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

For managers: "Innovators are seldom easy to be around. The most creative members of an organization can be irascible, annoying, touchy, intolerant, prickly, self-aggrandizing. Their lack of tact offends co-workers. It also makes them willing to speak up when others hold their tongues. What comes out of their mouths is often quite valuable, if not always easy to hear."

From the book Whoever Makes the Most Mistakes Wins, by Richard Farson and Ralph Keyes

You've completed your course work, snatched up your diplomas and hit up all of your parents' friends for graduation gifts.

You've also probably heard more advice and inspirational words than you can stomach, although if someone sidled up to you and said, knowingly, "plastics," that was worth a belly laugh, even if you didn't get the reference from the 1967 film The Graduate.

Now, if you really want to know something that will help you as you get on with your lives and your careers, pay heed to what Ralph Keyes has to say: "Now get out there and fail!"

Keyes and co-author Richard Farson recently published a book titled Whoever Makes the Most Mistakes Wins: The Paradox of Innovation. In it, they argue quite persuasively that failure not only is an unavoidable fact of life but, probably, the engine that drives success.

"If we're trying to do anything with this book, it's to destigmatize failure and to suggest that the worst way to achieve success is to pursue success and avoid failure," Keyes said last week from his Yellow Springs, Ohio, home.

"That's a very hard message to sell in this society because we're so success-oriented," the eclectic author explained. "It seems like every other book you see has success in its title. Dress for Success. Ten Ways to Success."

The authors cite dozens of examples of failures that led to successes and quote a variety of successful people who also believe in the failure-breeds-success model. One of the most ridiculed business initiatives in recent times was the Coca-Cola Co.'s decision to change its formula to create New Coke, for example.

Yes, New Coke was an extraordinary flop. But, the authors argue, the failure taught the company that its value was in its brand, not its formula. Coke rebounded to increase its market share, wiser for the lessons learned in failure.

A Yale student named Fred Smith earned a C -- not exactly a failure but close in the Ivy League culture -- for a paper proposing an overnight delivery service. Smith's professor dismissed his thesis as implausible. Smith took his idea forward after college anyway and created a company called Federal Express.

The great inventor Charles Kettering once said, "Failing is one of the greatest arts in the world. One fails toward success." Henry Ford called failure "the opportunity to begin again, more intelligently." And the man who made IBM the dominant force in the computer world for many years, Thomas Watson Sr., said, "The fastest way to succeed is to double your failure rate."

"Among the startup people in Silicon Valley, there is almost a failure chic," Keyes pointed out. "One guy will say, "I've gone belly-up twice and the next guy will say, 'Well, I've gone bankrupt six times.'"

The point is that big or innovative ideas would never get off the ground if people weren't afraid to fail. "It's one reason our economy is so vibrant compared to older economies such as those in Europe," Keyes said. "To take a chance and fail is one of the worst things that can happen to you in those systems."

Indeed, when Congress tightened up bankruptcy laws at the urging of the Bush administration last year, many economists argued that the measures would only discourage the kind of cutting-edge innovation that made the United States an economic giant in the first place.

Keyes says the fear of failure paradigm also applies in the sports world. "Look at the Winter Olympics. Michelle Kwan was clearly going for the gold and it made her tense and somewhat rigid," Keyes said. "Sarah Hughes wasn't thought to have a chance for the gold and she skated wonderfully because she wasn't carrying the fear of failure that hampered Kwan."

Keyes believes that the FBI's recent problems can be attributed in part to an institutional culture that held on to structures and methods that had been successful in the past. "They enjoyed so much success catching bank robbers and the like that they saw no reason to restructure themselves to better handle intelligence and the challenges of the modern world," he said.

All of this also applies to recent graduates of high school or college, Keyes said. "I think schools have a very bad success-failure model. You succeed or fail. You got a good grade or a bad grade. And if you got a bad grade, you're a failure.

"What we're trying to propose is the question, 'Is the distinction between success and failure that clear?' It isn't in real life. We can all look back at our own lives and see times that seemed like setbacks to us but actually pushed us in a new direction that led to some success."

