How To Fail the Right Way - A Guide for Innovation Leaders

Let’s start with an uncomfortable but undeniable truth: failure is inevitable. No matter how smart, strong, rich, lucky, tall, talented, or good-looking you are, sometimes things just don’t work out the way you’d like. I find that the sooner we acknowledge this uncomfortable truth, the sooner we can do something about it.

The inevitability of failure doesn’t mean we should just give up and resign ourselves to fate. It turns out, there is more than one kind of failure, and the good news is we can take steps to influence the direction in which we fail and the types of failures we will be exposed to.

I find it helpful to distinguish between two types of failure. First, there is such a thing as an Epic Failure. These cost a lot and teach us a little. But there is also something I call an Optimal Failure. These cost a little and teach us a lot. Both are indeed failures, but I much prefer the second kind.

Think about a megaproject, where a cast of thousands is spending decades and billions to build some massively complex piece of wondertech. Those projects only fail one way - they fail Epic. When we’ve made massive investments of time, money, people, and political capital into a thing and then it doesn’t deliver as promised, that lost investment can be painful. Plus, these megaprojects tend to take a while, which makes learning a real challenge. It’s hard to make sense of our experience when there’s a long time between making a decision and seeing the consequence of that decision. Add in personnel turnover and you’re basically obliterating your team’s ability to really learn from experience. On top of that, these megaprojects tend to have complicated processes & organizations, to say nothing of complicated system architectures. That complexity can undermine our ability to learn too, by obscuring things like cause and effect. Yikes.

Fortunately, there is an alternative. We can often deconstruct those big projects into an iterative, incremental series of small, thrifty, simple, fast projects. Some of those will still fail, but when they fail,, they’ll fail Optimally. Each failure will cost less and teach us more.

That’s just math. When we make a series of smaller investments (of time, money, people, etc), our exposure to loss is reduced, so these failures cost us less. Short timelines also enable learning, because less time passes between action and result which makes it easier to observe and assess the outcome. And of course simpler processes, organizations, and system architectures are more transparent and instructive, which makes it easier to learn how they work.

Understanding the different types of failure can help innovation leaders manage risk and avoid stress. In part, that’s because optimal failures are just less scary. They hurt less (and teach us more!), so they are easier to accept and manage.

How do we get there? The short version is to break large projects into an incremental series of smaller projects. That is possible more often than you might think. In a defense acquisition context, that might mean using modular contracting instead of issuing massive monolithic contracts. Fun fact: FAR part 39.103 says we should use modular contracting as much as practicable. How about that?

I’m also a big advocate of taking a portfolio approach. And once again, policy is on our side here. DoD directive 7045.20 says we should be doing capability portfolio management as much as possible.

But even when we take a modular or portfolio approach, failures will still happen. What do we do then? Well, my team has a terrific practice we call “failure cake.” It pretty much is what it sounds like. When something goes wrong, we buy a big fancy cake, then sit around a table and eat it together while we talk about the failure.

This Failure Cake practice has a lot of benefits. First, cake is delicious and celebratory, so it shifts the mood and boosts morale. It helps take the sting out of the failure, and it builds a sense of team. We’re all in this together and we’re all supporting each other. Gotta say, it’s hard to cast blame when you’re all eating cake together. It’s hard to be too mad or sad when you’ve got a mouth full of cake.

Plus, the discussion we have over cake sets us up to learn. What did we attempt, what did we accomplish, what will we do differently next time? Even better, failure cake makes us bold and resilient. When your team’s attitude is “the worst thing that could happen is we get cake,” they are more likely to try something new.

Failure Cake comes in a few different varieties, and you may want to try a large-group version of this exercise. It’s fun and easy. Just set up a table and an easel in a public space and offer free cake to anyone who is willing to share a failure story on a sticky note and put it on the easel. As the easel fills up, that sends an important signal to everyone. Everyone has a failure story.

Now, there’s on particular nuance we should address. Failure Cake is NOT about celebrating failure. Failure sucks. Nobody wants to fail. I don’t personally think failures are worth celebrating. But you know what is worth celebrating? Action. Courage. Imagination. So Failure Cake celebrates the attempt, the boldness, the creativity, the courage to try something new. That is always worth celebrating.

OK, we started with an uncomfortable truth: failure is inevitable. Let’s conclude with a comforting truth: failure is never the whole story. It is never the end of the story. It’s only part of the story, and how you choose to continue the story is what really matters. How you choose to process and learn from the failure, that’s really the key. So the next time your team fails, can I suggest you continue your story and your learning around a big, delicious cake?
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