APQC

Unlike the generally expressed notion that failure is not an option, when it comes to innovation, failure often should be an option. Best-practice organizations view failure as part of their innovation process, and it is accepted as long as it meets certain criteria, such as being identified early on in the process. Moreover, many of these best-practice organizations leverage their failures by learning from them.

One common element often seen in companies that excel at innovation and market creation is
the ability to invest a little to learn a lot. When companies are going into new spaces, their ratio of knowledge to assumption is low (they know a little and assume a lot). Companies that invest to address key unknowns and iterate their strategy as necessary end up doing better than those that aggressively execute a strategy that turns out to have fatal flaws.

Let's look at some real examples:

Mayo Clinic: Multiple criteria are considered when evaluating failure at Mayo Clinic.
The organization believes that if the failure occurred although careful thought and consideration was involved, then failure is accepted. Mayo Clinic understands that failures will occur, but the organization clings to its value of doing no harm to its patients by ensuring that failures do not put people (patients) at risk. In the innovation realm, Mayo Clinic accepts failure, although tolerance for it is minimized by the nature of its work. Mayo Medical Ventures, a member of Mayo Clinic's innovation community, is charged specifically with innovation accepts and welcomes failure.

The group awards failure with "the queasy eagle" award. This award is given to an employee to acknowledge his or her efforts, even if the idea or project failed.

KennaMetal inc.: For Kennametal, failure is defined as not getting product to market on time, not meeting performance, or not meeting sales quotas. Kennametal tracks when a project is cancelled and celebrates the fact that it was cancelled early on in the product development process. Kennametal believes that canceling projects is good as long it occurs early on and minimizes costs or future expenses from failures. Failures are also seen as good because the organization ensures that lessons from the failed project are identified and noted by project teams. This effort ensures that every failure is a learning opportunity that adds value to future efforts.

Bausch & Lomb: The acceptance of failure comes from the top at Bausch & Lomb.
The chairman of the company states that it is okay to fail as long it is in the feasibility phase of a project. Therefore, the organization understands that it is acceptable to fail early on in the development process, but it is not acceptable to fail in the marketplace. Bausch & Lomb uses various methods to ensure that it makes the right decisions, and that includes the decision to cancel a project--a failure.

IBM: Failure is handled differently depending on where the failure occurs at IBM. The organization has systems in place to identify and correct failures. In regard to innovation, IBM understands that failures will have to occur in some instances, and they are accepted as long as there is a known benefit to achieve a broader goal. IBM Research, for example, expects to encounter failure because of the nature of its work. For IBM, failure is an option as long it contributes to the greater good of the organization.

The Clorox Company: Failure is accepted and welcomed at Clorox as long as it occurs early on in its product development process. However, failure is not accepted well if it occurs when a product is closer to commercialization.

In summary, a climate ripe for innovation includes establishing a culture where innovation and collaboration are valued. Furthermore, by aligning recognition and support for innovative thinking, such as allowing ideas to develop and possibly fail, best-practice organizations reinforce their innovation commitment. Organizations that are seeking to establish innovation as part of their competitive arsenal need to establish a culture that understands and embraces innovation and its potential risks.
http://www.apqc.org