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The Innovation Paradox: The Success of Failure, the Failure of Success

In The Innovation Paradox (originally titled Whoever Makes the Most Mistakes Wins), Richard Farson and Ralph Keyes argue that failure has its upside, success its downside. These two are not as distinct as we imagine. They co-exist, are even interdependent. Both are steps toward achievement. It's not success or failure, but success and failure.

This truth has relevance to today's business economy. Success there demands nonstop innovation. Genuine innovation cannot be achieved with obsolete formulas. Only an entirely new mindset will revolutionize managers' thinking on this subject. According to Farson and Keyes, the key to innovation lies in taking risks. Doing this requires changing the way we think about success and failure. In a rapidly changing economy, managers will confront at least as much failure as success. Does that mean they'll have failed? Only by their grandfather's definition of failure. Both success and failure are steps toward achievement, say the authors. After all Coca Cola's renaissance grew directly out of its New Coke debacle, and near- bankruptcy forced IBM to completely reinvent itself.

Wise leaders accept their setbacks as necessary footsteps on the path towards success. They also know that the best way to fall behind in a shifting economy is to rely on what's worked in the past as when a once-innovative company like Xerox comes to rely too heavily on a once-successful formula that's grown obsolete. In the process they become failure-phobic. By contrast, companies such as GE and 3M stay vibrant by encouraging innovators, even when they suffer setbacks. Farson and Keyes call this enlightened approach "productive mistake- making." Rather than reward success and penalize failure, they propose that managers focus on what can be learned from each. Paradoxically, the authors argue, the less we chase success and run from failure, the more likely we are to genuinely succeed.

Rather than reward success and penalize failure, they propose that managers treat both alike. Not with rewards or punishments, but with engagement. Don't penalize, they say, analyze. Focus on what can be learned from setbacks and triumphs alike. The best managers always have. Since failures so often lead to successes, and vice-versa, rather than try to sort these two out, wise managers focus on the innovation process and what can be learned from it. What went wrong? What went right? What can we learn from each experience?

In a concluding section Farson and Keyes suggest that we follow the lead of great coaches such as John Wooden and Phil Jackson and de-emphasize winning. Paradoxically, they say, this could be the best way to win. They call this approach "Samurai Success" after the Japanese warriors who focused their attention on full participation in a contest rather than on its outcome. The less we chase success and run from failure, the authors conclude, the more likely we are to genuinely succeed.

• Translations published in Italy, Korea, Indonesia, Thailand, Taiwan, China, and Japan. 

• An article adapted from Whoever Makes the Most Mistakes Wins won the McKinsey Award for best article of 2002 in The Harvard Business Review. 

Questions and Answers About The Innovation Paradox

What are you trying to accomplish with this book?

 Basically, to de-stigmatize "failure" and raise questions about "success." 

How?

 By showing how the ways we usually conceive of success and failure frustrate innovation.  Making necessary changes in the workplace, or anyplace, calls for taking risks.  Risk implies failure.  When we're too focused on pursuing success and avoiding failure we can't innovate.  In today's volatile economy, not innovating is a surefire way fall behind. 

Sounds pretty contrarian.  

 Well, we're certainly challenging the worship of "success."  History's great innovators - Thomas Edison, Charles Kettering, Henry Ford, Minnesota Mining & Manufacturing - saw failure as an important stepping-stone on the path to ultimate success.  In IBM's early years, Tom Watson Sr. went so far as to say that the best way to succeed was to double your rate of failure.  Jack Welch seconds that motion today.

But aren't we a society dedicated to winning?

 In principle, yes.  But the greatest coaches - John Wooden, Phil Jackson, Vince Lombardi - de-emphasized winning because they realized it wasn't the best way to achieve overall success.

Vince Lombardi?

 Yes.  Lombardi disavowed the "winning is the only thing" statement that's so often attributed to him.  He said that "preparing to win" was what really mattered.  Lombardi was right.  Paradoxically, we're most likely to win, as the best coaches do, when we put the process of achieving over achievement itself.  Success is a journey, not a goal.  Did Bill Gates study Dress for Success as he was building Microsoft?  Unlikely.  The biggest achievers, the top CEOs, don't dwell on success very much.  When would they have time?

Doesn't success beget success?

