Navigating Failure in Entrepreneurship

0:08Hello and welcome to another episode of the duct tape marketing podcast. This is John Jantz, and my guest today is Amy Edmondson. She is the Novartis Professor of Leadership and Management at the Harvard Business School, renowned for her research on psychological safety for over 20 years. She is the author of The Fearless Organization and Teaming, and a book we're going to talk about today, Right, Kind of Wrong, The Science of Failing Well, which was a winner of the 2023 Financial Times Business Book of the Year. So, Amy, welcome to the show. So thank you for having me. All right. So I'm just going to toss this up and let you bat it out of the park because it's a softball question.

0:48But there's a lot of literature lately, a lot of gurus online talking about how entrepreneurs have to fail and fail fast and fail often. And frankly, I don't like failing. So why are you telling me I have to do it? So I don't like failing either. And that's why I wrote this book, because actually, really, it's a book about success, success in an uncertain world where we cannot prevent all failure. It turns out we can prevent an awful lot of failure. We can prevent, you know, unintelligent failures. We can prevent the kinds of failures that happen when you mail it in. You don't you know, you don't do your homework and you fail the exam.

1:30Those are preventable. And I think the reason why there's all this sort of literature or sometimes happy talk about failure is that we recognize it as a necessity for progress in any field. And if you're a startup, by definition, you're doing something that doesn't yet exist. And you've got a hypothesis that it might work. In fact, don't do it. If you have no confidence that this could work at all, stay out of the game. But you have a sense that this could work. In fact, you're probably pretty sure it could work. But because it's new territory, there is a possibility that you were wrong, right?

2:11That with all the effort, all the brains that this thing might not work. That would be what I would call, especially if you've done your thinking and had good reason to believe it would work, that would be an intelligent failure. And that is the kind of failure that the Silicon Valley talk, you know, fail fast, fail often, is implicitly referring to, but often they're not explicit enough. And it sort of sounds like they're saying, yeah, go ahead and fail at everything. No, nobody wants to fail. Yeah. So not doing your research and not understanding if there's product market fit, that would be silly failure, right?

2:49Right, right. Not doing your research to find out what we know, what we don't know, and what's worth trying next. Yeah. So how do we make this a science? You know, that obviously implies that there's, you know, a very methodical, you know, approach to it. How do we make that a science? Well, I think it's really the science of assessing risk thoughtfully. And of course, there's technical work on assessing risk thoughtfully. But in a more colloquial way, I offer three, four criteria that are from first principles, really, but any scientist is either implicitly or explicitly using them, right? So first of all, do you have a goal, right?

3:31Is there somewhere you're trying to get, whether that's a, you know, a new business or a new invention or a new relationship, right? You have a goal. And second, there's no way to look up the answer, right? That it's in new territory. And third, you've done, as we talked about before, your homework. You've found out what is known, what isn't known, and you have a theory or a hypothesis about what's worth trying. And then fourth, and importantly, the risk you're taking is no bigger than necessary. You do not bet your entire net worth on this new company that may not work. You, you know, borrow as much as you can afford to borrow, you bet as much as you can afford to bet, but you're mitigating risk because you know there's uncertainty.

4:22And that is true whether you're starting a company or, you know, developing a new product in a company or going on a blind date, right? You mitigate the risk. You don't agree to go off for a weekend with someone you agree to meet for coffee. And you tell a friend to text you in 10 minutes. So we all know, we know how to mitigate risk when we're thoughtful about it. But sometimes we're not, we just don't think systematically. So the science part refers to the fact that you can be very logical, very systematic, very thoughtful about the risks you take. In fact, I advise it. Yeah. Yeah. So, so there was with your reference to the date there, there was actually a rom-com movie.

5:11I don't know if you know that that was titled The Right Kind of Wrong. Oh, I didn't and I don't know it. That's terrible. It was a terrible movie, but you talk in the book about the gap between rhetoric and action when it comes to failure. Can you elaborate on that gap? Yeah. So, you know, the rhetoric is, I think my challenge with the rhetoric is it's a little glib. And when you fail fast, fail often or celebrate failure, it sounds like it applies to everything evenly. All failures are the same and all failures are not the same. And I think the last thing you want to do, and of course, the last thing you would do is celebrate preventable and occasionally tragic failures.

5:56I mean, you don't go into a manufacturing company and tell the plant manager to fail fast, fail often. She'll just look at you like, what are you talking about? No, we're going for six signals. Yeah, that's not what we're doing around here. We've got really good processes that are in control and capable. And you say, applaud, right? And similarly, scientists who fail, which they do all the time, you don't want them failing because they mixed up the chemicals that they were supposed to be using in the experiment. You only want failures that are truly new tests in new environments that haven't been done before.

