Friday, July 28, 2006

How Failure Breeds Success

One of the key components in corporate innovation is how executives embrace failure to allow their companies to strive for those all important breakthroughs. BusinessWeek have interviewed executives from the likes of Coca-Cola, Virgin and Intuit to find out how they “cozy up to the risk taking that innovation requires” on how they manage, embrace and communicate failure within their organizations.

Communicating the message from the top that failure is part of the innovation process has been something that E. Neville Isdell, CEO and Chairman of Coca-Cola, did at their recent annual meeting in April 2006, where he declared that “you will see some failures. As we take more risks, this is something we must accept as part of the regeneration process”. Isdell wants Coca-Cola to take bigger risks, tolerate failures and change Coke’s traditional risk-averse culture. Failure is so important to the experimental process, without it you simply aren’t learning. The key is to have intelligent failures, and preferably those that happen early and inexpensively which lead to new insights about customers. Reflecting on failure and passing that knowledge on is paramount, so many companies embarrassed by failure want to quickly forget it ever happened. In a recent celebration of failure by its marketing team, Intuit Chairman, Scott Cook, emphasized that “it’s only a failure if we fail to get the learning”.

A clear example of this in practice can be seen by Virgin Atlantic J2000 angled reclining upper class seats. Whilst such seats had existed in upper class, Virgin was the first to announce its offering to the business class. However, a year later British Airways trumped them and rolled out a truly flat bed for business class. Whilst there had been initial excitement about the J2000, some people complained about the sliding movement of the seat and general discomfort. In the end the J2000 was wildly unsuccessful and widely recognized as inferior to their principal competitor. However, Virgin entrusted their head of design, Joe Ferry, with a huge $127 million overhaul of the airline’s upper-class sears to reclaim their lost position. Their new version was a solid success and exceeded their target to increase Virgin’s business market share by 1%. This re-design saw the business-class seat leap beyond just being flat. “Flight attendants flip over the back and seat cushions to make the bed, allowing for different foam consistencies for sitting and sleeping”.

If top executives employ faith in ‘intelligent failures’, people can and will embrace risk. By noting errors on the job, not repeating them but learning from them should not only be supported but valued. This is a great read on how to manage failure within innovation. Enjoy.

No comments: