Good Fails, Bad Fails, and How to Know the Difference
“Fail fast!” as a Silicon Valley mantra is beyond cliché. But in reality, even when companies try to fail fast, most do something more akin to slow-motion flailing — not quite failing, but they’re clearly not succeeding fast enough. These are hard-working, smart people with a reasonable plan, trying a lot of stuff with varying degrees of success. When a company is failing is often not obvious unless something big happens, like an unexpected sales miss or a sudden slowdown in user growth. And even then, it may not be clear that something’s wrong; every company suffers through down cycles. So how do you know if you’ve hit a “bad fail” — meaning it’s time to worry — versus a “good fail” that still moves your company forward?
What makes a fail good is the quality of the learning. Good fails shift direction or prioritization and help a company get better faster. Bad fails waste resources and time and don’t lead to more insight or result in a better company.
Making mistakes is an essential part of any startup’s growth, so you can — and should — be making them. Here are some examples of good fails and bad ones to help you land on the side of getting better faster.
- Bad fails keep people busy without making clear progress toward an outcome. Good fails have intentional, specific learning goals connected to the business. A few good examples:
“We are testing mobile as a new acquisition method for our customer segment X. This should help us understand how to grow our customer segment X in our customer mix by 25%.”
“We are reducing the fields of sign-up for free trial to see if it increases conversion to trial by 15%. Trial is our top converting channel, and we want to improve the overall size of our pipeline.”
- Bad fails rely on vanity metrics or don’t have any metrics at all beyond “We’re trying to improve.” Good fails have metrics connected to the business and don’t shy away from sharing downward numbers because shortfalls reveal what to focus on to improve. Like new customer acquisition that still maintains high customer retention or sales cycle time decreasing while maintaining a healthy customer win rate.
- Bad fails lack answers as to why something did or didn’t work. Good fails always offer potential diagnoses and suggest ways to fix what’s not working. If sales missed their number, a good sales leader will know if it was bad forecasting versus bad pipeline and have concrete suggestions on what they are doing with marketing to fix it next quarter.
- Bad fails happen when a new idea has unbounded resources and time. Good fails are time bound. Clear timelines give better signals on whether or not ideas can yield intended outcomes in a highly competitive, time-bound market. Almost anything can succeed with unbounded resources and time, but that’s just not reality.
- Bad fails happen when ego or pet ideas drive initiatives. Good fails make clear what is most valuable to the market. If it’s not yielding answers to your company’s go-to-market or growth puzzle, question whether or not it should be done.
- Bad fails are initiatives that are informally communicated. Good fails have goals, timelines and responsibility crisply and clearly communicated. Anything can succeed if a finish line is never articulated; that’s what distinguishes personal experimentation from company-enhancing learning.
- Bad fails happen when you do exactly what the board tells you to, then blame them when the idea fails. Good fails happen when you hear what the board tells you but choose a course that is right for your company. If the board says, “Expand the product line. Sell to new verticals,” a smart company incubates new vertical solutions on a landing page and/or with a solution engineer to test interest before making product or sales investments. Then they report back to the board what they’ve learned and what they believe is the best course of action for the company.
Let’s be honest: Most people don’t like failure. But every company is unique — like the collection of people who work in any company. Failing is an inevitable part of a company’s growth as it learns what makes the most sense for it to do in order to succeed. Remember Apple’s Newton, the Amazon Fire phone, and Google Wave? All three were big fails. But they learned from them and continue to create some of the best businesses and technology ideas in our industry. Speaking from my own experience (yes I’ve had bad fails!), failure is the best teacher if you let yourself learn from it.
