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Posted: January 04, 2011

Actions that drive innovation

Work with failure to move ahead

Julie Williamson

In today's economic environment, many companies have developed a risk-averse approach to business. In doing this, they shy away from two key actions that drive innovation: exploring markets and exploiting competencies.

Doing either introduces risk, and companies are hesitant to invest in something that they know will fail. But by only investing in things they know will succeed, they limit the range of possibilities and the potential for tremendous, market-changing, competition-squelching success -- the kind of success that cements a company in the minds' of its customers and leads to long-term revenue advantages.

In 2009, Google launched Google Wave. You may have heard about it in the press, because it made a splash, but if you are like most people, you never actually tried it. Google Wave was a market failure. In the final April 2010 blog post for Google Wave, the product leads wrote the following: "We have always pursued innovative projects because we want to drive breakthroughs in computer science that dramatically improve our users' lives...We were equally jazzed about Google Wave internally, even though we weren't quite sure how users would respond to this radically different kind of communication...Wave has not seen the user adoption we would have liked. Wave has taught us a lot and we are proud of the team for the ways in which they have pushed the boundaries of computer science."

It is a fascinating response to what can only be termed a failure by market standards. The announcement is clear-Wave did not deliver and is being stopped. Equally clear- it will inform the future in ways that could never have been predicted without taking the risk. Despite such a high profile failure, Google remains one of the most viable and influential players in the market today.

Google Wave is a strong example of why businesses need to find ways to work with failure as a starting point. While chronic failure won't bode well for an organization, no failure may actually be just as bad from a growth perspective. Zero defects might be useful in manufacturing but in growing a business, it may mean you aren't looking at new ideas, which means you are missing serious growth opportunities.

Henry Mintzberg has been a prolific writer in the areas of strategy and strategic management. He offers three fallacies that cause strategic planning to fail
1. The Fallacy of Prediction-the assumption that market variables can be analyzed and the future reliably predicted.
2. The Fallacy of Detachment-it occurs when those who create the strategy are not those who have to act on the strategy, and when a strategy is based on purely quantitative data without regard for qualitative impacts.
3. The Fallacy of Formalization-the belief that formal systems are superior to human systems for information processing and decision making.

Combined, these three fallacies contribute to a systemic failure to implement strategy that continues to plague organizations today. I believe they also contribute to other types of failures including project delivery, product development, and customer relationships. Consider whether you are buying into any of these fallacies as you approach a project. Challenge your assumptions about things like the value of data versus intuition. Test your openness to failure for yourself and your team. Because as the saying goes, in the absence of failure, success is impossible.
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Julie Williamson is a principal with the Denver office of North Highland, an international management consulting firm. She has more than 20 years of consulting experience that includes working with executive teams on strategic development, bringing innovative solutions to complex problems, new business strategies, building innovation capabilities, and creating effective change management programs. She can be reached at julie.williamson@northhighland.com.

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