Learning & Development

Mar 30, 2023 8 min read

The cost of Failure is...Learning!

The word Failure can bring up a number of emotions which often leads to negative emotions, however, harnessing its power can become a catalyst for positive change towards creativity and innovation and such a failure is termed as “SMART FAILURE”.

Smart Failure is an intentional, strategic approach to failure that involves analysing the case, identifying what went wrong, shortcomings and steps to be followed in future to improve the future outcomes.

Experimentation allows organizations to test new ideas and methods without committing significant resources. By conducting small-scale experiments, organizations can identify potential problems and opportunities before investing large amounts of time, money, and effort. Secondly embracing failure as a natural part of the experimentation process, organizations can create a culture of continuous learning and improvement. This can lead to faster innovation, greater creativity, and improved performance. Thirdly, experimentation and smart failures can help organizations to stay ahead of the competition. By embracing experimentation and smart failures, organizations can stay at the forefront of innovation and develop unique solutions to complex problems.

Let’s explore the importance of experimentation and smart failures in various organizations.

The story of Airbnb which started as an experiment in 2007 when two friends, Brian Chesky and Joe Gebbia, rented out air mattresses in their apartment to attendees of a design conference. The experiment was a success, and Chesky and Gebbia realized they were on to something. However, despite initial success, Airbnb faced several smart failures along the way. In the early days, the company struggled to gain traction and attract users. The founders experimented with different marketing strategies and user experiences, such as redesigning their website and offering professional photography services to hosts. These smart failures allowed Airbnb to learn from their mistakes and make the necessary adjustments to become the successful company it is today. Airbnb’s success story is a testament to the power of experimentation and smart failures. The company was able to innovate and disrupt the hospitality industry by continually experimenting and learning from its mistakes.

Another example is story of 3M and Post-it notes is a great example of how experimentation and smart failures can lead to breakthrough innovations. In the 1970s, 3M was looking for ways to increase its revenue and tasked one of its scientists, Dr. Spencer Silver, with developing a stronger adhesive. However, instead of developing a stronger adhesive, Dr. Silver accidentally created a weak, pressure-sensitive adhesive. At first, 3M executives saw the invention as a failure and shelved the project. However, another 3M employee, Art Fry, saw potential in the weak adhesive and experimented with it in his personal life. He used the adhesive to create bookmarks for his choir hymnal, which would stay in place without damaging the pages. Fry then pitched the idea of using the adhesive to create sticky notes, and 3M eventually launched the product as "Post-it notes”. Today, Post-it notes are ubiquitous and have become an essential office supply worldwide. If 3M had not fostered a culture of experimentation and smart failures, this innovative product might never have come to market.

Google's "20% time" policy One example of a company that encourages experimentation and smart failures is Google. Google's "20% time" policy allows employees to spend 20% of their working hours pursuing projects that they are passionate about. This policy has led to the development of several successful Google products, including Gmail, Google Maps, and Google News.

Amazon's customer-centric approach Amazon is known for its customer-centric approach, which includes experimenting with new products and services to meet the changing needs and preferences of its customers. For example, Amazon Prime was initially launched as an experiment to see if customers would be willing to pay for a subscription service that offered free two-day shipping. The experiment was successful, and Amazon Prime has since become a key part of the company's business model.

Below are the statistics that highlight the importance of experimentation and smart failure in organizations.

  1. According to a survey by McKinsey & Company, companies that are most successful in innovation have a strong culture of experimentation, where they regularly test and learn from new ideas and prototypes. These companies are also more likely to embrace failure as a natural part of the innovation process.
  2. A study by Harvard Business Review found that companies that encourage experimentation and tolerate failure are more innovative and achieve better financial results than companies that do not. Specifically, the study found that companies that tolerate failure are 2.6 times more likely to be among the top quartile of financial performers.
  3. According to a survey by Accenture, 84% of executives believe that innovation is critical to their company's growth and success. However, only 28% of these executives believe that their company has a strong culture of experimentation and risk-taking.
  4. In a study of over 3,000 companies by Deloitte, companies that are successful in innovation are more likely to have a formal process for experimentation and testing new ideas. Specifically, the study found that 88% of innovative companies have a process for experimentation, compared to just 54% of non-innovative companies.

Companies can foster a culture of collaboration and experimentation by encouraging employees to share their ideas and feedback. By creating an open and supportive environment, organizations can inspire creativity, innovation, and experimentation. Overall, companies that prioritize experimentation and smart failures can drive innovation, achieve breakthrough successes, and stay ahead of the competition. By implementing policies and strategies that encourage experimentation, data analysis, customer-centricity, and collaboration, organizations can create a culture of continuous learning and improvement that can lead to sustained success and hence making the statement stand true “Failure is simply an opportunity to begin again, this time more Intelligently”- Henry Ford.


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