As has often been pointed out, Microsoft's Bill Gates was a Harvard drop-out. And David Letterman endowed a scholarship at his alma mater, Ball State, specifying that it should go to reward creativity and not grade point average.

"Actually," Keyes said, "it's fairly surprising to see how often the best students in high school or college do not go on to become the most accomplished citizens later in life."

Inspiration for great ideas is all around us - not hidden in shadowy recesses, but right there in plain sight. All it requires is for us to see the obvious with fresh eyes. Easier said than done? Sure, it's in our nature to overlook what we take for granted. But it's worth making a conscious effort to be more observant in our everyday lives. Amazingly enough, billions of tea drinkers observed the force of steam escaping from water boiling in a kettle before James Watt realized that this vapor could be converted into energy. And many scientists and researchers knew bacteria couldn't live around the penicillium mold, but it took Alexander Fleming to recognize that the mold killed bacteria and could potentially be used to fight infection, giving birth to the field of antibiotics. The Eyes Of Children "Those who see what's obvious aren't necessarily brighter than others. They're just more likely to observe that the emperor is naked. Like children, they see what's actually there. Their perceptions are less clouded by belief systems, taboos, habits of thought," said authors Richard Farson and Ralph Keyes of Whoever Makes the Most Mistakes Wins. Consider the case of Swiss engineer George de Mestral, the father of Velcro. He found an alternative to the zipper by observing nature. His story began one night in 1948, when he and his wife were about to go to dinner and she became frustrated by a stubborn zipper on her dress. She wondered if there might be another way to secure fabrics. A few weeks later, de Mestral took his dog for a walk through the forest. On his return, he noticed burrs on the dog's coat and thought he would look at one under a microscope. The surface consisted of tiny hooks, and he noticed that they stuck to tiny loops in his clothing. He wondered if the principle of tiny hooks and loops could be made into a product. It took him eight years to devise a cheap and simple way to make large quantities of the fasteners, making one strip soft and fuzzy (loops) and the other with tiny hooks. He finally succeeded and made millions of dollars in royalties. Oddly enough, nobody before de Mestral thought about the adhesive qualities of those annoying little burrs. And it wasn't for a lack of analysis. The herb that produces these burrs, called burdock, had long been valued for its medicinal properties, said Steven Strauss in "The Big Idea." Then there's the case of Ermal Fraze, the inventor of the first self-contained, ring-pull drink opener. Back in 1959, he was at a picnic and wanted to open his drink can, but couldn't find a can opener with a triangular pointed edge. So he used a car bumper to get it open. The result was a lot of foam and frustration. Fraze, a toolmaker, went down to his workshop one night and tinkered until he came up with the basic principles of the ring-pull can. The idea became the standard for soda and beer cans for nearly two decades. The push-in and fold-back version replaced it in 1977.

Ralph Keyes of Yellow Springs, Ohio has co-written the perfect gift for someone who has been fired, laid off or upbraided for concocting a bold new project that tanked.

Whoever Makes the Most Mistakes Wins: The Paradox of Innovation (Free Press, $22) is an anthem to lead balloons, a paean to flops.

“The fastest way to succeed is to double your failure rate," said Keyes, quoting Thomas Watson Sr. of IBM.

The writer -- who began work on the book three years ago with Richard Farson, author of Management of the Absurd -- set out to study how companies deal with innovations that falter.

"3M has a strong failure-tolerant culture," he noted. "They encourage their people not to be defensive about their failures."

Keyes said. "This guy at 3M was trying to develop a really strong adhesive. He came up with a very wimpy adhesive. Then he discovered that, although it was a weak adhesive, it would re-adhere."

Unsure of what to do, the researcher took the result to a free-for-all brainstorming session called Tech Forum.

A 3M staff member seeking a non-slip, removable marker for a church hymnal thought the adhesive perfect.

Similarly, Scotchgard was developed at 3M after a researcher spilled an experimental fluid on her shoe: The water she used to try to clean up the spill simply beaded.

"So-called accidents," Keyes said, "have been wholly or partly responsible for products such as Gore-Tex, nylon, Teflon, Silly Putty, penicillin, shatterproof glass and the microwave oven."

