The key
problem in encouraging intelligent failure is this: human nature is highly
averse to the feelings of shame, embarrassment and low self-worth associated
with failure. Employees also often fear
repercussions to their salary and status within the organization. As a result,
common reactions are to deny failure or point fingers and blame others. Based on my work at frog, following are
several recommendations for overcoming the psychological barriers to risk-taking
in your organization.
1.
TRAIN, COACH AND MODEL ‘MANAGED FAILURE’. Organizations
are often hesitant to institutionalize acceptance of so-called failures due to
fear of creating an environment that doesn’t recognize the value of resources
invested, or worse, a culture that doesn’t value ‘winning’. Experiments that build on the concept of ‘managed
failure’ can shift the mindset to accept that failed projects offer learning
opportunities and are part of an iterative process.
Generally
speaking, early-stage innovation experiments are activities planned to confirm
a hypothesis using modest resources. The purpose is to gather new information to
analyze, interpret and apply toward iteration and retesting. Therefore, the experiments should be designed
to represent true-to-life or representative environments, customers and
materials with limited external influences. The purpose is to discover anything
that could go wrong, such as issues in usability, safety, set up and customer
service, before further development or commercialization investments are made.
During
experiments, leaders can coach their team members by asking probing questions
about the reasoning behind setup, execution and analysis. In addition, leaders can
model ‘managed failure’ by testing an idea themselves and communicating results
to the company, welcoming feedback and new ideas for iteration.
At Facebook,
for instance, senior leadership — including CEO Mark
Zuckerberg — tests product designs to make sure that they understand
what elements of Facebook software and user experiences are delivering
meaningful value. Engineers and designers do not merely present their findings
to the C-suite; the C-suite engages in the iteration (and failure) process
directly, to better understand it and make more informed executive decisions.
2.
ALIGN PERFORMANCE MEASUREMENTS. To change the mindset around
failure, leaders must align performance measurements with the acceptance of
failure. People will be more motivated to experiment if they are supported by
their organization through raises, bonuses, promotions and other career opportunities.
During performance reviews, employees in innovation functions should be
evaluated on the effective planning, execution, analysis, communication and
application of learning from their experiments. For entire divisions dedicated
to innovation, performance goals can be set based on the percentage of division
revenue that is generated by new products launches, as well as the broader
impact on the evolution of best practices, intellectual property and learning across
the company.
3.
EMPHASIZE TEAMWORK. Innovation experiments can be stressful and emotional due to
their ambiguous nature. Emphasizing the teamwork aspect encourages shared
credit as well as shared learning opportunities. Toyota,
for example, promotes team bonding through collaborative exercises and rewards
entire teams (rather than individuals) who submit improvement ideas and take
risks toward change. Team members also provide support and encouragement to
each other to mitigate feelings of negative self-worth by documenting new
insights and best practices. It is often important for project leaders to
remind their team members that the purpose of an innovation initiative is as
much about data gathering and analysis as it is about achieving success.
4.
PUBLICALLY EMBRACE FAILURE. Company leaders can
reinforce acceptance of failure by publically celebrating projects that didn’t
quite meet expected results, but that were successful in providing new
learning. Some companies, like Eli Lilly, even
throw parties to celebrate their biggest failure, that is, the project that
involved unknown outcomes and did not meet expected results but led to the
greatest learning for the company. This type of public announcement is an easy
way to communicate to the entire organization the value of managed failure.
5.
ENCOURAGE EXPERIMENTATION WITH UNKNOWN RESULTS. One
way to encourage experimentation across the organization is to set aside time
within employee schedules. LinkedIn, for
example, sets aside one Friday a month, called ‘hackday’, for employees to work
on projects of their choosing. They have
even gone so far as to develop a program called [in]cubator that allows
employees to pitch an idea as a group to senior leadership. If they get the
green light, this team is afforded 30 to 90 days to iterate the idea and
develop a working business model.
At
frog, leaders allocate time for employees to explore the possibilities of
emerging technologies. Most recently, we held an internal, company-wide
competition to conceptualize wearable products that leverage the abundance of data
available to consumers to heighten their everyday experiences.
The
concepts ranged from an interactive friendship bracelet that allows users to
record, relive and share memories, to a pollution mask that directs users to
better pockets of air.
While
our wearable competition did not result in the development of any new products,
the exercise was valuable. The concepts
forced us to consider the design challenges inherent in low-fi, low-cognition
interfaces that many wearable devices will rely on. The knowledge gained from
these innovation experiments has given frog a head start on developing design
principles for emerging, wearable computing devices that are predicted to
explode in usage in the near future.
