• Fail Differently.

    Changing the innovation process from reactive thinking to proactive experimentation

  • Failure is often defined as “lack of success.” It’s a conclusion rather than a narrative that captures an ongoing process. Heard often within the growing tech industry, ‘fail often’ and other mantras act as a salve for ideas and actions gone wrong. These maxims are meant to support the idea that failure isn’t necessarily a bad thing, that we can learn from it and make our next steps stronger.

    While those adages may be true, it is also true that a failed plan or strategy can severely damage or even destroy a business. Lessons can be learned from these situations, but a more proactive, intentional approach to "failing" might be the better answer.

    We need to change our relationship with the process. We need to fail differently.

  • BBVA Compass spoke with motivational speaker Stephen Shapiro about how small businesses need to fail differently. Shapiro, who wrote the best-selling book, Best Practices Are Stupid: 40 Ways to Out-Innovate the Competition, endorses the principle "build it, try it, fix it." In his books and presentations, he asserts that “failure is overrated,” often citing the philosophy and work of inventor Thomas Edison.

  • “I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.”

    Thomas Edison

From Edison’s point of view, his work wasn’t based on coming up with ideas—some of which worked, and some which didn’t. His entire focus was on the process, the trial and error resulting in his desired outcome. Today’s small business owners might think, “That’s great, but I’m not in a lab with a team of researchers and all the time in the world. I am busy running my business.” The more important question then is: can you afford to fail?

The Cost of Learning

Consider the cost of learning from mistakes. When you invest time researching an idea and then carrying out that plan, and it results in failure, the costs of being wrong add up.

There are tangible costs (i.e., material investments; human resources) along with intangibles such as the time and energy to re-examine much of the research and work that was already done. The cost involved in this kind of learning process is potentially higher than it could have been.

So how then, can business leaders adopt this process to learn from failure without serious risk?

  • Learn from Experiments

    We learn from experience. When failure is obvious, it often triggers a series of lightbulb moments: “I should have done this,” or “I shouldn’t have done that.”

    Sometimes though, the results of our decisions aren’t glaring successes or failures, they’re just OK. These experiences, perhaps more than definitive results, can be missed opportunities. If a goal isn’t met, there must be a reason why. As painful as failure might be, the biggest mistake—one worse than failure itself—is not reflecting on the experience, not mining it for lessons.

    But you can start the learning process earlier. Instead of learning from experience (reactionary), try learning from experiments (proactive). Thinking in more preparatory ways can guide decisions closer to their intended success.

“I don't believe that failure is necessary in general. I also don't believe that the answer always resides in books, articles, or training classes. The key is running small, scalable experiments. Experiments only fail when you fail to disprove an incorrect hypothesis. Unfortunately, we are wired as human beings to prove what we believe to be true. As Scott Cook, co-founder of Intuit once said, ‘For each of our failures we had spreadsheets that looked awesome.’”

Stephen Shapiro

1. Start Small

When possible, test changes in a safe, ‘non-live’ environment. Before implementing any changes, get feedback from peers and customers on your prototype. This will help inform your final decision.

“When you have an idea you want to test, start small. What's the least expensive, fastest, lowest risk way to prove the concept? More importantly, what's the safest way to disprove the concept? First, test things out in a "laboratory" but quickly move to test the idea with the market. What do they like? What don't they like? Run some online tests via Google AdWords or other means to test interest. The key is to keep your investment low in the beginning until you have enough evidence that you have a winner. And then scale. Another option is to push the risk of failure into the market through crowdsourcing. When you do this, you force the market to experiment until they find a solution. You then pay for the solution based on value not time invested. You could have dozens or hundreds of teams working to find a solution to your problem, but only one is declared the winner and claims the prize.”

Stephen Shapiro

Start small, get feedback, and refine your model.

  • 2. Refine the Variables

    Use feedback to better refine the variables. Your test group might identify fallacies in your theory or gaps you never considered. Incorporate this knowledge in your next experiment. Don't underestimate the importance of this step. Seeking new perspectives increases your chances for success.

    “People will give you insights into variables you might not have considered. The key is to get multiple people with multiple perspectives involved. Unfortunately, if you only experiment with people inside your organization, you will have a myopic view of the world as you are all too close to the idea.”

    Stephen Shapiro

  • 3. Test Deeper

    Once your changes are made, test again. Try to disprove your hypothesis. Constantly challenge your idea. Is the concept still relevant? Are you targeting the right customer base? Are you asking the right questions?

