Innovating One's Approach to Failure Can Reap Large Successes

One of the biggest mistakes made by innovation-seeking companies is to place a premium on the development of the perfect idea. They should instead follow the guidance of two-time Nobel Prize winning scientist Linus Pauling: "The best way to have a good idea is to have a lot of ideas."

There's no such thing as the perfect idea. The best ideas in fact almost always emerge out of a process of trial-end-error experimentation. Re-watch the movie The Social Network for a simple reminder of this. Facebook didn't start as Facebook. It started in October 2003 as Facemash, a simple tool that Harvard sophomore Mark Zuckerberg created to allow people to rate the relative attractiveness of pairs of students. Then Zuckerberg created (or borrowed from the Winklevoss twins) the idea of a social network for Harvard students. It expanded to other Ivy League universities and then other universities before finally branching out to a mass-market platform. Anyone who tells you that what unfolded was mapped out on day one is trying to sell you something.

Every great innovation story has twists, turns, and near-death experiences. During the Innovation Summit, when IBM Chairman Sam Palmisano described his company's effort to create its super-intelligent Watson analytics platform, he noted how its success was rooted in many efforts that were failures, at least from the market's perspective.

The difference between innovators that ultimately succeed and those that don't isn't the quality of the initial idea. It is how they respond to inevitable failure. Successful innovators view failure as an important step on the way to success. They study failure, seeking to learn from it and discover alternative approaches that emerge from its ashes.

For example, in 1991 a drug that Pfizer had spent years researching to alleviate chest pain failed to deliver significant results. However, "sildenafil" had an unanticipated side effect. Seven years later, Pfizer introduced its blockbuster erectile dysfunction drug Viagra.

Some companies even go as far as publicly celebrating failure. For example, the venture capital company Bessemer Ventures Partners has a section on its Web site called its "anti-portfolio," or all the great deals in which it decided not to invest. One example, a "pre-IPO secondary stock" at a $60 million valuation that one Bessemer partner described as "outrageous." 

Today that company - Apple - is worth more than $500 billion. That's 35 percent growth every year for 30 years (if Apple maintained that growth for another 10 years it would be worth more than $10 trillion).

Celebrating and learning from failure stresses most organization's performance management systems. Most of these systems are understandably centered on results. But like professional baseball players, blackjack experts, and leading stock pickers, sometimes the best innovators can follow the right behaviors, and have sheer randomness lead to undesirable outcomes. The fear of failure is one of the greatest inhibitors of innovation. Celebrate it and study it to increase your odds of long-term success.

Scott Anthony - Scott Anthony leads Innosight's Asian operations. His fourth book on innovation, The Little Black Book of Innovation, is now available (HBR Press, January 2012). Follow him on Twitter at @ScottDAnthony.