"Success is 99% failure," Soichiro Honda, the founder of Honda, once famously stated. And this is from a man who experienced unprecedented, at times completely soul-crushing, failure in the early years of his business, as the company he founded in 1938 was put on hold when his factory was bombed. Twice.
Yet Honda is now the 8th biggest car manufacturer in the world. An understanding of the inevitability of failure is demonstrably inherent to their successful business model.
Including failure in your business strategy today is of vital importance because without at least the risk of it, innovation would be impossible. Often, you can only find the successful way to do something after doing it the wrong way, often many times over.
Parul Kaul-Green, Head of Innovation at M & A, AXA UK & Ireland group, said in an interview with us ahead of her presentation at our Chief Innovation Officer Summit in London, that "risk aversion and fear of failure stifle innovation." She suggests that if you have a culture where failure is something employees fear, they will inevitably end up frozen with worry about making the big changes that may be needed. Sure, not every idea is going to be a winner. Most probably won't be. But without a workplace which encourages its employees to throw ideas around without the fear of getting something wrong, the innovation needed to keep a company moving forward may never come into being in the first place.
That being said, it is incredibly counterintuitive to embrace failure, and it's just fundamentally not part of human nature. Risk is scary, and obviously being responsible for potential failure makes yourself vulnerable. This risk is especially prevalent for big companies. "The problem with large companies is they have a lot to lose if they mess it up. Small companies don't. So their risk-tolerance and risk aversion is different," said Tom Culver, Senior Innovation Advisor, RTI International, when we spoke with him prior to our R & D Innovation Summit in Chicago, March 21-22. He points out that this is a key difference between large organizations, which tend to have a reputation for being 'stuck in their ways', as opposed to startups, who embrace failure more readily and enjoy a reputation for being particularly innovative.
So, how can companies encourage an atmosphere of open risk-taking? Culver argues that "you have to have it as part of a culture where people are allowed to fail and people feel safe at work. These are larger HR and cultural issues that can either create or stymie efforts to build a culture where people are more risk-tolerant and willing to explore."
He points out that bigger companies are also maintaining their risk by "doing more corporate venturing. This allows them to make investments so that someone else is taking the risk external to their organization, yet they can tap into it."
Jo Clancy, Senior Strategy Analyst & Innovation Lead, Transport Accident Commission spoke with us about risk-taking too, suggesting that companies "use early experimentation to test risk in small scale and work out which risk mitigation treatment works the best. This is invaluable if you then want to scale the initiative being fully informed (and being able to communicate this to others) about the risk and reward you are anticipating at scale."
And the success stories? Astro Teller, Director of Alphabet's 'moonshot' R & D division, has worked hard to create an atmosphere which not only accepts failure but celebrates it. As FastCompany.com puts it, "he engineers a culture in which it is ok to come up with very terrible ideas and voice them out loud." Accepting that sometimes terrible ideas need to be put forward to make way for brilliant ones, and that this will create the ideal culture for innovation, Teller in fact rewards failure much like success. And you'd be hard-pressed to argue that Google's parent company are not on the cutting edge of innovation.
The gaming company, Supercell, are another organization that have embraced the inevitability of failure. "We celebrate failures," Supercell CEO Ilkka Paananen said during a meeting in Helsinki ahead of the country's Slush conference for startups. "We don't pretend failing is fun — people dedicate their lives to gaming production and sometimes the products get killed — but we get so much from that failure. We analyze and talk about what went well and what didn't. We pop a bottle of champagne to celebrate what we learned." This method has helped them build a $10 billion empire, according to Wired.
No one enjoys failure, but it might just be vital to successful innovation. So you never know, maybe that catastrophic failure you experienced today will lead to tomorrow's innovative breakthrough.