"Do you remember Railway Express?" he asked. "If they had had the vision to see the future of air express, they would today be FedEx.

Polaroid, which sought bankruptcy protection in 2001, "did wonderful with instant photography, but they should have looked ahead at digital photography. There is a real danger in relying on what succeeded in the past to build your future."

"Country singer Joe Diffie said that the best year of his life was the one in which he lost his job at a foundry, got divorced, totaled his pickup and was audited by the IRS," Keyes writes.

"With so little to lose, Diffie left Oklahoma for Nashville" -- and launched a career in music.

What's important to understand, Keyes said, is the relativity of both failure and success.

Borrowing from Kipling, he pointed out that triumph and disaster should be approached as impostors.

"In 1929, the year Thomas Wolfe's Look Homeward, Angel; Ernest Hemingway's A Farewell to Arms; and William Faulkner's The Sound and the Fury were published, novelist Julia M. Peterkin won the Pulitzer for her now-long-forgotten novel Scarlet Sister Mary.

Unfortunately, in tough economic times, daring is sometimes replaced by caution and wariness.

"I've missed more than 9,000 shots in my career. I've lost almost 300 games. Twenty-six times I've been trusted to take the winning shot and missed. I've failed over and over again in my life.

Make No Mistake: Seeking Perfection Harms Innovation: Scandals' worst effect may be to quash risk-taking.

At the moment, investors and politicians are trying to put out the firestorm of corporate crimes that came to light after the Enron collapse.

They are insisting not only on intensive investigations and accounting reforms but punishment of the wrongdoers. In response, the business community has become nervous and fearful. This may turn out to be more damaging than the scandalous behavior itself.

Caution and accountability are replacing the expansiveness that once characterized American business. In the long run, this could be the most destructive consequence of book-cooking by the likes of Enron and WorldCom.

Long before news of corporate scandals broke, Americans were already on an accountability binge. Especially in our schools, but also in other institutions, we have been demanding tests and standards and answerability. The stunning misbehavior of the darlings of our investing public has only intensified that attitude.

As Ambrose Bierce noted almost a century ago, accountability is "the mother of caution." In a climate of fear, we tend to insist more and more on tests and measures. In the process we become increasingly risk-averse.

Risk is the only avenue to innovation. And the demand for innovation in the current fast-paced, globalized and technologized economy is constant. We need continual innovation in both product and process.

Instead, we are seeing a pulling back, a move toward tightening up, toward making sure no mistakes are made.

Today's most popular management fad is a quality-control approach known as "six sigma," a term borrowed from statistics that means that the work done by our business and government institutions must be as close to perfect as possible. No mistakes.

This impulse to seek perfection takes us in the wrong direction, robbing us of what is perhaps our most important national strength: the ability to innovate. Other countries may occasionally have taken markets away from us, but there were always more where those markets came from because we had the power to innovate by taking chances and, in the process, to create new markets.

Mistakes and failure are the inevitable consequences of taking risks. One measure of genuine risk-taking is the amount of failure generated. That's why IBM's Thomas Watson Sr. said, "If you want to increase the probability of success, double your failure rate."

The great innovators from Thomas Edison down to the contemporary entrepreneurs in Silicon Valley have operated on the same principle. They understand that failure and success are intimately connected, interdependent, sometimes indistinguishable. One has always led to the other.

Microsoft's Bill Gates was recently depicted in Fortune magazine as a risk-taker whose success grew from the realization that, in the words of a colleague, "you have to try everything, because the real secret of innovation is to fail fast."

To allow the current revelations of disgraceful corporate behavior to make us hunker down in a mode of caution could cause us to lose our edge in the highly competitive global economy.

Before automobile mogul Henry Ford struck gold in the auto industry, he failed twice in previous ventures.

The late chief executive officer of Coca Cola, Roberto Goizueta, presided over one of the greatest blunders in business history when he replaced traditional Coca Cola with a sweeter version, new Coca Cola, an saw his decision summarily rejected by consumers. But learning from his mistakes, Goizueta went on to build a more prosperous company centered around Coca Cola as a brand, not as a product that sold on the basis of taste.