Another
method of experimentation is to surface prior failures and then ask employees
to re-evaluate them for potential solutions. Employees can conduct small information
gathering sessions to identify what didn’t work the first time, and then test
potential new solutions. Pfizer’s Viagra, for instance, was first created to relieve blood
pressure, and although it failed in initial market trials, it became one of the
most successful failures in history thanks to its ‘side effects’.
6.
CONDUCT POST-EXPERIMENT FEEDBACK SESSIONS. After a
failed project is completed or halted, team members can analyze quantitative
findings through any appropriate statistical program, and then discuss possible
changes to processes or assumptions based on the findings. For example, after any
mission or training event in the U.S. military, a leader conducts an After
Action Review. The group involved in the mission reviews what went well and
should be sustained, what didn’t go well, what was learned, what can be
improved upon and what the action plan is for making changes. Everyone gets the chance to speak up and
provide either general or specific feedback. Even in these high-stress
situations, feedback rules are enforced, including withholding finger pointing.
If the description of an event does involve an individual’s specific actions,
phrasing such as ‘in this instance, this wasn’t the right decision’ is used.
At
frog, we have adopted a similar approach and implemented an end-of-project
retrospective framework to rapidly assess and learn from failures and
successes. This process includes not only project team members, but also client
representatives, so that multiple perspectives are reflected and results are
shared across organizations. This approach has enabled frog and our clients to
develop a shared culture that is accepting of managed failure and that
encourages ongoing innovation.
7.
LOOK FOR ADDITIONAL APPLICATIONS OF FINDINGS. Companies
may gain an advantage by analyzing findings from innovation experiments for
strategic value that goes beyond the initial project scope. For example, frog
worked with a major technology company on prototyping and creating a reference
design for a Home Energy Management System (HEMS). This was subsequently
described as both a failure within the client’s organization (because it did
not result in a product that came to market), and a strategic opportunity to
gain early insights into emerging markets where the client could define new,
industry-specific solutions for an emerging category of network-connected
appliances in the home.
The
HEMS project champions moved into new leadership roles, and their early
insights into the energy management industry helped the company re-think its
long-term vision for a new business unit that was mandated to gain an early
beachhead in the machine-to-machine and intelligent systems markets. The
project leaders formed a new Industry Solutions Group to advise on
industry-specific strategies and solutions, rather than on products. This was
only possible because the client’s corporate culture values the willingness of
its colleagues to experiment, fail and use their experiences to influence the
strategic direction of the organization.
8.
SHARE RESULTS. After analysis, results of experiments should be distributed
across the company to inspire others to apply leanings and further experiment
with the findings. In the U.S. military,
results of after-action reports (AARs) are recorded in Leader Books and
escalated through the ranks if needed. Feedback from AARs is analyzed, and
trends are reported across the military through publications called Lessons Learned reports.
In one
instance, the military studied potential preventable military
deaths and found that some wounded soldiers died because of extremity injuries
and bleeding. As a result, tourniquets were introduced into the field and
medics were taught how to use them. The military then went back to study this
potential solution, and found a significant drop in preventable deaths with no
ill affect from the use of the tourniquet. In share-out documentation, it is
important to state not only what was learned, but also the recommended actions
for change and future testing.
In closing
To overcome the various psychological and organizational barriers
to embracing failure, managers can adopt the methods detailed in this article
and, in doing so, re-cast ‘failure’ as something much more positive:
progressive experimentation.
In the end, progressive experiments allow an organization to
advance towards innovative marketable products or services in manageable
increments that enable rapid course corrections at a lower cost. What leader
wouldn’t want to encourage more of that?
frog
partnered with Visa to develop a portfolio of innovative
financial
services that better meet the needs of base-of-thepyramid
consumers
in Rwanda. frog researchers spent over
1,000
hours in the field learning about consumers’ needs,
behaviours
and motivations. In this image, a researcher is using
a
mobile phone prototype rapidly mocked up the previous day
to
probe a respondent’s attitudes towards trust and loyalty.
AirWave
is one of 12 wearable computing prototypes that
frog
created in 2012 through an internal Studio competition
program.
Airwave is intended to be a connected face mask
protecting
people from air pollution, while collecting location
specific
air-pollution data at the same time. It then feeds
the
pollution data into a smart phone application to visualize
and
share it with a network of like-minded people.
Theodore
Forbath is the Global Vice President of Innovation Strategy at frog,
based in Cambridge, Massachusetts.
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