Building a fast-failure-friendly firm

THE
FAST-FAILURE
FRIENDLY FIRM
FAIL YOUR WAY TO SUCCESS
http://www.flickr.com/photos/geyring/

Pacemakers
Post-its
Penicillin
The Light Bulb
The Microwave
Corn Flakes
Discovery of the Americas
Kitty Hawk

These were all failures that
led to mondo ducats

But, we shouldn't just say
"Whoo hooo! Let's fail
more!"

Ideally, we should fail more,
but fail smarter

that means we want to fail
when….

1. the costs of failure are low
and the returns are high

2. we can quickly determine if
we're failing, so that we can
pivot quickly

3. we can learn effectively
from the failure

this presentation is about how
managers can build
organizations that can do that

let's first differentiate
between failures and f@*k
ups

failures are legitimate
mistakes

It's a legitimate mistake when
you…

fumble because you lacked all
the data, but had to move
forward anyway

made a reasonable bet, but
got unlucky with
circumstances

invested in a low cost - high
potential reward experiment

failed to execute due
diligence before or during

failed to learn from a
legitimate mistake and
repeated it

invested in a high cost – low
potential reward experiment

let's talk about 8 reasons why
legitimate mistakes can be
valuable

REASON 1
Fail regularly to ensure that
you keep striving
Failure occurs when you stretch / grow yourself, because you are out of
your comfort level. If you’re not failing, you’re likely not stretching.
Explicitly track (and record) your rate of personal failures. Ensure 1 meaty screw up per
quarter, or force yourself to move into personally uncharted waters.

REASON 2
Fail regularly so that you
continue to be surprised
Surprise is a key to innovation because it reveals opportunities. It also
stores valuable Return on Investment if you learn from it.
Seek out Failure and aggressively run retrospectives (post mortems). Celebrate what you learn
positively, widely, and publicly.

REASON 3
Fail regularly to keep an open
mind
We are biologically predisposed to calcify assumptions & shy from
cognitive dissonance. Shake things up before they can’t be dislodged.
Compose a list of 10 things that you believed 15 years ago, which you now know are false, or
at least, not quite right. Remember how sure you were.

REASON 4
Fail regularly so that you
remind the ego to stay
humble
The greatest danger of confidence is over confidence
Find and listen to the album “Nothing’s Shocking” by Jane’s Addiction. It has nothing to do
with this topic. It’s just a fraking good album.

REASON 5
Fail regularly so that you build
empathy for others who fail
Most people fear failure because of how they think others will see them.
It is peer pressure which makes us avoid what is innately good for us.
Look around for someone who is currently failing and give them a shoulder to lean on. No
questions asked. No judgements made.

REASON 6
Fail regularly so that you build
confidence in your resilience
One of the reasons that it was so hard to shave my head bald for the
Children’s Cancer Foundation Hair for Hope program was the worry that
it wouldn’t come back. It did.
Compose a list of 3 big mistakes you’ve made in your life thus far. Appreciate that you got
through them and that they are not nearly so dire years later.

REASON 7
Fail regularly to build practical
recovery skills so that you get
up faster & stronger next time
‘nuff said
Go back to the retrospective you ran for Reason #2 and analyse the process after the failure
rather than before. Identify 1 thing to improve with recovery next round.

REASON 8
Fail regularly so that failure
becomes less scary &
embarrassing
Once you train your brain to see failure as an opportunity, it will become
one
Find someone who has failed (and who may feel privately ashamed) and let them know
personally that it’s no big deal.

PART THREE
HOW DO YOU BUILD
A FAST-FAILURE
FRIENDLY FIRM

if you are a manager or a leader

and you are now convinced that a bit
more failure would be a good thing for
your group

here are 5 simple, practical things that
you can do at any level of an organization

PRACTICE 1
Iterate Faster & Smaller

PRACTICE 1
put in place a process to identify low-hanging opportunities where
failure is low cost & high return

PRACTICE 1
do a bit of shot gunning with the results of the low-hanging fruit review.
Commission many small bets and let the dice roll

PRACTICE 1
rewire your infrastructure/administration to support quick-iteration
(e.g.: annual budgets….really?!?!)

PRACTICE 1
add "no-go" tollgates to avoid the basic human hard-wired tendency to
throw good money after bad

PRACTICE 1
require business cases to identify minimum viable product features and
customer validation metrics from the start

PRACTICE 1
define exit plans so that features (and applications) are designed for
easy decommission if they don't work

PRACTICE 2
Celebrate Failure
make sure that senior leaders celebrate great post-mortem learnings at
townhalls or team meetings

PRACTICE 2
Celebrate Failure
heck, have those leaders give out an award to the bravest or most
resilient failing team of the quarter

PRACTICE 2
Celebrate Failure
or at least, have them talk openly and broadly about the importance of
smart failure

PRACTICE 2
Celebrate Failure
at every level, use neuro linguistics such as, 'and versus but'

PRACTICE 2
Celebrate Failure
look outside the firm and do positive post-mortems on the mistakes of
competitors or other industry players

PRACTICE 3
Share & Learn from Failure

PRACTICE 3
use a tool that helps you effectively share knowledge broadly – check
out Jive, or other Enterprise Social Networks

PRACTICE 3
make sure all project leads learn how to effectively facilitate
retrospectives / post-mortems and make sure they do

PRACTICE 3
publish retrospectives broadly

PRACTICE 3
every year, circle back and review your library of post-mortems for
emergent themes

PRACTICE 4
Habitually Challenge the
Status Quo

PRACTICE 4
Habitually Challenge the
Status Quo
have a annual mechanism to challenge all wisdom that has stood for a
long time, especially during times of market disruption

PRACTICE 5
Hire & Train Sherlocks &
wackos

PRACTICE 5
wackos
make sure to hire some folks who are good at forensics

PRACTICE 5
wackos
and a few oddball outliers to introduce randomness and surprise

SMART FAILURE IS PROFITABLE
Characteristics of Smart Failures:
• Costs of failure are low and returns are high
• We can quickly determine we are failing so we can pivot
• We learn
LEGITIMATE FAILURES
• You lacked all the data but had to go
• You got unlucky with circumstance
• Low cost of failure & high returns
F@*K UPS
• Lacked due diligence before or during
• Failed to learn
• High cost of failure & low returns
WHY FAIL?
• Ensure that you keep striving
• Continue to be surprised
• Keep an open mind
• Stay humble
• Build empathy for others who fail
• Build confidence in your resilience
• Build practical recovery skills
• Make failure less scary &
embarrassing
MANAGERIAL BEST PRACTICES
• Iterate Faster & Smaller
• Celebrate Failure
• Share & Learn from Failure
• Habitually Challenge the Status Quo
• Hire & Train Sherlocks and Wackos

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Building a fast-failure-friendly firm

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