7/28/2019 Why innovators cant be afraid to fail

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InnovatIon ImperatIve BY Peter Merrill

Risky BusinessWhy innovators cant be araid to ail

Norm LarseN celebrated 39 previous

ailures when he named his breakthrough

new product WD-40, which is short or

Water DeterrentAttempt Number 40.

He invented the product in 1953, and

nearly 60 years later it is still regarded as

one o the most useul products on the

planet.

Larsens example proves that innova-

tors cant be araid to ail. As Thomas

Edison said, Genius is 1% inspiration

and 99% perspiration. But the biggest

ear people have when trying something

new is the ear o ailure and the ear to

take a risk. More than anything else, in-

novation is a risky business.

Risk is the our-letter word that stops

businesses rom innovating. In large part,

we are averse to risk because we under-

stand it more than we did a decade ago.

We are able to calculate, prioritize and

mitigate risk. Because o these abilities,

we have developed a mindset that risk

should never enter our lives.

And yet risk is necessary. Without

taking risks, Columbus would not have

sailed the ocean, the Wright brothers

would not have own, and Armstrong

and Aldrin would not have reached the

moon.

What drove Larsen to create WD-40

was a need. WD-40 was not a solution

looking or a problem; it was the

answer to a need at that time. More

oten than any other single cause, auto-

ignition systems ailed due to damp

plugs and cables short-circuiting.

Larsen asked, How can we drive away

damp? He answered that question,

and his product went commercial in

1958. Ater that, nobody let home

without WD-40.

Create, execute

Innovators risk their reputation when

they develop crazy new solutions. They

risk ridicule rom their colleagues, and

they are oten accused o being mad

scientists. The media also make much

o accidental breakthroughs such as

Alexander Flemings discovery o penicil-

lin. Yet these accidents and crazy

solutions are only a small part o the

innovation process.

The creative phase o the innovation

process is the point at which we fnd

opportunity and potential solutions.

This creative phase is, in truth, relatively

low risk and certainly low budget when

compared with the execution phase

o innovation, at which point the risk

increases signifcantly. Beore entering

the execution phase, we must select our

preerred solution, ocus on making it

user riendly and deliver the solution to

the market.

I your oering is not user riendly

when it reaches the market, it will not

succeed. Historically, this was the great

strength o Kodak. Founder George

Eastman said, You press the button,

well do the rest. More recently, the frst

digital cameras were slow to be accepted

because they were not user riendly.

Daniel Kahneman was awarded a

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Nobel Prize or economics in 2002, in

part because he showed that or a new

product to be accepted by the user, it

needed to achieve a tenold increase

in perceived value. I you say your o-

ering is twice as nice, youre not even

close. What the late Steve Jobs did

so well was understand the user. He

created user interaces that worked or

real people.

Partner problems

The innovators real risk is not whether

the product will work; thats dealt with

in the development stage. The risk is

whether the new oering will be accept-

ed and whether new business partners

will deliver. Larsen, or example, needed

fve years beore WD-40 became a com-

mercial product.

In addition to taking risks and being

willing to ail during product develop-

ment, innovators have even more risk

involved in product deliveryupstream

risk with new business partners and

downstream risk with customer ac-

ceptance.

As part o risk measurement, Intel

measures its ailures against successes.

It is said that unless it gets 10 ailures or

every success, it doesnt think its taking

enough risk.

A new product portolio should con-

tain a mix o potential new products that

will come to ruition in one, fve and even

10 yearsthe longer the time, the higher

the risk. The portolio should range rom

improvements driven by immediate

customer need to radical new oerings

customers dont even realize they need

the more radical the oering, the higher

the risk.

I you have a new oering, its almost

guaranteed you have new suppliers. The

classic calculation is that with our new

suppliers, three will have a 90% prob-

ability o delivering, and one will be at

40%. That means the overall probability

o your oering coming together is 0.9 x

0.9 x 0.9 x 0.4 = 0.2929%.

Thats a serious case or risk mitiga-

tion. That does not mean you walk away

rom your great new idea; it means you

manage that 40% supplier very careully.

And, i necessary, you buy and manage

the supplier yoursel.

We identiy risk with a new sup-

plier, not just by evaluating its product,

but by evaluating its quality manage-

ment systemor the quality o its

management. A potential new supplier

will always show you the shiny new

component that works or the delighted

customer they service well. You must

evaluate how its leadership works.

Use the management and measure-

ment clauses o ISO 9001 to audit the

supplier. Use the HR clause to evaluate

how it develops its people as well as its

product.

Stand and deliver

Supplier risk is the risk attached to

bringing the product together. Then,

theres the risk o being able to deliver.

Delivery risk also revolves around

business partners. I you are going

to use a distributor or a marketing

partner, you need to ully understand

their decision cycles on new oerings.

I its an annual cycle, you may be at

serious risk o missing the boat on your

new product launch. You might need

alternative distributors or agents built

into your business strategy to mitigate

this risk.

As you can see, true innovators have

many areas to consider as they calculate,

prioritize and mitigate risk. In the end,

however, they still must take risks. QP

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Peter Merrill s psdn of Qus

Managmn Sysms, an nnovaon

consuancy basd n Bungon, On-

ao. M s h auho of sva

ASQ Quay Pss books, ncudngDo

i rgh h Scond tm, scond d-

on (2009), and innovaon Gnaon

(2008). H s a mmb of ASQ and

h ASQ innovaon tchnca Comm.

The righT readWhile its great when things go right the rst time, thats rarely

the case, which is why its crucial to be able to learn from

your mistakes. Read about how to turn that ability into lasting

change at your organization in Do It Right the Second Time,

second edition, by Peter Merrill, available in the ASQ Quality

Press bookstore (http://asq.org/quality-press).