Failing Productively

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As an entrepreneur you will typically get advice like, “Fail fast and fail often.” I always found this somewhat amusing, similar to the saying, “It takes money to make money” (a lot of bad investments are made using that philosophy). Living this yourself is an amazing experience – especially when things turn out well. But as I have mentioned before, you learn as much from the good experiences as you do from the bad ones.

Innovating is tough. You need people who are always thinking of different and better ways of doing things, or question why something has to be done or made a certain way. It takes confidence to ask questions that many would view as stupid (“Why would you do that, it’s always been done this way.”) When you have the right mix of people and culture, amazing things can happen and it feels great.

Innovating also takes a willingness to lose time and money, with the hope of winning something big enough later to make it all worthwhile. This is where a lot of companies fall short because they lack the patience, budget, or appetite to fail. I believe that this is why innovation often flows from small companies and small teams, as with them the prospect of doing something really cool is motivation enough to give something a try.

It takes a lot of discipline to follow a plan when a project appears to be failing, but it takes even more discipline to kill a project that has demonstrated real potential but isn’t meeting expectations. That was one of my first, and most important, lessons learned in this area. Let me explain…

In 2000 we looked at franchising our “consulting system” – processes, procedures, tools, metrics, etc. that were proven in our business. We believed that this could help average consultants deliver above average work products. It took a lot of work finding an attorney who would even consider they believed it would be impossible to proceduralize a somewhat ambiguous task like solving a business or technical problem. We found an attorney who after a 2-hour interview agreed to work with us (as he said, he “didn’t want to waste his time or our money on a fools errand.”)

We estimated it would take 12 months and cost $100,000 or less to fully develop. We met with potential prospects to validate the idea (it would have been illegal to pre-sell the system) and then got to work. Twelve months turned into 18, and the $100K budget increased almost 50%. But, all indications were positive and we felt very good about this effort.

Then, the terror attacks occurred on Sept. 11th and businesses everywhere saw a decline. In early 2002 we reevaluated the project and felt that it could be completed within the next 6-8 months, and would cost another $50K. After a long and emotional debate we decided to kill the project – not because we felt it would not work, but rather because there was less of a target market and now the payback period would double or triple. This was one of the most difficult business decisions that I ever made.

A big lesson learned was that our approach had to be more analytical. From that point forward we created a budget for “time off” (we bought our own time, as opposed to waiting for bench time) and for other project related items. We had a simple system for collecting and tracking ideas and feedback. And, when an idea felt right we would create a plan with a defined budget, milestones, and timeline. If the project failed to meet any of the defined objectives it would be killed. We documented what we did, why we did what we did, and would have postmortem reviews to learn as much as possible from every effort.

We still had failures, but with each one we took less time and spent less money. More importantly, we learned how to do this better, and that helped us realize several successes. It provided both the structure and the freedom to create some amazing things. And, since failing was an acceptable outcome it was never feared.

This was much more than just, “failing fast and failing often,” it was intelligent failure, and it worked for us.

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