Innovation is the result of taking big leaps, but failure is often the downside of taking those leaps. While media profiles on successful companies have long celebrated how business encourages creative risks and embraces the possibility of failure — from the battle-tested CEO to the front line worker — without penalty, we wondered if this was a myth, especially in today's tough economy.
So Incubator asked business leaders, Tony Chapman, CEO of Capital C, a Toronto communications and advertising company, Charles Plant, Managing Director of the Market Readiness Program for entrepreneurs at MaRS, and Naeem 'Nick' Noorani, founder and publisher of Canadian Immigrant magazine, a series of tough questions about risk and failure.
Is failure necessary?
"The only way you're going to grow your business is innovation," says Tony Chapman. "If you're going to have an innovative culture, you must understand that that comes with the acceptance of failure. Innovation comes with a lot of mistakes."
"You need a culture that allows failure for success because without it, people become anti-failure," says Charles Plant. "Trying different things is the act of innovation. If you fail 14 times, hopefully you're going to succeed on the 15th try. Without failure, we're not going to be driving and growing the economy."
"Canadian Immigrant magazine was my 17th entrepreneurial venture," says Nick Noorani. "The other 16 were lessons in how to do it right!"
Myth or reality?
"Everybody in theory embraces the concept of failure and risk but if the person at the helm is purely financially driven, there really isn't a lot of tolerance for risk" says Chapman, who says the tolerance for failure in his own company is incredibly high. "We're in the business of creativity so our profitability is based on being able to deliver big ideas that work. The cost of that is that some jobs are just not going to make money. Nobody is penalized for that because collectively, we all share in the success of the business."
Plant says that acceptance of failure is a cultural problem in Canada in that we tend not to reward the people who have failed. "We tend to punish people who fail whereas in Silicon Valley, they tend to reward people who have failed because they've learned lessons and can gain from that failure.
"There are measurement benchmarks that we can't get away from, depending on the business," says Noorani. "But we need to give people the opportunity to be creative and therefore, allow them to fail.'
Is there a permissible way to fail?
Everyone agrees that the key to successful failure is doing it in a sensible manner to protect against the downside. The trick to successful failures is to know when to quit.
"I think you have to quickly acknowledge when something is a failure and have a back up plan of what you're going to do," says Plant. "Don't keep flogging a dead horse."
According to Chapman, there are two types of failure in his company: external and internal. The most punitive is external where they've failed in the eyes of their client because it's not only lost revenue, but loss of reputation and confidence as well. In that case, the best way is to handle it with transparency and honesty with the client and to talk about solutions to make sure it won't happen again. Internally, Chapman says that they've put a process in place to mitigate and isolate failures. Each step along the way, they evaluate so they can course correct if needed. Then, if they have to abandon something, they're not months down the road.
Employees who fail
