Failure IS an Option
And when our goal is innovation, we shouldn't fear it, but learn from it. Even CFOs. Just look at the track record at Apple.
Mon, August 22, 2011
For anyone in finance for more than 10 years, traditional strategic planning will evoke images of large binders, endless meetings, and thoughts about wasted time. These images occur because we all spent too much time analyzing and planning, hoping to find the scenario or situation that eventually would turn into reality. We all do this because executive teams essentially communicated, "Failure is not an option." Either we developed plans and make the numbers, or there would be consequences.
I am an admitted fan of Apple (AAPL). I currently use a MacBook Pro and an iPad to write my blog posts, and I use my iPod Touch as my mobile device (at least until the new iPhone arrives in two months.) But while I love Apple products, I also love the attitude the company has toward failure.
Think about it a minute. In many ways, Apple is nearly as well known for its spectacular failures as it is for their amazing success stories. For every iPhone, there was a Newton. The original MacBook Air was derided as an expensive netbook. Steve Jobs was fired, and for what seemed like the longest time the company nearly ceased to exist.
I contend that Apple's failures are as important to its status today as its successes are. While it is true that product teams have endured the wrath of Steve on more than one occasion, Apple has learned from its failures, and come back with better products. Prolific author and leadership expert John Maxwell calls this "failing forward." When you are able to learn from failure and apply it to the future, you haven't really failed.
As the financial guardians of our organizations, we must instill a culture in which small-to-medium-sized failures, at least, are accepted. No one wants to fail. But emphasizing innovation and speed will, by its very nature, result in some failures.
CFOs must work with business units and engineering organizations to design analysis phases and milestones, to identify which projects should proceed and which should stop. No one wants to eliminate projects when sunk costs are involved, but it's better to admit defeat and allocate resources to more promising projects. Companies must also do a better job of modeling key variables and reporting these results to executive teams.
Failure is an option. In fact, it's a necessity for companies that want to innovate and introduce products quickly. The key is to instill a culture where failure is accepted, and take those lessons to more successful opportunities.