It is generally accepted that innovation involves risk. In the more enlightened organizations it is also clear that failure should be accepted as a consequence of playing the innovation game. It’s a bit like sport. You can’t win all the time, but it doesn’t mean that you change the whole team if you lose one game. Equally, embracing failure is going too far.
Of course there are caveats; quite often everybody does most things right in the right way and the right decisions are taken at the right time, but the innovation doesn’t work for reasons outside the company’s control. I call this “competent failure”. If on the other hand, the same mistakes are made repeatedly, it’s time to change the team to avoid further instances of incompetent failure.
Experience will identify areas where things could have been done differently. The company should learn from that experience, including mistakes that were made. Unless you are able to invent the mythical retrospectoscope, it will be difficult to predict all the mistakes and wrong decisions.
But what is failure? It should be obvious, shouldn’t it? Well, if it’s analysed further, we need to consider two areas. Firstly, how the innovation has failed; and secondly, when the failure occurs.
How Innovation Fails
There are many ways in which innovation projects can fail; below are just a few examples.
Quite often the technology fails to live up to expectations, or does not deliver the benefit it originally promised. Depending on the novelty of the technology, the project may be facing challenges for the first time and therefore the risk of failure can be pretty high.
The customer acceptance of the product may not be as high as expected in development. This can happen when insufficient or inappropriate market research is done; there is an unexpected market entry from a competitor; or before launch if the project doesn’t meet the company benchmarks.
If the wrong type of, or insufficient resource is allocated to an innovation project, there will be an increased chance that it will fail. This will probably happen before launch but may happen afterwards, if the reduced resource means too many corners have been cut.
Finally, poor execution can result in the failure of an innovation to gain traction in the market place. Often the marketing plan that occurs in reality is different from that on which the launch was justified so – surprise, surprise – the product is a failure.
When Innovation Fails
1. Before launch – Many projects never see the light of day, usually unseen by the external world. This is where the mantra “fail fast, fail cheap” is most applicable. It avoids the cost of launch on something that won’t succeed. The resources can be moved to something more likely to make a difference.
Failure in this stage can still hurt. A new drug that fails at the end of Phase III clinical trials will be a very expensive and painful blow, quite often throwing smaller companies out of business.
2. Soon after launch – If a new launch fails to take off in the first year or two, even if several attempts are made to make it succeed, then determination should sensibly give way to an acceptance of defeat. The right decisions may have all been made at the right time, but still the innovation doesn’t work. You should learn from it and move on.
The “fail fast, fail cheap” approach is very relevant here. In many cases, a test market can help a company to learn, adapt and then scale up. There are risks, for example a test launch sends clear signals to the competition, which may then be able to damage the scaled up launch.
3. A long time after launch – As was pointed out in a recent Innochat framing post, 78% of corporate initiatives cease to exist 7-10 years after launch. That number feels about right (I know, I’m a scientist….) from experience. But is that the fault of the original developers? In development and launch phases, it’s almost impossible to predict how markets will develop, how consumer attitudes will change and what initiatives will come from the competition.
In some markets, e.g. mobile phones, it will be tough to find a successful product over seven years old. Does that mean that all the phones launched were failures? Of course not.
So my conclusions for failure and innovation are:
1. Fail fast, fail cheap. Yes, I know it’s a commonly used phrase, but it’s highly relevant, particularly for pre-launch and early launch phase projects. Establish performance targets (including learning) for test markets so that you can judge whether to proceed or not.
2. Forget about long-term sustainability. This may sound strange, but the priority should be an absolute focus on launching the right product to the right people at the right time; then supporting it in the right way. Like many areas in innovation, there should be an understanding of the eventual destination but a focus for action on the immediate steps.
3. Support innovation teams who fail competently. Change the ones who fail incompetently.
4. Introduce active learning programs for both successful and unsuccessful projects.
Above all, innovation is a game in which you should expect to lose occasionally. How you react to defeat will help to shape your attitude to future games. And if you find you’re winning nearly all your innovation games, you’re probably not taking on enough hard challenges. Not taking risks is a big risk.
image credit: Jeff Djevdet
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Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.