Updated: Oct 14, 2021
As you stroll through a new museum in Helsingborg, Sweden, past an old Sony Betamax video recorder and a bottle of Harley-Davidson eau de cologne—it soon becomes apparent that nothing on display there exudes the sweet smell of success.
That is by design. The Museum of Failure, which is set to launch a Hollywood branch next month, was created to showcase the “risky business of innovation.” Founder Samuel West launched the museum, he says, “to encourage organizations to be better at learning from failures—not just ignoring them and pretending they never happened.”
West’s quirky celebration of failure, together with trends like Silicon Valley’s failure parties and NASA’s Fail Smart Award, illustrates how a formerly hush-hush subject has gone mainstream. Yet for most organizations, failure is still taboo—a source of shame to be swept under the rug or, better yet, avoided altogether.
This is unfortunate. By embracing innovative risk-taking that carries a strong possibility of failure—and then rigorously analyzing the causes and contexts of that failure—organizations can harness a powerful tool for promoting deep learning, continuous improvement, and future success.
Why Is It So Hard to Learn from Failure?
First companies need to overcome the stigma associated with failure.
Fear of failure has been ingrained in most of us since early childhood, which in turn has shaped the bias toward a performance culture that discourages risk-taking or experimentation. Corporate hierarchies all too often equate bad news with incompetence, making it difficult for managers to initiate a discussion on failed projects. And when failures happen, cognitive bias often makes it hard to extract meaningful lessons from it—those with emotional involvement in the project find it hard to be objective.
Above all, most companies lack the distinctive analytical skills—to understand change over time and in context and discern patterns of behavior in complex human systems—needed to learn from failure. Not to mention a tolerance for causal ambiguity that few hard-charging executives, accustomed to clear-cut answers, can justify.
A number of strategies have emerged to help organizations overcome these obstacles. Data—and the complex algorithms for mining it—can stimulate discussion and challenge assumptions in a neutral way. It also can be used to test ideas and “fail quickly.” Capital One, for example, uses randomized control trials to test-market initiatives for its credit card, enabling it to learn what works and what doesn’t.
The US military, meanwhile, has long used “after action reviews” to analyze combat missions, assess objectives and outcomes, and shape more effective strategy and tactics going forward. And bringing in outside consultants with the independence and expertise to see the bigger picture can help an organization get at the root causes of past failures and map a better way forward.
Corning is a classic case of a company whose rigorous examination of failure paid rich dividends. Despite a storied history of technical innovation—the glass for Edison’s light bulb and Pyrex bake ware are just two of its iconic achievements—the company found itself on the brink of bankruptcy in the early 2000s when the booming market for optical fiber collapsed after the telecom bust.
Corning’s then-CEO, James Houghton, responded by ordering an in-depth study of the company’s successes and failures since inception. Their critical and unblinking look benefited from a culture in which researchers had always been encouraged to innovate even when a discovery turned out not to be commercially viable.
One failed product—a DNA microarray—reminded them of their experience in the drug development marketplace. Combining that work with another a failed product in the field, Corning scientists were able to create Epic, a revolutionary technology for drug testing, which helped turn the company around and is now a highlight of its Life Sciences division.
A pioneer of computer-animated movies, Pixar has always been obsessed with passion and creativity. This doesn’t always translate well into performance and profits, but Ed Catmull, Pixar’s founder and president, has made an art out of using failure as a catalyst for innovation—and commercial success.
Everyone on a project is encouraged to throw out ideas, and then shoot them down. This constant review is part of the Pixar process, and nobody takes “failure” personally—Catmull believes communication is key to creativity. No matter how far behind schedule or how costly the solution, employees know they have the green light to fix what’s wrong.
Toy Story 2 highlights this philosophy. Despite pressure to repeat the commercial success of the original Toy Story, the creative team felt there was something wrong with the film and halted production to correct it. The failure to make the release dated turned out to be an expensive one for Pixar. But the added costs and effort paid off when the revised film went on to become another blockbuster. “Mistakes aren’t a necessary evil,” Catmull put it later. “They aren’t evil at all. They are an inevitable consequence of doing something new….and should be seen as valuable.”
Ford Motor Company
The Edsel ranks high on the list of history’s biggest product flops. And yet, by facing up to its mistakes, Ford went on to engineer one of its greatest successes.
Determined to challenge General Motor’s dominance in the automobile industry in the 1950s, Ford spared no expense in creating the Edsel, a bold new car designed to drive its way into the hearts of the American public. The company conducted extensive market research, followed by a star-studded advertising blitz that included The Edsel Show, an hour-long television “infomercial” featuring Frank Sinatra and Bing Crosby. But despite all the hoopla surrounding its launch, the automobile crashed with consumers, who hated everything about it—the name, the front grill, the price tag, and the lack of reliability.
However, in the process of deconstructing its failure, Ford discovered some key insights into their industry. No longer was the market defined by income groups—the emotional appeal of “lifestyle” was taking over the driver’s seat. The traditional business model for automotive companies had always been to create a car and then figure out its market. Lee Iacocca, then president of Ford, shifted into a new gear by building a car designed to appeal to the new consumer tastes. The result was the wildly popular Mustang, which turned Ford into an industry leader and remains one of its iconic brands to this day.
Those who shy away from making an objective analysis of their failures, on the other hand, risk paying the ultimate price, as Kodak famously did.
Founder George Eastman was a visionary thinker who revolutionized photography by taking it away from professionals presiding over formal studios and putting a simplified technology into the hands of the ordinary people. Over the next century, Kodak became synonymous with family snapshots. Nearly every household in America recorded its everyday life with Kodak, which continued to offer innovations like color film and disposable cameras. The company reigned as the unchallenged King of the printed photo.
The trouble was, its kingdom was crumbling. The problem wasn’t simply a technological failure. In fact, Kodak invented the first digital camera; it also pioneered Ofoto, an online site for posting and sharing digital photos. Management’s mistake was to misunderstand Kodak’s essential identity, which was not to print photos but to capture memories through innovative technologies. Had it embarked on an objective analysis to grasp this crucial distinction, it might still be creating “Kodak moments.” Instead, it survives today largely in the past tense.
Failure as a Catalyst for Success
Good companies celebrate their successes. Great companies do too, but they also learn from their mistakes. They understand the powerful lessons that lie in their own past—warts and all—and have the confidence to learn from them.
“So go ahead and make mistakes,” said IBM founder Thomas J. Watson, Sr. “Make all you can. Because that’s where you will find success: on the far side of failure.”
Andrea DaRif, a Saybrook consultant, is an award-winning art director and historical novelist who has published articles on history and culture for a range of publications.