    “If you buy into the concept of scalable experiments, then the best way to avoid failure is to make sure you run experiments specifically designed to disprove your hypotheses. Put people who will play a devil's advocate role on the team. Do everything in your power to show why your idea is a bad one. And if for some reason an idea passes this level of scrutiny and still fails to perform in the market, make sure you learn from it. What would you do differently in the future to avoid this from happening again?”

    Stephen Shapiro

  • 4. Look at History

    Likely, someone’s been in your situation before. Use your network, the internet, or the library to research similar cases: what went wrong, and what they learned from it. Use that research as a reference for your own experiments. As the saying goes, those who don’t learn from history are doomed to repeat it.

    “There are two ways to learn from a failure: 1) visceral learning, and 2) process learning. It is difficult to learn from someone else at a visceral level. However, it is this form of learning that is typically most effective as it rewires our brain to not make the same mistake again. Cognitive learning can't replace this. However, as leaders, we can create a pseudo-visceral learning experience by connecting our current situation to something in the past where failure occurred.”

    Stephen Shapiro

It’s good to learn and change when our plans fail, but business leaders shouldn’t rely on failure as the tool. We need to understand failure in a different way, to learn more from the process rather than postponing learning until the failure occurs.

“The key is to remember that innovation is a process. It is not haphazard. When you learn from past failures, adjust the process and make sure that gets rolled out to everyone. The individual failure typically highlights a process flaw that needs to be corrected.”

Stephen Shapiro

Keep Moving

With a focus on the process—on trying and learning—we can start to understand failure differently. Is there a guarantee we will never fail again? No, but our understanding of that experience will be much different.

When our ideas fail, we are affected not only financially, but also emotionally. Don't dwell on the loss. Move on to the next challenge. Focusing too long on why something didn’t work could obscure the next big success.

“The first step, of course, is to mitigate the risk of failure as much as possible. But if you do fail in a colossal way, you might find that celebrating the failure helps. Some organizations at their employee rallies bring up teams that failed yet learned a lot in the process. One company I know had a coffin in the office. When there was a major failure, they would hold a funeral for the idea. Learn from it, but bury it. I always liked the visual aspect of this celebration.”

Stephen Shapiro

What you can do right now:

Start small, refine the variables, test deeper, and look at history.

Tweet your experiments, learning, and what failure means to you with

#faildifferently

Let us partner with you on your next potential success. Learn how BBVA Compass can benefit your small business.

Fail Differently.

Changing the innovation process from reactive thinking to proactive experimentation


Failure is often defined as “lack of success.” It’s a conclusion rather than a narrative that captures an ongoing process. Heard often within the growing tech industry, ‘fail often’ and other mantras act as a salve for ideas and actions gone wrong. These maxims are meant to support the idea that failure isn’t necessarily a bad thing, that we can learn from it and make our next steps stronger.


While those adages may be true, it is also true that a failed plan or strategy can severely damage or even destroy a business. Lessons can be learned from these situations, but a more proactive, intentional approach to "failing" might be the better answer.


We need to change our relationship with the process. We need to fail differently.


BBVA Compass spoke with motivational speaker Stephen Shapiro about how small businesses need to fail differently. Shapiro, who wrote the best-selling book, Best Practices Are Stupid: 40 Ways to Out-Innovate the Competition, endorses the principle "build it, try it, fix it." In his books and presentations, he asserts that “failure is overrated,” often citing the philosophy and work of inventor Thomas Edison.


Expertise is the Enemy of Innovation





“I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.”

Thomas Edison



From Edison’s point of view, his work wasn’t based on coming up with ideas—some of which worked, and some which didn’t. His entire focus was on the process, the trial and error resulting in his desired outcome. Today’s small business owners might think, “That’s great, but I’m not in a lab with a team of researchers and all the time in the world. I am busy running my business.” The more important question then is: can you afford to fail?


The Cost of Learning

Consider the cost of learning from mistakes. When you invest time researching an idea and then carrying out that plan, and it results in failure, the costs of being wrong add up.


There are tangible costs (i.e., material investments; human resources) along with intangibles such as the time and energy to re-examine much of the research and work that was already done. The cost involved in this kind of learning process is potentially higher than it could have been.


So how then, can business leaders adopt this process to learn from failure without serious risk?


Learn from Experiments

We learn from experience. When failure is obvious, it often triggers a series of lightbulb moments: “I should have done this,” or “I shouldn’t have done that.”


Sometimes though, the results of our decisions aren’t glaring successes or failures, they’re just OK. These experiences, perhaps more than definitive results, can be missed opportunities. If a goal isn’t met, there must be a reason why. As painful as failure might be, the biggest mistake—one worse than failure itself—is not reflecting on the experience, not mining it for lessons.


