Innovation: Learning from both Successes and Failures

Stephen DeAngelis

January 12, 2012

All companies want to win in the marketplace and one way to do that is to continue providing innovative products and services that consumers want to buy. Each year the Wall Street Journal sifts through hundreds of new technologies to find the few that could change how we live and work. This year a panel of independent judges sorted through 155 entries that had been winnowed by the newspaper’s editors from a larger group of 605 candidates. For 2011, “the judges chose a total of 35 winners and runners-up in 16 categories.” [“2011 Technology Innovation Awards,” by John M. Leger, 17 October 2011] According to Leger, “the judges assessed the applications primarily on these criteria”:

• Does the innovation break with conventional ideas or processes in its field?

• Does it go beyond marginal improvements on something that already exists?

• Will it have a wide impact in its field or on future technology?

Leger writes, “If you think start-ups have a monopoly on innovation, think again.” He reports that the winners included a number “of big names [such] as International Business Machines Corp., Novartis AG, Intel Corp., Abbott Laboratories, Xerox Corp. and runners-up Hewlett-Packard Co. and Yahoo Inc.” The three big winners were: “[Gold Award] Cellular Dynamics International, which makes huge quantities of human heart cells that can be used to study diseases and develop medicines. [Silver Award] Joule Unlimited Technologies Inc. [which has developed] a more efficient technique for producing biofuel. … And [Bronze Award], IBM for Watson, the supercomputer system that defeated two grand champions on ‘Jeopardy!'”

Although this blog mostly covers topics related to supply chains, I do occasionally stray into other areas to talk about innovation. Cellular Dynamics’ breakthrough advances may not improve supply chains, but its research could very well save your life. On the other hand, Joule Unlimited’s biofuel and IBM’s Watson technologies could have a direct impact on supply chains. To read more about Watson, see my post entitled Artificial Intelligence and the Future. There are other technologies among the winners that could also impact supply chains, including: “SeaMicro Inc., U.S.: A line of computer servers that use a quarter of the power of traditional servers; … Mykonos Software Inc.: … A website-security product that lures in hackers, tags and profiles them and then blocks all of their future break-in attempts; … Equipois Inc.: A mechanical arm that holds tools, parts and other objects, allowing factory workers to move the objects freely as if they were weightless; … CloudFlare Inc.: A service that helps secure and speed up the performance of websites; … Intel Corp.: … A three-dimensional transistor design that makes it possible to build a smaller semiconductor, while improving performance and reducing energy consumption; … Xerox Corp.’s Xerox Research Centre Europe: … A prototype customer-support system that uses three-dimensional virtual-reality imaging to connect customers with live help-desk assistance directly from a broken printer; … KPIT Cummins Infosystems Ltd.: … A kit for converting regular gasoline-powered automobiles into hybrids; [and] … Altobridge Ltd.: … A low-cost solar-powered wireless system called ‘lite-site’ that aims to tackle three big barriers to extending wireless service to remote areas: high capital costs, high operating costs and high transmission costs.” For the full list of winners, click on this link.

Although the Wall Street Journal list recognizes successful innovations, another article published in the paper admits that innovative ideas can also result from failure. [“Better Ideas Through Failure,” by Sue Shellenbarger, 27 September 2011] Anyone who is a student of creativity and innovation knows that success and failure are symbiotic traveling companions. Shellenbarger writes:

“Amid worries that we are becoming less innovative, some companies are rewarding employees for their mistakes or questionable risks. The tactic is rooted in research showing that innovations are often accompanied by a high rate of failure. ‘Failure, and how companies deal with failure, is a very big part of innovation,’ says Judy Estrin of Menlo Park, Calif., a founder of seven high-tech companies and author of a book on innovation. Failures caused by sloppiness or laziness are bad. But ‘if employees try something that was worth trying and fail, and if they are open about it, and if they learn from that failure, that is a good thing.'”

Saying that “failure is a good thing” and actually believing it are two different things. I once read an article that included the story of Matt Buckley, an employee at Southwest Airlines. As I recall, Buckley recommended that the company expand into the maritime transportation industry. His recommendation was followed and the company lost millions of dollars. Instead of firing Buckley, the company praised him for his initiative. I believe the article went on to state that any out of the box idea presented by a Southwest employee was for a while (and may still be) called a “Matt Buckley.” I know two things are true. Matt Buckley does work for Southwest Airlines and, in March 2011, he was promoted to Vice President of Cargo & Charters. Shellenbarger continues:

“Many people succeed at producing innovations because they churn out a very large number of ideas, both good and bad, says Dean Keith Simonton, a psychology professor at the University of California, Davis. ‘The most successful people tend to be those with the most failures,’ says Dr. Simonton, author of more than 500 studies and articles and 12 books on creativity and innovation. Extracting lessons from foul-ups is the focal point of Michael Alter’s ‘Best New Mistake’ awards at SurePayroll, a payroll-services company in Glenview, Ill. Only people who are trying to do a good job, make a mistake and learn from it are eligible for the $400 annual cash award.”

