Fail fast, analyse faster

“Fail fast!” exclaims the business guru. Not knowing that this really is only one half of the equation.

In newly published research, business professors Danneels and Vestal set out to debunk the myth that many failures will eventually lead to the holy grail of business success.

Through studying the culture and performance of 108 US manufacturing firms, the academics show that the “pick yourself up and try again” approach is insufficient. There is no statistically significant relation between high tolerance for failure and product excellence. You just keep on randomly poking in the dark.

Instead you need to be like a bat, whose echolocation skills allow it to navigate a path in the dark. Yes, you want to closely interpret the feedback you’re receiving. Danneels and Vestal call this a culture of failure analysis. Firms that habitualise detailed debriefs of unsuccessful projects are significantly more likely to roll out products that are superior to their competitors.

What are the character traits of these companies? The researchers identify the following statements of conduct:

1. “We openly analyse past mistakes”

2. “We go to great lengths to learn from failure”

3. “We review past decisions, especially if they did not lead to success”

4. “We conduct post-mortems”

This is easier said than done! The study also highlights that only around 22% of companies do number 4 of this list regularly. The “What went wrong” question can invite heated, vindictive personal exchanges and hence seen by management as embarrassing or a waste of time. Danneels and Vestal’s research finds that only firms with a culture of constructive conflict can optimally benefit from failure analysis practices.

So much the better for those that nurture these safe spaces in their organisation. They fail fast, analyse fast and thereby grow faster.

Danneels, E. and Vestal, A. 2018. Normalizing vs. analysing: Drawing the lesson from failure to enhance firm innovativeness. Journal of Business venturing

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