396 ENTREPRENEURSHIP
Discovering It’s OK to Fail
Ford had the Edsel. McDonald’s had the
hulaburger, a slice of grilled pineapple
topped with cheese for vegetarian cus-
tomers. Coca-Cola had the New Coke. Lots
of successful businesses have suffered fail-
ures and gone on to become even more suc-
cessful.
Many experts advise that innovation
requires risk taking, and that risks don’t
always succeed. Harvard Business School
professor Stefan H. Thomke, author of
Experimentation Matters,reports that when
he speaks to business groups he often tells
them that failure is not a bad thing. “I always
have lots of people staring at me, [thinking]
‘Have you lost your mind?’ That’s O.K. It gets
their attention,” he says. Jeffrey R. Immelt,
Chairman and CEO of General Electric,
apparently agrees. “If you try something and
it fails but you went about it the right way
and learned from it, that’s not a bad thing,”
Immelt suggests.
Ford Motor Co. shut down production on
the Edsel after about 2,800 cars were pro-
duced in 1960. But in the aftermath of that
failure, the company’s research on what con-
sumers really wanted and what they were
willing to pay led to the 1964 introduction of
the Mustang, which sold 1 million units in the
first 18 months of production. The 1962 fail-
ure of McDonald’s hula burger spurred a
franchise owner to suggest the Filet-O-Fish
sandwich, which remains a staple on the fast
food giant’s menu. And when Coca-Cola
stopped producing the New Coke after just
79 days in 1985, consumers who complained
must have rediscovered original Coke,
because sales of that product soared.
Intuit, the company that produces busi-
ness and financial management software like
QuickBooks and TurboTax, has found a way
to institutionalize the process of learning
from mistakes. Jane Eggers, head of thefirm’s Innovation Lab, hosts “When Learning
Hurts” sessions at which blunders are dis-
sected for insights. “It’s only a failure if we
fail to get the learning,” notes Intuit
Chairman Scott Cook.
There is a kind of six-step recovery pro-
gram that can help companies spring back
from missteps:- First, schedule some time for reflection.
- Second, encourage everyone in the organ-
ization—especially managers—to share
their own failures so employees will feel
comfortable talking about their defeats. - Third, bring in outsiders to evaluate a flop
from their less emotional and more objec-
tive viewpoint. - Fourth, celebrate smart failures and
reward risk-takers who deserve it. - Fifth, when you are ready to move on to
the next innovation, be flexible in your
goals so you don’t get trapped by unrealis-
tic expectations. - Sixth, test your new innovation with an eye
towards proving yourself wrong, not right.
Drug company Pfizer thought it had a
loser when tests for Sildenafil showed the
medicine wasn’t effective for treating angina.
But after reviewing patient reports, the com-
pany discovered that the drug had an unex-
pected side effect. Pfizer reintroduced it as
Viagra. “Figuring out how to master this
process of failing fast and failing cheap and
fumbling toward success is probably the
most important thing companies have to get
good at,” observes Scott Anthony, managing
director at the consulting firm Innosight.
SOURCE:Adapted from Jena McGregor, “How Failure
Breeds Success,” BusinessWeek, July 10, 2006: 42.STREET STORY 10.2