IBM legend Thomas J. Watson once faced the situation where an employee’s mistake cost the company ten million dollars. When the man was summoned into Watson’s office, he was asked if he knew why he was there. The man said that he expected that he was going to get fired. “Fire you?” Watson exclaimed. “I spent $10 million educating you. I just want to be sure you learned the right lessons.” Learning the right lessons from failure is critical — otherwise failure is just failure and that’s bad for business. Shellenbarger reports that failure isn’t the only way that companies try to foster innovation. She continues:

“Employers use a variety of tactics to foster innovation. Grey New York blocks off a ‘no meeting zone’ every Thursday morning, to allow employees sustained time for work on creative projects. Procter & Gamble Co. has set up a division for innovation, called FutureWorks. Some add game or nap rooms, expansive art-filled atriums, hiking trails or private meditation rooms with music and adjustable lighting. Intuitive Surgical, a Sunnyvale, Calif., maker of surgical robots, limits work teams to five members ‘like jazz bands,’ says Gary Guthart, president and chief executive. Team members tend to share ideas easily, respond quickly to problems and hold each other accountable, he says.”

The one trait that all truly innovative companies share is the right corporate culture. Judy Estrin told Shellenbarger that “all innovative companies tend to be alike in certain ways. … They encourage coworkers to trust each other, comment on each other’s work and take criticism in stride. Also, managers encourage intelligent risk-taking, tolerate failure and insist that employees share information openly.” Shellenbarger continues:

“At the 150-employee Consumer Electronics Association, an Arlington, Va., trade group, Gary Shapiro, president and chief executive, tries to make it safe to fail by talking openly about screw-ups. In his eight-page manifesto called ‘Gary’s Guidelines,’ writes Mr. Shapiro, co-author of a book on innovation: ‘Mistakes are OK—hiding them is not.'”

Fostering a culture of innovation is a tougher task than it might sound. Even in the best organizations, there is tension created by innovative activities. That is because, by their very nature, organizations resist innovation. In his book entitled Bureaucracy, James Q. Wilson wrote:

“We ought not to be surprised that organizations resist innovation. They are supposed to resist it. The reason an organization is created is in large part to replace the uncertain expectations and haphazard activities of voluntary endeavors with the stability and routine of organized relationships. The standard operating procedure (SOP) is not the enemy of organization; it is the essence of organization.”

Traditional organizational silos can also be a barrier to innovation. Not only do silos make information sharing more difficult, they establish turf wars that make other collaborative activities harder to pursue. In an interview Dustin Mattison conducted with Steven Schumaker, Schumaker talks about how he “was tasked with streamlining the entire innovation process for a company that works with fresh food, Steven Shumaker’s first task was to bring 21 departments to the table.” [“Top-level view of processes helps break down silos and improves innovation,” Dustin Mattison’s Blog, 28 November 2011] Mattison writes:

“In 2009, Steven Shumaker was involved in mapping the entire innovation process for a company that makes fresh food for the United Kingdom and Ireland. With 21 departments, each playing separate roles in bringing new products to the marketplace, it was quite an eye-opener. In supply chain alone, Steven said, there were four departments that impacted the process, including supply chain procurement and packaging, supply chain ingredients, supply chain planning, and supply chain logistics. The project had three goals in mind. First, to reduce the risk of doing something wrong and wasting the investment in new product introduction. Second, to streamline the process with an eye toward making the new product introduction process more efficient and pushing more innovation through in a more timely manner. Third, to gain an understanding of the company’s capability to innovate from a capacity perspective.”

Those are obviously worthy goals that are shared by companies in a number of industry sectors. Schumaker began with a discovery process to establish a baseline for the company. Schumaker told Mattison, “discovery can be a nightmare if allowed to drift on forever without specific exercises in place to keep it moving forward and keep people engaged. Steven said he was fortunate enough to have the support of the CEO, which no doubt went a long way toward keeping people on task.” Schumaker found that the company didn’t have a process in place for measuring progress in any meaningful way. As a result, he established a four-gate process “that every innovation project must pass through to bring each of the 21 departments to a point where a company executive could make an educated decision regarding whether a project should go forward.” Mattison continues:

“The first stage of innovation, Steven said, was the alignment of tasks. For example, procurement might have to buy a new line, the flavoring department might have to develop a new formula, the packaging department would likely have to develop a new design, which in turn, might trigger the need for adjusting a high-speed packaging machine to facilitate the project. No commitments were made at this point, but at the end of the phase, if everything was in alignment and contracted out with a supplier, it would trigger the next round of investment into the project. Moving forward with a new food product, there are always legal hurdles to clear as well, including protecting intellectual properties, such as formulas, and proper word of all product descriptions. Until the company went through complete discovery to arrive at a process flow, people were working within silos, not pulling together and sharing information vital to cost effectively bring new products to the marketplace. In the end, Steven said, everyone was a lot smarter, but the true test was pulling everything together and transforming the company in such a way that everyone was inspired to follow the regimen.”

You read a lot about the importance of corporate alignment nowadays. Schumaker’s example, drawn from the innovation process, makes it clear why alignment is so important. Without shared data and permeable silos, alignment simply can’t occur. Schumaker offers several other interesting ideas in the interview as well; so I recommend clicking on the link and reading Mattison’s entire blog.

The main lesson to be drawn from the articles discussed above is that companies need to learn from both their successes and their failures. There are always things we can do better. There are no magic formulas for innovation; although there are some shared traits that innovative companies share. Estrin listed some of those traits above. Other traits are discussed in my post entitled Learning to Innovate.