Success Behind Failure: Innovation Comes From Mistakes

Big investors know this and for this reason, they are wary of those who have never failed: when they entrust their money to someone, they tend to choose an entrepreneur who has already made mistakes because they trust that he has learned something. But contemporary society loves success stories.

Failure has always been considered the antithesis of success, and this dates back to ancient times. In fact, in Greece of 1800s. C. the "failed" merchants were forced to sit in the square with a basket over their heads. In pre-modern Italy, on the other hand, entrepreneurs who held outstanding debts were stripped naked and mocked by the crowd in a public square. In the 17th century, failed entrepreneurs in France were brought to the center of the market, where their bankruptcy was publicly announced. In order to avoid their immediate arrest, they had to wear a green beret in order to be recognized and distinguished as "failures" by the rest of the citizens.

It is clear that the examples described above are extreme but it is equally clear how these ancient cultures have influenced entrepreneurs and companies up to the present day. When failure is "punished", there is a tendency to repress innovation and business creation, the engines of economic growth in any nation.

There are therefore different reactions in the way of dealing with bankruptcy:

In America, the most common reaction to the failure of an activity is to react positively to it and adapt to market changes. On the contrary, in Europe, the tendentially most widespread reaction of companies is to surrender to their own failure and not to approach innovation, be it technological or organizational.

In 2016, Amazon founder Jeff Bezos wrote in his annual letter to shareholders that:

"Failure and innovation are inseparable twins. To innovate, you have to experiment and if you know in advance that things will go well it is not a real experimentation".

“At Amazon, we have to grow the size of our failures as the size of our company grows,” he said. “We have to make bigger and bigger failures — otherwise none of our failures will be needle movers. It’s a very bad sign over the long run if Amazon wasn’t making larger and larger failures. If you do that all along the way, that is going to protect you from ever having to make that big hail mary bet that you sometimes see companies make right before they fail or go out of existence.” [1]

The same is true for Richard Branson, the tycoon of the Virgin group, who says:

"The people and businesses generally considered successful or luckier are usually also those most ready to take risks and therefore fail."

Branson launched Virgin Atlantic Airlines in 1984 to give passengers a better flying experience. He saw a big opportunity but had little experience, and his new venture almost failed before it got off the ground. During the initial test flight of Virgin’s only plane, a rented Boeing 747, a flock of birds flew into an engine, causing extensive damage. The airline couldn’t get certified to start carrying passengers without a working plane, and it couldn’t get money for repairs without being certified. Instead of panicking or giving up, Branson stayed optimistic. Working fast, he restructured his companies and pulled money from other ventures to get repairs done quickly. His airline got the certification it needed, and Virgin’s inaugural flight from Gatwick to Newark was a success. [2]

Failure reduces costs and encourages collaboration: research and innovation in science call for failure, which must be taught, nurtured, understood and integrated into one's scientific paradigm.

Making mistakes and innovating are the two sides of the same coin, for this very reason it is necessary to use managerial practices that stimulate and stimulate experimentation and are willing to accept mistakes and errors. This is where the lever of experimentation comes into play.

It is only through continuous experimentation that it is possible to acquire knowledge and understand if the idea works or not, if the hypotheses that characterize it are validated or not.

Exponential Organizations combine bottom-up and top-down design in order to develop innovative ideas from the bottom up and gain approval, ratification and support from above. Experimenting with ideas, products, services and business processes, and in any case making the best ideas "win", regardless of where they come from. The only possible strategy for exponentially growing organizations is therefore that of scalable learning, i.e. the ability to learn quickly and on a large scale through data-driven tools.

Fail fast. Fail cheaply. Fail often. It is one of the most repeated and widespread mantras of the Lean Startup approach among those involved in innovation and that we can find in many slides by experts, consultants, and teachers. This would allow an organization to encourage creativity, a predisposition to experimentation and learning, openness to the proposition, and evaluation of new ideas, thus decreasing the risk of ostracism towards innovation.

Resources:

[1] Failure and innovation are inseparable twins’: Amazon founder Jeff Bezos offers 7 leadership principles, Taylor Soper, October 28, 2016  https://www.geekwire.com/2016/amazon-founder-jeff-bezos-offers-6-leadership-principles-change-mind-lot-embrace-failure-ditch-powerpoints/

[2] What Richard Branson Learned From His 7 Biggest Failures, Alp Mimaroglu July 18, 2017 https://www.entrepreneur.com/article/295312