Failure - The Mother of Innovation

by Paul Sloane

In the 1950s the Jacuzzi brothers invented a whirlpool bath to treat people with arthritis. Although the product worked, it was a sales flop. Very few people in the target market, sufferers from arthritis, could afford the expensive bath. So the idea languished until they tried relaunching the same product for a different market - as a luxury item for the wealthy. It became a big success.

Very often the best way to test an idea is not to analyze it but to try it. The organization that implements lots of ideas will most likely have many failures but the chances are, it will reap some mighty successes too. By trying numerous initiatives we improve our chances that one of them will be a star. As Tom Kelley of IDEO puts it:


"Fail often to succeed sooner."


Honda Motor Company entered the US market in 1959 with its range of low-powered motorcycles. It endured failure after failure as it learned the hard way that little motorcycles popular in the Tokyo suburbs were not well received on the wide open roads of the USA. They eventually brought out a range of high powered bikes that became very popular. Soichiro Honda, the founder of Honda said:


"Many people dream of success. Success can only be achieved through repeated failure and introspection. Success represents the one percent of your work that results from the 99 percent that is called failure."


What makes Silicon Valley so successful as the engine of high-tech growth? It is the Darwinian process of failure. Author Mike Malone puts it like this:


"Outsiders think of Silicon Valley as a success, but it is, in truth, a graveyard. Failure is Silicon Valley's greatest strength. Every failed product or enterprise is a lesson stored in the collective memory. We don't stigmatize failure; we admire it. Venture Capitalists like to see a little failure in the resumes of entrepreneurs."


In order to develop the concept of the benefits of failure, Penn State University has a course for engineering students called Failure 101. The students have to take risks and do experiments. The more failures they have, the sooner they can get an A grade!

Many great successes started out as failures. Columbus failed when he set out to find a new route to India. He found America instead (and because he thought it was India he called the natives Indians). Champagne was invented by a monk called Dom Perignon when a bottle of wine accidentally had a secondary fermentation. 3M invented glue that was a failure - it did not stick. But it became the basis for the Post-it note, which was a huge success.

Scientists at Pfizer tested a new drug called Viagra, to relieve high blood pressure. Men in the test group reported that it was a failure at stopping high blood pressure but it had one beneficial side effect. Pfizer, the manufacturers, investigated the side effect and found that the drug had a dramatic effect on men's sexual vigor. Viagra became one of the most successful failures of all time.


Failure as a stepping stone

Even if the failure does not lead directly to a success it can be seen as a step along the way. Edison's attitude to "failure" is salutary. When asked why so many of his experiments failed he explained that they were not failures. Each time he had discovered a method that did not work.

Tom Watson Jr. was the legendary President of IBM who led them through the high-growth years when they were the most admired company in America. He encouraged what he called 'wild ducks', people with unconventional and disruptive ideas. On one occasion a Vice President who had lost the corporation $10 million on an experiment which failed was called to Watson's office. The VP was expecting to be fired so he took his letter of resignation with him and presented it. Watson refused to accept it. "Why would we want to lose you?" he said. "We've just given you a $10 million education."

Another boss who welcomes failure is Richard Branson, founder of the Virgin Group. According to his publisher, John Brown, "The secret of (Branson's) success is his failures. He keeps opening things and a good many of them fail but he doesn't care. He keeps on going."

In 1985 Coca Cola experimented by introducing "New Coke" - a new flavor to replace "Classic Coke." It had fared well in consumer tests but it was a marketing disaster and flopped. Coca Cola had to eat humble pie and reintroduce Classic Coke. Did this great disaster do any long-term harm to Coca Cola? Probably not. Did the senior managers and marketing professionals responsible for this failure all get fired? No, they did not. It was an experiment that failed but Coca Cola survived, learned and prospered. As the great philosopher Nietzsche put it:


"That which does not kill me makes me stronger."


Bill Gates stood down as CEO of Microsoft so that he could focus more time and energy on strategic leadership of the company's development efforts. He took intense interest in Microsoft Research, the 600 person think-tank he set up in the early 1990s to push the envelope of software technology, user-interface design, speech recognition and computer graphics. As one of his colleagues put it, "Bill isn't afraid of taking long-term chances. He understands that you have to try everything, because the real secret to innovation is failing fast."


Conclusion

The innovative leader encourages a culture of experimentation. You must teach people that each failure is a step along the road to success. To be truly agile, you must give people the freedom to innovate, the freedom to experiment, the freedom to succeed. That means you must give them the freedom to fail, too.