6:38So the rhetoric is just a little sloppy and a little non-nuanced, whereas the reality of failing well is thoughtful risks in new territory are to be applauded, whether they end in success, which we hoped for, or failure, which we didn't hope for, but we still must welcome the new knowledge. And in familiar territory for which there is a recipe or a protocol or a process, we should use it and use it thoughtfully. Yeah, I think about all the times I've heard the kind of cliche, Edison, you know, 10 ,000 failures, you know, was just giving him like 9 ,999 that were, you know, of the wrong answers.

7:19And I think a lot of people really look at it that way as like you're eliminating wrong answers when it's more. No, this was a hypothesis that had some thought behind it. And we either made it or didn't. Right. I love the Edison quote, but it is right. It gives the wrong impression of scattershot. And I think because the 10 ,000 is probably not a scientific number, but a kind of poetic number. What he's saying is I didn't mind all of the false starts on the way to the phonograph or the electric light bulb. I understand that's a necessary part of being an inventor, not scattershot. Right, right.

8:00So I think you're actually calling this smart failure. You may have already said that already, but I know it's in the book, smart failure. So in the context of, say, an organization, what are some of the characteristics of smart failure versus just failure? Smart failure is anything that's legitimately in new territory in pursuit of a goal and with a hypothesis and no bigger than it had to be. And that literally could be a formal R &D project, a clinical trial, or it could be, you know, a salesperson, you know, making a call on a potential client and trying an approach, a script, you know, a way of describing the product that hasn't been tried before and it falls flat.

8:49And that's a smart failure, as long as some thought has gone into it. So I think in companies day in and day out, depending on which part of the operation you're in, which tasks you have, there's ample opportunity for smart failures. But they are more numerous in R &D than in execution of operations. But even in operations, let's say you have an idea, a hypothesis about a way to speed up the line a little bit and you test it in a small way and it doesn't work. That's an intelligent failure in a routine setting. But it's a very small one indeed. And now a word from our sponsor, Work Better Now.

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10:10And there are no contracts. To schedule a 15-minute consultation with a Work Better Now rep and see how they'll support your business growth goals, visit WorkBetterNow.com. Mention the referral code DTM podcast and you're going to get$150 off for your first three months. That's workbetternow.com. And don't forget that DTM podcast code. Do you ever run the risk with a lot of emphasis on failure? Do you ever run the risk of people sort of preparing to fail? And so it's like, yeah, we're going to try this thing. It's probably not going to work. And so then it doesn't, right? I mean, does that ever sort of crop up?

10:49You know, I haven't actually thought of that. So I haven't seen that, but I love the question. And it would be worth keeping an eye out for it. I think most of the time that risk is counterbalanced by our very human desire to do well. Even when we know we're in novel territory and there's a real risk that it might not go well, we're still hoping that we're going to be the ones who gets it right. Right. So, you know, even a scientist who like my husband, who says 70 percent of the experiments in his lab fail, even there every day, you know, every scientist, every young scientist is sort of hoping that they're the ones who are in the 70, not in the 30 that day.

11:34So I do think I think our, of course, motivation can be missing. Right. You can have a place when people aren't are apathetic and don't really care. And then it would be a bigger risk. Yeah, I think of a lot of venture capitals that often talk about, you know, they bet on 10 companies, kind of almost with the hope that one's going to be a unicorn and, you know, knowing that seven are going to fail. And that probably becomes a bit of a mentality, isn't it? It can become a self-fulfilling prophecy, right? Because if they, and this goes back to the old research on teachers, where, you know, if you start to expect this one's a winner and this one's not a winner, you will start to unconsciously do things that help the winners and thwart the losers.

12:18And so you do have to be honest with yourself and thoughtful about how am I thinking about this company, this project, this person? And if your honest answer is, I don't think they can make it, test that. Think a little more carefully. If you really think so, maybe it's time to pull out now. If maybe you're wrong, what are you missing? Have an honest, difficult conversation with them or with the executive team. And it's always important to be able to step back later and say, I think I did everything I could. Yeah. So it's very common people will say, you know, it was only a failure if you didn't learn something from it.

12:56What are some of the other than learning from failure? What are some of the other return on investments that an organization can start to see, you know, by well-designed failure experiments? Well, it's mostly learning. And learning means, you know, learning is a pretty encompassing category. It means a lot of different things. It can mean very technical things that now we know to do this and it'll work. Or it could mean just, ooh, when we don't try hard enough, we don't get the results we want. So there's lots of things we can learn. And those are really important dividends from any failure. But I think we also, the other positive output from a failure that we take the time to learn from is that we learn, sorry, I used the word, we discover that we didn't die of embarrassment or something else.

