Failure is unavoidable for innovation teams, and the normal rate can be up to 80%.
Such a failure rate sounds appalling, but not all failures are terrible. Done correctly, innovation failure can have extremely positive consequences.
What is a good failure? Usually its one where a project has taught the team something they weren’t aware of before they started work. Now, of course, such lessons will have cost the team the amount of money they’ve already spent on the project. Good failures tend to happen whenever a team cancels a project early.
In an organisation that has a culture of celebrating good failure, the money that’s theoretically been wasted on a stopped project is seen as an investment that’s useful in teaching a team how to make something happen the next time.
In contrast, of course, a bad failure is one which hasn’t revealed anything new at all, AND has wasted a large amount of money by not being stopped early enough.
For many organisations, its hard enough to celebrate good failures. So you can imagine how very difficult things become for innovation people when they have to explain a series of bad failures. Most of the time, a series of bad failures will be all it takes to kill an innovation programme once and for all.
On the other hand, some organisations are excellent at accepting failure as success. These are the organisations that have developed sophisticated innovation processes that recognise that failure is inevitable.
Let’s examine the math of this.
On average, if four of the five things tried goes wrong, then the one remaining thing that worked has to be good enough to pay for the others. Failure to manage this basic equation means that an innovation programme will never be able to justify itself financially.
What is the best way to ensure this doesn’t happen? Obviously, by concentrating attention on maximising the number of good failures – those which don’t cost much.
The natural corollary of this, of course, is that you should delay investment in new things as long as possible – certainly long enough to ensure you’ve removed as many risks of failure as possible.