Ever had a good idea that turned out completely differently than expected? Made a perfect plan that didn’t actually work in practice? An average day for an entrepreneur isn’t exactly straightforward, and entrepreneurship involves plenty of trial and error along the way. Whereas successes are often celebrated extensively, we prefer to forget both minor and major setbacks as soon as we can. And we certainly don’t share them with others. Avoiding failures completely is impossible, but we do have the chance to see them as great opportunities for learning. After all, you can also fail brilliantly. And then you move from failure costs to failure revenues – achieving ‘intelligent failure’.
This is the mission of Paul Iske, professor of Open Innovation & Business Venturing at the University of Maastricht. As the founder and Chief Failure Officer of the Institute of Brilliant Failures, he aims to make organisations smarter, more innovative and more entrepreneurial through a radically different view of failure. He shared his insights at the annual iGMO Summit, where some 125 entrepreneurs and members of the Growth Management for Medium-Sized Enterprises Impulse Centre (iGMO) listened to his plea for greater scope to experiment, innovate, fail and learn.
Paul drew his fascination for the positive power of failures and the inspiration for setting up his institute from his own career. After obtaining a doctorate in theoretical physics, he started his career at Shell. Because he noticed that a lot of valuable, internal knowledge was wasted, he joined forces with a colleague to create a new platform for sharing knowledge across activities and countries. However, his attempts to bring this system (a forerunner of LinkedIn) to market after leaving Shell failed because the market was not yet ready for it. He then joined ABN AMRO, where he spent almost 20 years as Chief Knowledge Officer and ultimately Chief Dialogues Officer and Senior Vice President of Innovation, where he was responsible for all the open and sustainable innovation at the bank.
“So far, I've never seen an interesting development in which no knowledge or strengths were pooled. But trying something new is always a trade-off: if you don’t take a risk, there’s nothing that can fail – but doing nothing leads to nothing, which is also risky in itself. We shouldn’t want people to stop trying things just because they could go wrong or because they might get labelled as ‘failures’. That's why it's important for the threshold for trying (and failing) to be very low and for people to be able to reuse the knowledge that comes from failure. When I set up my institute, my main aim was to reduce this fear. You shouldn't be afraid to try things, even if you're not sure whether they’re going to work out. And you shouldn't be afraid to talk about the result either, whether it's good or bad. Our tendency to keep silent about failures is fundamentally wrong.”
Paul describes entrepreneurship as a mindset of identifying and exploiting previously untapped opportunities. Entrepreneurs do this with passion, perseverance and courage, so they must also be willing to take risks. “Anyone who has ever gone bankrupt will have trouble getting more funding from a bank. However, what the bank doesn’t take into account is how you went bankrupt. Was it in a stupid way or actually in a very brilliant way? Failure can be very valuable if you regard it as an opportunity for learning. A European study on ‘entrepreneurial restarters’ with the highly appropriate name ‘Setting the Phoenix Free’, found that people who tried again after stopping or failing the first time round actually had a higher chance of succeeding. Of course, you only get this higher chance if the learning outcome of the previous failed attempt is not erased. If you regard ‘FAIL’ as a First Attempt In Learning, you can take the step from failure costs to failure revenues.”
The Institute of Brilliant Failures uses the following definition: a brilliant failure is a well-prepared attempt to create value, but with a different outcome than planned and with a learning effect. An ambitious and innovative idea was in place and despite the fact that the product or project was not successful, you opened the door to new knowledge, new insights or new opportunities for the future.
In order to determine whether or not something is a brilliant failure (BF), Paul has also developed a formula: BF = V x I x R x A x L.
In order to learn from our mistakes and then go on to assess possible risks better before and during decision-making, Paul applies the principles of associative thinking to failures. By learning to recognise recurring patterns, you can adjust your actions to achieve the desired result. And that's how you achieve genuine failure intelligence. Based on an analysis of hundreds of failures, he identified 16 failure patterns with names such as the Honduras Bridge, the Diver of Acapulco or the Empty Chair. People who know these patterns and can link them to practice are not only able to analyse afterwards why things went the way they did, but can also anticipate possible failures before they even begin and react better while the project is underway.
And if every entrepreneur embraced this vision, Professor Paul Iske believes, we would “create a world together in which people have the courage to keep on doing things, keep on doing business and share experiences.”
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