Failure Can Be Mined for New Knowledge and Unseen Opportunities

How Failure and Entrepreneurial Vision Fuel Success (Part 2 of 4)

In the right context and when appropriately framed, the identification of failure is one the best way to scout out and identify the possibilities for improvement. To the keen entrepreneurial eye, the failure of others can shine light on potential opportunities.

Bill Taylor, writing for hbr.org, notes that a lack of risk-taking due to fear of failure is a major impediment to innovation and creativity in our business systems, and that both innovation and creativity are necessary to adapt to constantly changing marketplace conditions. (Bill Taylor, “How Coca-Cola, Netflix, and Amazon Learn From Failure,” hbr.org, November 10, 2017.)

Taylor reminds the many leaders who penalize failure that “If you’re not prepared to fail, you’re not prepared to learn.” He says that the focus should not be on failure, however, but on learning, noting that “unless people and organizations manage to keep learning as fast as the world is changing, they’ll never keep growing and evolving.” 

In his bestselling book Principles, Ray Dalio provides some perspective for managerial leaders with his advice to “create a culture in which it is okay to make mistakes and unacceptable not to learn from them” (348) and to “recognize that mistakes are a natural part of the evolutionary process” (351). Managers should try to find capable people who see the opportunities that arise from making mistakes and avoid capable people who aren’t able to acknowledge and embrace their mistakes. Such people with debilitating egos and entrenched defense mechanisms will not be able to engage with the team in a healthy and honest recognition of reality and search for the truth.

Dalio tells a story about basketball legend Michael Jordon which he heard from a ski instructor who worked with Jordan. Dalio writes that Jordan “reveled in his mistakes, seeing each of them as an opportunity to improve. He understood that mistakes are like those little puzzles that, when you solve them, give you a gem. Every mistake that you make and learn from will save you from thousands of similar mistakes in the future” (352). Jordan wasn’t seeking failure; he was striving for success.

It’s obvious that failure is easy. It comes naturally and anyone engaged in purposeful action can do it with very little effort. It is also easy and beneficial in the right context and under the right circumstances for bosses to give people permission to fail or screw up (within defined boundaries of discovery) as a step in the learning and value-creation process. But failure does generate costs that aren’t so easy to overcome or convert to benefits.

A managerial policy to “budget” for failure and leverage the learning generated is prudent and perhaps virtuous for many reasons. What is much more difficult for investors and managerial leaders of “successful” organizations to tolerate are the “troublemakers” who see failure in what others perceive to be hard-earned success.

There is a world of difference between encouraging and tolerating failure at the task level and at the systems level. Iconoclastic innovators have the vision and mental capability to see solutions or opportunities beyond the conventional. They often discover or envision new ways to apply new technologies and newly discovered knowledge to existing problems. They see new possibilities where others may only see impossibilities. They are shunned as outsiders and as being “crazy” or unhinged, until they prove that they are right. This is the thin line that defines genius. 

Consider the “great” companies that have been lauded over the years for their successes and celebrated by experts and pundits as exemplary leaders in their fields until a new disruptor enters the field and the exemplar is suddenly seen as a tired old dog trapped in a world of their own making, supposedly blinded by their past success. It takes a visionary—perhaps a genius—to see the inherent failures of successful and dominant business systems in serving the desires and values of customers and to develop a large-scale re-allocation of economic resources as an improved and viable alternative. Progress is defined by ideas and actions that improve on what is already seen as success through a lens that allows one to visualize the “failures” or shortcomings of current systems or business models relative to a new vision. This is the essence of what futurist Joel Arthur Barker refers to as a paradigm shift in his work on understanding how worldviews shape our perspective and outlook.

Barker wisely notes that when the paradigm shifts, everything goes back to zero, and reflects on what this means for the old guard who are unlikely to be seen advocating and tolerating the virtues of enthusiastically embracing failure. (I highly recommend Barker’s excellent book, Paradigms: The Business of Discovering the Future.) The idea of paradigm shift has been replaced in business jargon by Clayton Christensen’s ideas of disruptive innovation. At the core of these concepts is the idea that what have heretofore been undeniably successful businesses are rapidly converted to failures through obsolescence by newly discovered and conceived value creation systems.

© 2020, Barry L. Linetsky. All Rights Reserved. 

Barry Linetsky is a Partner with The Strategic Planning Group in Toronto, Canada, where he and his colleagues have been helping executives and owners define and align their business purpose with customer values since 1994. Barry is the author of the acclaimed book The Business of Walt Disney and the Nine Principles of His Success (Theme Park Press), and an Honorary Disney History Institute Historian. Barry is also a writer, photographer, researcher, analyst, and business strategy enabler. Read his blog and learn more at barrylinetsky.com.

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