But you can start the learning process earlier. Instead of learning from experience (reactionary), try learning from experiments (proactive). Thinking in more preparatory ways can guide decisions closer to their intended success.


Experiments and Failure




“I don't believe that failure is necessary in general. I also don't believe that the answer always resides in books, articles, or training classes. The key is running small, scalable experiments. Experiments only fail when you fail to disprove an incorrect hypothesis. Unfortunately, we are wired as human beings to prove what we believe to be true. As Scott Cook, co-founder of Intuit once said, ‘For each of our failures we had spreadsheets that looked awesome.’”

Stephen Shapiro



1. Start Small

When possible, test changes in a safe, ‘non-live’ environment. Before implementing any changes, get feedback from peers and customers on your prototype. This will help inform your final decision.


“When you have an idea you want to test, start small. What's the least expensive, fastest, lowest risk way to prove the concept? More importantly, what's the safest way to disprove the concept? First, test things out in a "laboratory" but quickly move to test the idea with the market. What do they like? What don't they like? Run some online tests via Google AdWords or other means to test interest. The key is to keep your investment low in the beginning until you have enough evidence that you have a winner. And then scale. Another option is to push the risk of failure into the market through crowdsourcing. When you do this, you force the market to experiment until they find a solution. You then pay for the solution based on value not time invested. You could have dozens or hundreds of teams working to find a solution to your problem, but only one is declared the winner and claims the prize.”

Stephen Shapiro



2. Refine the Variables

Use feedback to better refine the variables. Your test group might identify fallacies in your theory or gaps you never considered. Incorporate this knowledge in your next experiment. Don't underestimate the importance of this step. Seeking new perspectives increases your chances for success.


“People will give you insights into variables you might not have considered. The key is to get multiple people with multiple perspectives involved. Unfortunately, if you only experiment with people inside your organization, you will have a myopic view of the world as you are all too close to the idea.”

Stephen Shapiro



3. Test Deeper

Once your changes are made, test again. Try to disprove your hypothesis. Constantly challenge your idea. Is the concept still relevant? Are you targeting the right customer base? Are you asking the right questions?


“If you buy into the concept of scalable experiments, then the best way to avoid failure is to make sure you run experiments specifically designed to disprove your hypotheses. Put people who will play a devil's advocate role on the team. Do everything in your power to show why your idea is a bad one. And if for some reason an idea passes this level of scrutiny and still fails to perform in the market, make sure you learn from it. What would you do differently in the future to avoid this from happening again?”

Stephen Shapiro



4. Look at History

Likely, someone’s been in your situation before. Use your network, the internet, or the library to research similar cases: what went wrong, and what they learned from it. Use that research as a reference for your own experiments. As the saying goes, those who don’t learn from history are doomed to repeat it.


“There are two ways to learn from a failure: 1) visceral learning, and 2) process learning. It is difficult to learn from someone else at a visceral level. However, it is this form of learning that is typically most effective as it rewires our brain to not make the same mistake again. Cognitive learning can't replace this. However, as leaders, we can create a pseudo-visceral learning experience by connecting our current situation to something in the past where failure occurred.”

Stephen Shapiro



It’s good to learn and change when our plans fail, but business leaders shouldn’t rely on failure as the tool. We need to understand failure in a different way, to learn more from the process rather than postponing learning until the failure occurs.


“The key is to remember that innovation is a process. It is not haphazard. When you learn from past failures, adjust the process and make sure that gets rolled out to everyone. The individual failure typically highlights a process flaw that needs to be corrected.”

Stephen Shapiro



Keep Moving

With a focus on the process—on trying and learning—we can start to understand failure differently. Is there a guarantee we will never fail again? No, but our understanding of that experience will be much different.


When our ideas fail, we are affected not only financially, but also emotionally. Don't dwell on the loss. Move on to the next challenge. Focusing too long on why something didn’t work could obscure the next big success.


“The first step, of course, is to mitigate the risk of failure as much as possible. But if you do fail in a colossal way, you might find that celebrating the failure helps. Some organizations at their employee rallies bring up teams that failed yet learned a lot in the process. One company I know had a coffin in the office. When there was a major failure, they would hold a funeral for the idea. Learn from it, but bury it. I always liked the visual aspect of this celebration.”

Stephen Shapiro



Tweet your experiments, learning, and what failure means to you with

#faildifferently

Let us partner with you on your next potential success. Learn how BBVA Compass can benefit your small business.