It is accepted that up to 80% of things innovators try will fail. This is a fact of life when you’re running an innovation team.

But not all failures are bad. Some can have extremely positive consequences.

A good failure is one which teaches an organisation something. Usually, these lessons will have been learnt after a certain amount of investment has been made. The best failures are those where the lessons have been bought at the smallest possible cost. In other words, the innovation team has cancelled a project early.

In an organisation that has a culture of celebrating good failure, the money that’s theoretically been wasted on a stopped project is seen as an investment that’s useful in teaching a team how to make something happen the next time.

In contrast, a bad failure is one which fails to create new lessons at all. Bad failures are also typified by wasting large amounts of money.

For many organisations, its hard enough to celebrate good failures. So you can imagine how very difficult things become for innovation people when they have to explain a series of bad failures. Most of the time, a series of bad failures will be all it takes to kill an innovation programme once and for all.

On the other hand, many organisations are great at accepting failure. They’ve recognised that they need sophisticated innovation processes to ensure their failures are directed into new unique things that work.

Let’s examine the math of this.

If (on average) only one out of every five things tried succeeds, that one thing has to be good enough to pay for the four things that went wrong. Otherwise, the innovation programme will never be able to justify itself financially.

So what’s the best way to ensure financial results from innovation? Clearly, by focussing attention on maximising the number of good failures – which are those that don’t cost very much.

The natural corollary of this, of course, is that you should delay investment in new things as long as possible – certainly long enough to ensure you’ve removed as many risks of failure as possible.

For more information about managing innovation failure, please review James A Gardner’s free online book on starting an innovation programme.

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