If you’re not failing, you’re not innovating.
Elon Musk’s words are echoed by most successful entrepreneurs and corporate innovators.
If you’re not willing to fail, then you will only ever embark upon safe, incremental improvements, where you have all the answers and therefore can’t fail.
However, in today’s rapidly moving environment yesterday’s answers are fast becoming redundant and tomorrow’s are mostly unknown. The only way to unlock the answers is by doing, failing and learning from your mistakes.
But failure, done incorrectly, can cost companies millions.
This is why it’s important to optimise the Return on Failure (RoF) in order to support management buy-in, optimise learnings and increase an organisation’s likelihood of success when it comes to innovation.
If we want to optimise our RoF and therefore our learnings, we need to increase assets whilst decreasing resources.
How to Build, Measure and Learn Faster (theleanstartup.com)
By optimising RoF, we give ourselves the opportunity to place many more bets than we would otherwise and when it comes to innovation, experimentation and a relentless focus on the customer underpins everything.
Venture capitalists get it right once out of every ten times, and their entire job is to invest in early stage innovation so large traditionally conservative company has very little chance of staying alive beyond today’s 12 year average company lifespan (down from 60 only 50 years ago) if all they’re ever placing is few large bets.
These metrics include not only product investment metrics but also success metrics for prototypes, startup evaluation metrics, employee performance, and organisational performance as a whole.