Fail Fast to Flourish
We often hear today from Venture Capitalists and others that they prefer non-successful companies in which they invest to “fail fast” if they can’t flourish. Peter Sims provides insight into this mind-set in his book Little Bets: How Breakthrough Ideas Emerge from Small Discoveries.
Most people (and larger companies) are driven by risk-avoidance, rather than gain-maximization, a finding that Won Kahneman and Twersky a Nobel prize in economics. However, successful new ventures focus on “affordable losses”.
Saras Sarasvathy, in a study on ”what makes entrepreneurs entrepreneurial” surveyed 30 entrepreneurs who built companies ranging from $200 million to $6.5 billion in a wide range of industries and discovered that these entrepreneurs used a completely different mind-set than the MBA trained managers whom she teaches at the Darned Graduate School of business (University of Virginia). Management training emphasizes a procedural approach – identify the goal and use a given set of means (often best-practices) to achieve the goal in the fastest, cheapest most efficient way. If you think of them as chefs, they begin with a specific menu, pick out recipes, shop for the ingredients, and then prepare the meal in their well-equipped kitchen.
Entrepreneurs, in contrast, are more likely to enter a new kitchen with a menu, rummage through the cupboards to see what ingredients are there and improvise along the way. In other words, they aren’t focused on avoiding errors and surprises but on learning from them.
Fundamental to the “little bets” approach is to experiment: learn by doing and fail quickly to learn fast. This is a very different approach to how many of us learned. I know of a science teacher who decided to stop the class from asking questions by having everyone put on their desk a sign saying “is this a stupid question?” He successfully encouraged the class to avoid the risk of asking almost any questions!
The lesson, whether you’re trying to encourage young people to build their creative muscles, engage your employees in challenging assumptions and developing prototypes for innovative new solutions, or just discovering new horizons for your own life, is to focus on the affordable loss principle: what’s the worst that can happen? If it’s affordable, then the lesson is to allow the little bet and reap benefit. A.G Lafley did just that when he took became P&G’s CE; he fanned the flames of organic growth by confronting deep cultural limitations for detailed planning and error maximization and encouraged employees to prototype ideas and talk about mistakes and what they learned from them, rather than focus on what went right.
What are you doing to inspire creativity, encourage innovation and accept a culture of “little bets”?
Share your experiences with us!