Those are just two just examples of tremendously successful businessmen who fell flat on their faces. So were they failures and then successes Or were their successes a direct outgrowth of their failures? And what, really, is failure, a shameful episode that marks one as a loser forever or as a risk-taker willing to tolerate setbacks as the cost of great achievement?

“The fastest way to succeed is to double your failure rate,” said former IBM Chairman Thomas Watson Sr., who used that formula to build a hugely successful company.

A success himself, Champaign [Illinois] native and author Ralph Keyes has been thinking a lot about failure and its virtues. Now he and co-author Richard Farson have published a book on the subject, Whoever Makes the Most Mistakes Wins: The Paradox of Innovation, that examines the ups and downs of achievers, the danger of early success, complacency in the face of continued success and the advantages of risking failure.

“It’s really an inquiry. What does success mean? What does failure mean? We write about many instances in which early failure led to later success,” he said … Keyes is hoping that his latest work, his 11^th book, will prove to be popular with more than just the “managers and leaders of all types” who have a specific interest in subjects like this.

“Obviously, the primary market is market managers,” Keyes said. “But we tried to address broader issues.”

Those who want to have a better understanding of what motivates bosses, employees and peers should read “Whoever Makes the Most Mistakes Wins,” a new book by Richard Farson and Ralph Keyes. This small gem, published by Simon & Schuster’s Free Press division, is packed with easily understood, interesting and useful philosophy.

This is one of the most thought-provoking management books to come out in recent years. As its subtitle, “The Paradox of Innovation,” suggests, much of the volume is devoted to innovation successes and failures, but its management suggestions go far beyond that.

“In personal and professional lives alike, neither success nor failure is what it seems to be,” the authors point out. “That is the book’s basic message. Success and failure can be hard to tell apart; one leads to the other and both have value. That conclusion has led to its most counter-intuitive suggestion for leaders: Treat success and failure similarly, not with rewards or sanction, but personal engagement. We have tried to show how many more management approaches become possible once conventional notions of success and failure are discarded.

“A both/and rather than either/or approach makes it easier to encourage inventiveness, support mavericks, do simultaneous planning, and destroy apparently successful businesses to make way for new ones that might fail – or win big. At the heart of this posture is greater acceptance of failure as a necessary part of innovation. This acceptance produces work environments that are genuinely risk-friendly, which is to say, failure-tolerant. Even though fear of failure cannot be eradicated from such environments, it can be managed, even put to work as a source of energy and focus. Those who are passionately engaged in a task they care about are the ones most likely to achieve success – paradoxically by minimizing thoughts of succeeding, or failing.”

There are so many other good ideas in this book that it is hard to summarize them, but here are a few:

· In the midst of adversity, we are stronger than we think. Human beings grow most from situations they try hardest to avoid.

· Mistakes come from doing, but so does success. We’re playing it too safe if we don’t fail occasionally. Effective achievers focus on the task at hand and don’t let the possibility of failure break their concentration.

· A reluctance to try something new is worse than trying something new that fails. Generally accepted wisdom is what usually gets us in the most trouble.

· Progress can be made only when failure is risked. Failure and setbacks are often learning experiences, a step on the road to success. Failure is not a disgrace; we should ask ourselves what we learned and them, “Where do we go from here?”

· Success, which often results in the loss of focus and daring, is at least as hazardous as failure. Complacency actually costs more than “costly failures.”

· A company’s inability to move beyond its current success is more often due to lack of vision than lack of opportunity. Preparing for the future sometimes requires a company to renounce its past. Success is a moving target; what worked yesterday won’t necessarily work tomorrow.

· Employees can’t be told to be innovative; corporate culture must be changed to encourage it. Intolerance of errors is the Achilles’ heel of overly mature organizations.

They say it is the paradox of innovation: That in order to succeed, we must learn to fail. Think of all the great inventions that came from mistakes, all the great products that were developed in pursuit of something else...