13:45So there's a kind of, we can, our failure muscles become a little strengthened. Like we learned that we're still okay. And so that's a kind of confidence enhancer. Even though it was a failure, there's a little bit of a more robust and healthy ego as opposed to unhealthy ego. I don't know if you have any examples of this, but there are some people that tried something as a hypothesis experiment. It didn't work, but they accidentally created Velcro or, right, like that. I mean, so are there some potential benefits of sort of by by trying more stuff, you're going to accidentally write post it. That was the one I was trying to think of.

14:28Yeah, post it. So, you know, the epitome of that story. But there's penicillin was a it was an accident in the book. I just I described oyster sauce, which was that, you know, a small failure of overcooking the oysters and they burnt and turned into yucky goo. And it turns out if you taste that yucky goo, it's delicious. And there was born a multi-billion dollar industry from that young chef more than 100 years ago. So, yes, I call that the happy accident failure. And those are not the dominant category, needless to say. So if you're sort of hoping that your screw-ups will always yield wonderful dividends, that's probably not the best strategy for failing well.

15:13But if you don't take the time to pause and taste or dig into the failure, the glue that wouldn't stick properly and think deeply about and create the conditions where other people can team up to think deeply about the implications of that failure, then you stand no chance of a real success at the end of the tunnel. I know a great deal of this work is targeted at the decision makers, strategic thinkers, you know, but down the line, how do we empower managers and team leaders to give people permission, right? Because that's part of it, right? We're not going to try stuff that we think will work better if we don't, if culturally it's not acceptable.

15:55So how do they bring that environment? I wish more than anything to speak to the team leaders, to the managers, to anyone in a project or people management role, because they're the ones who are shaping the climate far more than executive leadership. They matter, but it's those local interactions that are really shaping our mental models about what's possible, what's acceptable, what's not okay. And if you get that message, either explicitly or implicitly, that ever coming up short is not okay, then you're going to either hide, you know, hide when the news isn't good, or undershoot, you know, specified targets or goals that you know you can make, rather than ones that are a stretch and bring a risk.

16:51And you don't want people doing that. So I speak, I think, primarily to all of those sort of leaders in the middle who are responsible for setting the stage, for describing the world in which we are working as one that brings necessary uncertainty and necessary human fallibility. And when we accept that those two things like external uncertainty in the world around us and fallibility of ourselves and our teams, then and only then are we well set up to actually do our best because we can be honest about it. We can be as ambitious as possible about beating the odds, but we can be honest about when things aren't working.

17:35There's a book I had the author on recently, and the premise of the book was that it's actually easier sometimes to think in terms of like doing something really big. 10x is actually how he defined it, as opposed to just 2x, which is basically 20 % more growth. We can probably just do a little what we're doing harder. But 10 % or 10 times growth, we truly have to innovate. We truly have to take big risks. I'm curious of how your thoughts on that mentality. That's interesting. Okay. So my first thought when you said that was, well, that's kind of crazy. I don't mean that in a bad way, but you know, like we're not going to just do 20 X or 10 X next year.

18:14Like we can't, but then, you know, I thought, so that's, that might by saying so that might lead people to kind of go, okay, it's not discussable, but that's nuts. Right. As long as it's actually an explicit exercise, then I think it's brilliant. Because then the idea is we won't think differently if we just say, okay, this piece. But if we say, just for fun, let's imagine 10x, what would have to be true? So it's a way of unlocking our team's thinking rather than a kind of new ogre who's come in and said, you must do 10x. Right. That would be crazy. Exactly. But to sort of as a thought device to get us to think out of the box, as it were, I think that's really fun.

19:02Yeah. You'd have to have a whole different set of hypotheses, right, for that. Right. You couldn't just do more of. Right. You'd have to do different. Exactly. Yeah. Well, Amy, I appreciate you stopping by the Ductate Marketing Podcast. Is there some place that you would invite people to find out more about your work and obviously find a copy of Right Kind of Wrong? Sure. So the book is for sale everywhere, I think, more or less. But if you go to amycedmondson.com, there are links to the book, which I really hope you'll read, and also to other papers and articles and even some fun little videos here and there.

19:40Again, I appreciate you taking a few moments to speak with our audience, and hopefully we'll run into you one of these days out there on the road.

19:53We'll be right back.