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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.

Bill Gates Coming out of Retirement?

by an Anonymous Microsoftie

When I saw the op-end piece in The New York Times this morning by Dick Brass, I thought it was time to submit an article somewhere about this pattern of facts. I came across Blogging Innovation today and thought it might make an interesting place to cast some daylight on the possibilities. I shouldn't get into any trouble because I am just stating facts and asking questions, and I don't even mention certain names.

So here goes...

Just in the past month there have been some really strange things that by themselves might not amount to much, but if you look at the facts as a collection, it starts to make one wonder if something is up over at Microsoft. Microsoft is in fact my employer and I am the first to admit that I don't know of any secrets on this subject. I am just seeing some odd patterns, and I started to wonder if they add up to Bill Gates coming out of "retirement" to fix Microsoft.





The facts exist in a couple of different categories, and the first is the signs of trouble internally:

1. Systemic problems. In The New York Times today, a former Microsoft executive wrote a lengthy opinion piece called "Microsoft's Creative Destruction" where he lays out some vivid examples of problems within the company - specifically that the Office and Windows franchises have run their course and there are no obvious heirs, despite several attempts that were quashed for personal and political reasons. Very compelling. But it does beg the question - why now? What is the reason for that op-ed piece?


2. Executives are leaving. CFO Chris Liddell did an amazing job as CFO and just left to be the CFO of General Motors, where it has been widely speculated that he will be their next CEO. Senior Vice President Bill Veghte, an almost 20 year veteran also just resigned because he also wants to be the CEO of an organization. Again, why now? Were Liddell and Veghte told that they weren't candidates to be the next CEO? There aren't many people who can come in and take that job.


3. Wall Street disapproval. With a brand new CFO, last week Microsoft announced much higher than expected profits, and the stock dropped. Why? Some have speculated that any time a company like Microsoft misses expectations in either direction that substantially, it is a sign that they don't have a real handle on what's going on. Who has the credibility to get Wall Street excited about Microsoft, there are not a lot of people who could do it quickly.


4. Mostly flat stock for ten years. There have been some big fluctuations, but if you look back at the last ten years, the stock has been basically flat, and that isn't sustainable. Could you imagine what the stock would do if Bill Gates came back to be the CEO?

The other side of this that's intriguing is that Bill Gates has taken on a dramatically more public persona related to his foundation work, from Twitter, to Facebook, to The Daily Show (where he was engaging and funny). Here are some facts that are interesting:

1. Foundation CEO is a close, trusted friend of Bill. Last year, former Microsoft executive Jeff Raikes took the job as CEO of the Bill and Melinda Gates Foundation, and for some odd reason agreed to a really big salary even though he made a huge pile of money at Microsoft. So if Bill puts one of his most trusted former Microsoft execs in charge of the foundation, that then makes it possible for him to make time to go fix his "baby" - Microsoft. Why wouldn't Raikes be the one pushing all of these messages for the foundation?


2. Bill is rebranding. For many years, Bill Gates had a bit of a Darth Vader reputation. People literally called Microsoft "the evil empire" and Bill was the leader for all of the anti-competitive things that were alleged to have happen in those days. Now Microsoft is seen by many as irrelevant in discussions about Apple, Google, and IBM. So now, Bill goes out and talks about all of the incredibly cool things his foundation is doing, people are becoming "fans" of his on Facebook by the thousands every day, he's being buddy-buddy with Jon Stewart and he is becoming really cool and really popular, while still being one of the smartest guys in the world. What a great story to have Joe Cool go in to fix his ailing "baby"


3. It wouldn't be the first time. Michael Dell came back to Dell, Jerry Yang came back to Yahoo!, and there are others who have come out of retirement to fix their creation (though not always with storybook endings). Bill is only 53, he's still not that old and he has all of the credibility in the world to come back in and reinvigorate the masses. Why wouldn't he do that with the foundation in the competent hands of Jeff Raikes and Bill's wife Melinda?

As I said, I haven't heard any rumors about this, but it certainly makes for an interesting narrative and it would explain a lot of the above. Personally, I think it would be great to see and Microsoft people would do backflips to have Bill back at the helm, Google would cringe, and Wall Street would cheer and I would bet on a storybook ending.

So hopefully Bill is considering coming out of retirement, and he can take Bill Brass's op-ed piece as input into imagining what is needed at Microsoft.


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Our Anonymous Microsoftie would prefer to remain anonymous so we have not included his or her picture here. If you have any inside information to add, please add a comment or contact us.