But if failure is such a good thing, why are compensation and performance evaluation so geared against it? We'll pick up some new ideas in Whoever Makes the Most Mistakes Wins, all this week on Business Prescriptions....

Former 'Lofter' upbeat since 24-hour live TV show ended

One day she's sending off résumés and demo tapes to television networks, the next she's licking stamps and mailing out medical school applications.

Heather Basciano is keeping her options open.

Summer's almost over and the 24-year-old Torontonian is making the most of her extended vacation, mostly catching up with friends and pounding the pavement - hoping to catch a break.

She used to be a "Lofter," on camera 24/7 for the whole wired world to see, working as a host on the Internet reality-based television station U8TV.com.

The gig was supposed to last for a year, but ended abruptly in late June when the network pulled out, canceling the show U8TV: The Lofters and shutting down the U8TV.com Web site, leaving Basciano and her eight roommates without a job.

Now the bubbly blonde is still trying to find out where she belongs and what she wants to do, without a camera trailing her every move.

"Six months living like that and some old habits are hard to break," she says in an interview.

"At first it was hard for me to not keep checking on my invisible microphone and (to not) keep looking around to the side to check if the camera was looking at me."

Wiser from the experience, she admits to missing the novelty factor and semi-celebrity status that came with the job, but at the same time welcomes the return of her privacy.

"I am thrilled to be back to normal and get started on my real reality right now," she says.

More than two months out of the loft, she's still unemployed, but not too worried. She knows something will fall into place.

Instead of filling her days hosting shows about love, news, music, life and entertainment, she spends her time surfing the Internet, browsing classified ads and networking.

She's also taking a couple of acting and improvisation classes to hone her skills.

And if it nothing pans out soon, she's considering packing up and moving to Los Angeles this fall.

"I'm going to go and try and get an agent," she says.

"I'm not expecting anything, but it will be an adventure and if something happens, great."

Her adventurous outlook explains why she's gushing about a book she just read, Whoever Makes The Most Mistakes Wins: The Paradox of Innovation, by Richard Farson and Ralph Keyes.

A business management book, the authors reason that while some failure is an inevitable part of the road to success, it actually may aid in the process of achieving it. They're encouraging readers to take chances and learn from their mistakes.

"This book is totally the way I live," she says. "I just picked the book up off the shelf and couldn't put it down."

A Queen's University life science and biology graduate, Basciano is still a newcomer to the entertainment business.

After giving up a job as a pharmaceutical rep to take the job as a Lofter, her six-month stint was among her first experiences on camera.

"I took a huge chance. I threw away a really good career, a company car, a two-bedroom apartment and lots of money," she says of her decision to become a Lofter.

"It was scary throwing that all away and doing something so ludicrous, but then all of a sudden I realized that it would open up so many opportunities that I wouldn't have had before."

Her mother thinks it was a huge mistake, but Basciano doesn't see it that way. She's realized she likes acting and hosting, and if it doesn't work out, she still has her education to fall back on.

She's also learned she has strong opinions and 24 years of experiences to share with others.

As a Lofter, Basciano never dreamed how powerful her voice would become as a tool to help others.

"People would ask me advice about everything, ranging from what they should do about their husband cheating, to how do they subtly ask for a raise at work, to detailed disparities of depression and confidence issues," she says.

Viewers found comfort in the fact that Basciano has her own quirks and problems, which she never shied away from sharing. Of all the shows she hosted, she received the most feedback from a series recounting her experience being raped as a teenager.

After those shows aired, women started sending her e-mails detailing their personal stories and commending her for her bravery. The e-mails never stopped coming. Basciano guesses in six months she received about 7,000, each one of which she responded to.

Sitting in her new bedroom earlier this summer, staring at the walls of the uptown apartment she now shares with her two roommates, she says she misses the type of interaction she had with viewers and the opportunity to help others.

She's sad that U8TV is over, but proud for taking such a big chance.

"I figure if you have the opportunity to do something in your life that you'll probably never do again, then just do it ... This was my one year to push the envelope and really explore my creative side."

Now she's looking to the future, gearing up to pounce on whatever opportunities cross her path.