Innovation – When is failure OK?

I’ve seen a number of surveys lately and read countless articles about the concept of innovation. Much attention has been given to the process of creating an innovation function within an organization and then measuring, monitoring and reporting on its success. I would like to posit that there is a disconnect among senior leadership teams in most organizations seeking to install an innovation function between their perceived understanding of said function and the actual characteristics of innovation.

What’s the disconnect you ask? Let’s focus tonight on the failures. Much work has been done in the area of ideation to capture, quantify and select ideas to move to product. If you look at the popular models for predicting success, most will give a 1 in 6 chance for a qualified idea to make it all the way through to commercial success. That means that 5 of 6 fail. I know it’s simple math and something we all learned in kindergarten or first grade but it seems to escape the best and brightest in corporate America.

I have heard fellow product managers decry the failure of others in an innovation setting time and time again.

Naysayer:     “She should have never brought that idea forward.”

Ernie:        “But why not?”

Naysayer:    “isn’t it obvious? It failed!”

Ernie:        “But don’t most ideas fail? In fact only 1 in 6 typically succeeds – right?”

Naysayer:    “Oh sure, if you go by the book…”

So what exactly does that mean, to “…go by the book…”? If by saying go by the book you mean to ignore the statistically obvious then yes, let’s ignore the book and plan for a near 100% success rate in our innovation functions. What if major league baseball suddenly said one day, “Hey, we know that the thousands of professional athletes in the country currently playing baseball only succeed in getting a hit once out of every four tries, but you know, that’s not what we’re going to plan for anymore. We want it to be better so we’re just going to fire any ball player that can’t get a hit 19 out of 20 times because that’s successful!”

This is effectively what’s happening in many companies today. So how do we stop the madness you ask?

Good old fashioned morals – tell the truth – it will set you free.

You need to present an innovation function business case that is realistic. If you have company that wants to start a formal innovation function, develop the framework and financial model based on the typical 1 in 6 rule of thumb. Set your idea selection criteria such that the 1 in 6 success will be commercially successful on a scale that covers the losses from the 5 failures. Taking a short cut and trying to paint a more optimistic picture than is really out there only serves to accomplish two things. One, it will likely get you fired when your first three ideas flunk out and two, it impedes the ability of innovators in other companies to implement innovation functions by souring the well.