ARYZE interviewed, the curator of Museum of Failure and innovation researcher, Dr. Samuel West, about the biggest failures of innovation, where companies fail the most and if failures should be prevented.
What are typically the biggest failures, in terms of innovation, in business?
“Biggest can be in terms of money lost, but it can also be seen in terms of suffering caused. For example from the healthcare sector, the Thalidomide disaster is a good example of a failure that caused death and suffering. While the Exubera is an example of an expensive innovation failure. And then there are the fun embarrassing innovation failures like Procter & Gamble’s fiasco in the 1990s with Olestra.”
Where do you think most companies fail in innovating?
“I think most companies fail in innovation due to not experimenting enough and not being willing to take early risks. They play it safe and end up spending millions on minor improvements rather than substantial real innovation. Companies are good at being better but they are bad at being different. Another large reason for failed innovation is when companies focus too much on tech innovation – look at how everyone is throwing money at Artificial Intelligence despite AI being hugely disappointing. Some of the most disruptive innovation and the largest innovations failures are when companies fail to innovate their business model. Kodak and Blockbuster are both good examples of that.”
“Blockbuster was a chain of home movie and video game rental shops. In 2004, it was an enormous company with over 9,000 stores. A primary source of Blockbuster’s profits came from punishing customers with fines for returning films late. A small competitor started a DVD-by-mail service in 1997, with the ad campaign »The end of late fees.« With subscriptions instead of renting videos, the annoying late fees became unnecessary. Customers could keep a video for as long as they wanted then return it to get a new one. Blockbuster briefly invested in digital but didn’t continue because it threatened their profits. That little startup that was initially ignored now has more than 81 million subscribers. Netflix killed Blockbuster. Radical disruption made Blockbuster’s business model obsolete.”
“When Kodak engineers created the first digital camera in 1975, management’s response was: »That’s cute – don’t tell anyone about it.« The digital camera was dropped for fear it would threaten Kodak’s profitable film business. Despite this rough start, Kodak later became a successful pioneer of digital cameras, the DC-40 released in 1995 was one of the first consumer digital cameras. Kodak even developed an online image sharing service, an early version of Instagram.
However, the digital cameras and the image-sharing service was used to promote their profitable photo paper and printing services. Kodak’s failure was an inability to truly embrace the new business models that the disruptive technology opened up. Kodak went bankrupt in 2012. The same year Instagram with only 13 employees was sold to Facebook for $1 billion.”
What is the best way a company can recover from failure?
“By owning the failure. Transparency. The typical corporate bullshit stories used to cover up failures do not help anyone. Especially not the organization itself as it hinders acceptance and learning from failure. Deliberate experimentation and a genuine “fail early, fail fast, fail often and fail cheaply” approach means that companies can handle and recover from failure much better than when they fail catastrophically.”
How can startups prevent innovation failures? Should startups even prevent failure?
“I am a firm believer in the power of experimentation. By taking early risks that do not destroy the organization or totally destroy the startup’s economy. Startups need to be much better at failure recovery than failure prevention. Investors expect startups to take risks, the risks that larger dinosaurs are not willing to take.”
What are the benefits of failure?
“Learning, learning, learning. There is no better teacher than failure.”
What five pieces of advice would you give to companies trying to innovate?
- Work on building Psychological Safety in your teams.
- See failures as fantastic learning opportunities.
- Don’t neglect non-tech innovation.
- Have fun! People are the most innovative when they have a playful approach to a challenge.
Follow Samuel West on his LinkedIn or have a look at the Museums of Failure in Helsingborg or Los Angeles. The Museum of Failure is a collection of over 100 failed products and services from some of the world’s best-known companies. For more interesting insights, stay tuned on our ARYZE blog and website!