Innovation is a long process, and it can take a long time to progress from an innovative idea to a marketable product. Exactly because of all the time and resources that business owners invest, it can be incredibly disappointing and paralysing when a major project fails. What an entrepreneur does then is often the key factor in determining their ultimate success. Innovation and disruption is a long and bumpy process, and responding to failure well is ultimately what separates successful serial disruptors from the thousands of failed startups with great ideas who ultimately don’t deliver.
Failures drive industries forward
Surviving and learning from one or multiple major failures is a near-universal experience of successful disruptors, especially those who repeatedly succeed in changing their industries. SpaceX, for example, famously failed for years to bring its rockets into orbit, until, nearly out of funding, they made history with their 4th launch in 2008. Each failure came with enormous costs, but ultimately also led to their success. Since that time, they’ve achieved breakthroughs that have promised to revolutionise spaceflight on a nearly annual basis. In many ways, those setbacks needed to happen before success could realistically be possible. Great entrepreneurs understand that a project failure can be a part of progress.
Be prepared for negative outcomes
Some ideas just don’t work, others need to be developed further or applied differently, and still others just weren’t marketed correctly. Whatever the case, a business that wants to push the envelope and cause a real industry disruption needs to be prepared to do a lot of troubleshooting.
Be mentally prepared
Being mentally prepared doesn’t mean anyone should “plan to fail”. Pessimism is not a useful trait for a business. What it does mean is being open to the possibility of negative outcomes, and not being paralysed when something goes wrong in a minor or a major way. If disruptive innovation was straightforward, everyone would do it. That process is necessarily experimental, and experiments have value in the data they return as much as any tangible profit.
Maintaining good oversight over what’s going on in your business is always important, but it’s especially critical when you’re developing new products and services and trying to apply new ideas. When things don’t go as planned, relatively minor details can provide critical insights into what went wrong, and what you might be able to improve in the future.
Have a financial backup plan
Serious innovation often requires big, high-risk investment. There’s nothing wrong with taking ambitious financial risks for the sake of progress, but entrepreneurs do need to ensure that their business can survive when things don’t work out. Businesses that can’t survive a setback, and get funding for further work, won’t be able to take advantage of the knowledge and experience they gain from that situation to drive progress further. It’s important to sit down with a financial professional ahead of time to determine what your options are, and how you can best keep cash flow stable.
Responding to negative outcomes
The idea of framing setbacks as “learning opportunities” is not just a feel-good morale booster. Every project offers an enormous amount of data that businesses can use to better understand their products, their market, and their own business. By gathering that information and analysing it, businesses can understand exactly what does and doesn’t work, and use that information to improve.
Analyse the data
It’s not enough to know that a project failed because you lost investors, the product flopped, or you ran into technical issues. Business leaders need a thorough understanding of exactly what happened, and determine why things went wrong. To do that, you’ll need to sit down with your team and review the project step-by-step. Decide what worked well, and what may have contributed to the project’s failure, and then focus on what might be done to improve in the future.
Develop actionable responses
Once you’ve analysed the failed project and learned as much about it as you could, it’s time to return to the drawing board to apply that knowledge. The insights you’ve gained from this prior experience puts you in a better position to succeed on a second attempt, giving you an edge over less experienced competitors. By innovating to address the specific issues that contributed to a previous project failure, you may even stumble upon process improvements that turn out to be disruptive in their own right.
Innovation is a continuous process of setting goals, brainstorming solutions, experimenting, analysing, and improving. While setbacks can be expensive, they often do far more in terms of bringing progress and disruption than lucrative successes, provided your business is prepared to take advantage of the lessons offered by those failures.