Strategic CIO // Executive Insights & Innovation
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1/7/2014
11:33 AM
Chris Murphy
Chris Murphy
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Is 'Fail Fast' Code For 'Don't Take Risks?'

To encourage innovation in a risk-averse environment, identify the "killer issues" early.

We all know that companies need to encourage employees to take risks while accepting some failure. And often this risk-taking is couched in a philosophy of "fail fast," which at some companies is code for "you can fail only if no one actually ever notices that you failed. Or took a risk."

Venture capitalist Marc Andreessen
Venture capitalist Marc Andreessen

I got to thinking about the mixed messages we send about taking risk after reading The Wall Street Journal's interview with venture capitalist Marc Andreessen. Asked if failure is a good or bad thing in the tech startup world, Andreessen acknowledged he's schizophrenic on the subject. On the one hand, he says:

This whole thing where failure is somehow good in Silicon Valley, or failure is OK, or failure is wonderful, or failure is part of the process, is just a bunch of nonsense, and is actually a destructive sort of meme because it gives people an easy excuse to give up. If you look at a lot of the great successes in corporate history and in technology, they required real determination and real staying power.

["Intel inside" -- everything? Read Intel CEO: 'Make Everything Smart'.]

His other side, though, understands the need for a business culture that accepts some failure. That culture can be difficult to create at established companies, where failure has a long memory and where leaving to try something new can mean your chair is gone when you come back. Says Andreessen:

You really can't just give up the minute things get hard. But at the same time, not everything works. And when something doesn't work, it shouldn't end your career. It should just inform the next thing you do. And that's kind of how the Valley works.

The oft-repeated "fail fast" idea doesn't fit neatly into either of Andreessen's two views of failure. People need staying power and long-term support to succeed at a given project, and failure can't come with such a stigma that it's acceptable only if it's ultra-low-profile and low-cost.

Which brings me to a highly practical approach to failing fast that I heard recently from Worthington Industries VP Michael Luh, a former innovation exec at Procter & Gamble who's now leading an innovation effort at the steelmaker. (Luh and I were on a panel together at the TechTomorrow event in Columbus, Ohio.)

Luh does advocate failing fast and cheaply, but he emphasizes that approach because disruptive innovation has maybe a 10% success rate, so you can't invest in every project. "I've killed thousands of projects," Luh says. "… You need to be very disciplined if you're not going to lose your shirt." One essential tactic, he says, is to know very clearly why you're killing a proposed project.

And so Luh's fail fast strategy requires stakeholders to identify the hardest elements of a would-be project -- the "killer issues" -- and tackle those first.

Is the performance of the product to be developed the big hurdle? Is it distribution, because your new product's less profitable to the existing channel? Is the potential market not big enough to interest the company? Are internal incentives or the organization a barrier?

Survival instinct tells us to avoid these kinds of deal-breakers early on and instead build up some momentum with easier wins. With Luh's approach, "failing fast" is about making sure your company isn't going to spend $10 million engineering a dazzling product that you figured out at the start you had no way to sell.

Too many companies treat digital and mobile strategies as pet projects. Here are four ideas to shake up your company. Also in the Digital Disruption issue of InformationWeek: Six enduring truths about selecting enterprise software. (Free registration required.)

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Shane M. O'Neill
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Shane M. O'Neill,
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1/7/2014 | 12:50:56 PM
The pressure to fail quickly and quietly
Nothing's guaranteed, even when IT groups have done all the due dilligence they can on a project. To IT managers and CIOs out there: Do you feel pressure to fail quickly and discreetly (and of course cheaply) if it looks like a project isn't working out? What steps do you take early on to avoid failure?
RobPreston
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RobPreston,
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1/7/2014 | 1:03:39 PM
Re: The pressure to fail quickly and quietly
Project portfolio management, like stock portfolio management, requires managers to constantly weed out the underperformers. It's among the hardest decisions, knowing when to pull the plug, especially for projects that looked so promising at the beginning.
Thomas Claburn
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Thomas Claburn,
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1/7/2014 | 4:18:45 PM
Re: The pressure to fail quickly and quietly
I suspect much of the enthusiasm for failure in the VC community comes when other people's money is at stake.
TerryB
IW Pick
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TerryB,
User Rank: Ninja
1/7/2014 | 1:20:26 PM
Too broad a brush
So much of this discussion depends on exactly what you are trying to accomplish. If you are implementing a new ERP system for your company, failing quickly or slowly is not an acceptable option. If you have implemented a new customer self service extranet portal that sales really thought customers would like but no one uses, failure is certainly an option. And no disgrace either.

The really tough ones are the new business models you take a chance on. Did Amazon really know cloud storage would work? Did Netflix really know people would change the way they consume media? Those are the things that impress me the most.

Look at Blackberry now. When should they quit trying to reinvent themselves and when should they just pack it in and fail? Now that's a tough decision.
Laurianne
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Laurianne,
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1/8/2014 | 12:09:53 PM
Re: Too broad a brush
Many people would argue BlackBerry is a poster child for not taking enough risks. It waited too long, too often.
TerryB
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TerryB,
User Rank: Ninja
1/8/2014 | 1:03:13 PM
Re: Too broad a brush
As we see them now, no question you are right. The value of hindsight. The question is whether they could have kept Apple from becoming Apple. Apple didn't really invent much of any single technology in the iPhone, just did a great job of putting it all together and convincing people they had to have one.

I submit Apple had much less to risk at time, not like Mac was going to dethrone Windows. Risk is harder to take at the top, which Blackberry was at time.
Kristin Burnham
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Kristin Burnham,
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1/9/2014 | 3:30:46 PM
Re: Too broad a brush
Some may argue that Facebook takes too many risks. They have posters around campus that read, "Move fast and break things." Regardless, innovation requires risk, and Facebook has been very innovative.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
1/8/2014 | 2:12:08 PM
Re: Too broad a brush
Netflix is an interesting example -- it was only in 2011 when the exec team proposed splitting the streaming and DVD business, with the big bet on streaming. They were pilloried for that, and they backed off the split. But it stuck with its big, public, long-term bet on streaming, and it proved right.
Lorna Garey
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Lorna Garey,
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1/7/2014 | 6:43:27 PM
Generational divide
I wonder how the 'fail fast' message plays for Millennials vs. Boomers vs. Gen X workers. The meme for Millennials is that they lack perseverance and the ability to focus for any length of time on a project. So, is telling a younger worker to fail fast essentially giving permission to throw in the towel prematurely? Conversely, is it something  that Boomers will ever feel comfortable with?

Fail fast seems like a Gen X thing.
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