 Not always.  Making success one's goal can be a good way not to achieve it.  Better is to be fully engaged in what you're doing without regard the distraction of dreams of success, or fear of failure.  Athletes call this being in the zone.  Psychologists call it a state of flow.  Any time we're consumed by an absorbing task, thoughts of success or failure vanish.  If anything they're a distraction.  Michelle Kwan went for the gold; Sarah Hughes skated her best.  Sarah Hughes won the gold.

But she didn't want to fail.

 Who does?  But welcoming failure and tolerating failure - seeing value in failure - are two different things.  Entrepreneurs in particular are remarkably philosophical about the prospect of going belly up.  They say that failure is simply part of trying new things, a sure sign that you aren't playing it safe.  In Silicon Valley business setbacks are considered evidence that you've been taking chances and learning lessons that will be applied to your next venture.  The Menlo Park futurist Paul Saffo says that they consider failure an important part of the ecosystem out there, like forest fires clearing deadwood to make room for fresh growth.

 Within reason failure is a sign that new things are being tried, mistakes made, and cultures transformed.  That's been the lesson of vibrant companies ranging from 3M to GE: in order to succeed one must tolerate failure.  After all, defeat often leads to victory and victory to defeat.  Looking back on our lives we typically see that reverses built a foundation for later triumphs, while triumphs sometimes made us complacent and susceptible to failure.  Every life is a mulligan stew of wins and losses.  The two can be so intertwined that they're hard to tell apart.  Failure can be the basis for success and vice-versa.
 
Success can fail?

 Certainly.  Think about the Most Likely to Succeed senior in your high school.  Did that person become the most successful member of your class?  They seldom do.  More often those who enjoy too much early success never develop the drive that, say, a Michael Jordan developed after being cut from his high school basketball team. 

 Any coach can tell you that sustaining success is harder than achieving success.  This is true of companies as well as teams.  IBM, for example, and Xerox, have struggled to rise from the ashes of their phenomenal early success.  IBM's done a pretty good job of it.  Xerox hasn't.  When lots of breakthrough discoveries in modern computing were being developed by Xerox researchers, their company was enjoying so much success leasing copiers that it let others capitalize on those discoveries.  As a result Xerox went from being wildly profitable to teetering on the brink of bankruptcy.

 Since we wrote our book, Polaroid has actually gone bankrupt because it tried to sustain success on obsolete terms.  As consumers were demanding digital cameras they stayed focused on instant photography.  By contrast, a company such as GE managed to stay abreast of a changing economy by getting out of electronic hardware alone and getting into a wide range of services.  Or take Wells Fargo.  If they'd simply capitalized on their early success, Wells Fargo would be a long-forgotten stagecoach company.  Instead, by continually reinventing itself over the years - not simply resting on its laurels - Wells Fargo has become a much-admired financial services corporation.  But that has hardly been a smooth ride.  After all, Wells Fargo ordered 30 expensive new stagecoaches just before the transcontinental railroad was completed in 1869!

What relevance does this have to corporations trying to compete in the global economy?

 All the relevance in the world.  Large, profitable companies are often ill-equipped to deal with a changing, global economy because they have too many tried-and-true ways of doing things.  They're paralyzed by "If it ain't broke, don't fix it" thought patterns.  This leads to failure phobia, innovation's enemy #1.  In order to innovate, organizations must be prepared to fail, sometimes more often than succeed.  It took the New Coke blunder to make Coca Cola into one of the world's leading companies, partly because that debacle steered it in new directions.  When we try new things, we're at least as likely to fail as succeed (which is why so many can't take that chance).  But risking failure is the essence of innovation.  Only when companies begin to develop new patterns of thought and action - including ones that might not work -- will they begin to get in shape for the millennia to come. 

Surely you're not promoting failure?

 Yes and no. When failure results from sloppy planning, too much turf protection, or overall carelessness, it should not be condoned.  But when it's a result of a well-planned departure from the norm, or when it's due to circumstance beyond one's control, one hardly wants to penalize those involved in a so-called failure.  Such reverses can even be an encouraging sign that innovation is in the works. We try to make these distinctions in our book, and offer guidelines for managers who want to distinguish productive from destructive failure.

 We discuss specific ways in which organizations of all shapes and sizes can reinvent their cultures to become more risk friendly, more failure tolerant, and therefore more innovative.  These ways range from using information new technology to break down old structures, and encouraging innovation by engaging with employees rather than assessing their work with rigid, outdated criteria of success and failure.  The most important thing is to jettison those criteria.  Once they discard obsolete notions of success and failure, managers are free to develop new approaches that can lead to genuine innovation.