Navigating Failure in Entrepreneurship: The Science of Failing Well

John (00:08): Hello, and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch. My guest today is Amy Edmondson. She is the Novartis professor of leadership and management at the Harvard Business School, renowned for her research on psychological safety for over 20 years. She’s the author of the Fearless Organization and Teaming, and a book we’re going to talk about today, right? Kind of wrong, the Science of Failing Well, which was a winner of the 2023 Financial Times Business Book of the year. So Amy, welcome to the show.

Amy (00:41): Thank you for having me.

John (00:43): Alright, so I’m just going to toss this up and let you bat it out of the park because it’s a softball question. But there’s a lot of literature lately, a lot of gurus online talking about how entrepreneurs have to fail and fail fast and fail often. And frankly, I don’t like failing. So why are you telling me I have to do it?

Amy (01:05): So I don’t like failing either, and that’s why I wrote this book because actually really it’s a book about success, but success in an uncertain world where we cannot prevent all failure, it turns out we can prevent an awful lot of failure. We can prevent unintelligent failures, we can prevent the kinds of failures that happen when you mail it in, you don’t do your homework and you fail the exam. Those are preventable. And I think the reason why there’s all this sort of literature or sometimes happy talk about failure is that we recognize it as a necessity for progress in any field. And if you’re a startup, by definition, you’re doing something that doesn’t yet exist and you’ve got a hypothesis that it might work. In fact, don’t do it if you have no confidence that this could work at all, stay out of the game, but you have a sense that this could work.

(02:03): In fact, you’re probably pretty sure it could work, but because it’s new territory, there is a possibility that you were wrong. That with all the effort, all the brains, that this thing might not work. That would be what I would call, especially if you’ve done your thinking and had good reason to believe it would work, that would be an intelligent failure. And that is the kind of failure that the Silicon Valley talk, fail, fast, fail often is implicitly referring to, but often they’re not explicit enough. And it sort of sounds like they’re saying, yeah, go ahead and fail at everything. No, nobody wants to fail.

John (02:42): So not doing your research and not understanding if there’s product market fit, that would be silly failure, right?

Amy (02:50): Right. Not doing your research to find out what we know, what we don’t know, and what’s worth trying next.

John (02:58): So how do we make this a science that obviously implies that there’s a very methodical approach to it. How do we make that a science?

Amy (03:07): Well, I think it is really the science of assessing risk thoughtfully. And of course there’s technical work on assessing risk thoughtfully, but in a more colloquial way, I offer three, four criteria that are from first principles really. But any scientist is either implicitly or explicitly using them. So first of all, do you have a goal? Is there somewhere you’re trying to get, whether that’s a new business or a new invention or a new relationship, you have a goal. And second, there’s no way to look up the answer that it’s in new territory. And third, you’ve done, as we’ve talked about before, your homework, you’ve found out what is known, what isn’t known, and you have a theory or a hypothesis about what’s worth trying. And then fourth and importantly, the risk you’re taking is no bigger than necessary. You do not bet your entire net worth on this new company that may not work. You borrow as much as you can afford to borrow, you bet as much as you can afford to bet, but you’re mitigating risk because there’s uncertainty. And that is true whether you’re starting a company or developing a new product in a company or going on a blind date, you mitigate the risk. You don’t agree to go off for a weekend with someone. You agree to meet for coffee and you

John (04:39): Tell a

Amy (04:39): Friend. Sense what I’m saying?

John (04:41): You tell a friend to text you and text you in 10 minutes,

Amy (04:45): Got to go. So we all know, we know how to mitigate risk when we’re thoughtful about it, but sometimes we’re not. We just don’t think systematically. So the science part refers to the fact that you can be a very logical, very systematic, very thoughtful about the risks you take. In fact, I advise it.

John (05:05): Yeah. Yeah. So there with your reference to the date, there was actually a rom-com movie. I don’t know if you know that that was titled the Right Kind of Wrong.

Amy (05:15): Oh, I didn’t, and I dunno it. That’s terrible. It’s a

John (05:20): Terrible movie. But you talk in the book about the gap between rhetoric and action when it comes to failure. Can you elaborate on that gap?

Amy (05:29): Yeah. So the rhetoric is, I think my challenge with the rhetoric is it’s a little glib. When you see fail fast, fail often, or celebrate failure, it sounds like it applies to everything evenly. All failures are the same and all failures are not the same. And I think the last thing you want to do, and of course the last thing you would do is celebrate preventable and occasionally tragic failures. Go into a manufacturing company and tell the plant manager to fail. Often she’ll just look at you, what are you talking about?

John (06:07): Get people

Amy (06:07): Killed. We’re going for six s signal. Yeah. Yeah. That’s not what we do around here. We’ve got a really good processes that are in control and capable and you say applaud. And similarly, scientists who fail, which they do all the time are not, you don’t want them failing because they mixed up the chemicals that they were supposed to be using in the experiment. You only want failures that are truly new tests in new environments that haven’t been done before. So the rhetoric is just a little sloppy and a little non nuanced. Whereas the reality of failing well is thoughtful risks in new territory are to be applauded whether they end in success, which we hoped for or failure, which we didn’t hope for, but we still must welcome the new knowledge and in familiar territory for which there is a recipe or a protocol or a process, we should use it and use it thoughtfully.

John (07:09): Yeah, I think about all the times I’ve heard the cliche Edison, 10,000 failures was just giving him like 9,999 that were of the wrong answers. And I think a lot of people really look at it that way as you’re eliminating wrong answers when it’s more, this was a hypothesis that had some thought behind it and

Amy (07:30): We

John (07:31): Either made it or didn’t, right? Yes,

Amy (07:32): I love the Edison quote, but it is right. It gives the wrong impression of scattershot. And I think because the 10,000 is probably not a scientific number, but a kind of poetic number. What he’s saying is, I didn’t mind all of the false starts on the way to the phonograph or the electric light bulb. I understand that’s a necessary part of being an inventor, not scattershot,

John (07:59): Right? So I think you’re actually calling this smart failure, but you may have already said that already, but I know it’s in the book Smart Failure. So in the context of say, an organization, what are some of the characteristics of smart failure versus just failure?

Amy (08:16): Smart failure is anything that’s legitimately in new territory in pursuit of a goal and with a hypothesis and no bigger than it had to be. And that literally could be a formal r and d project, a clinical trial, or it could be a salesperson making a call on a potential client and trying an approach, a script, a way of describing the product that hasn’t been tried before and it falls flat. And that’s a smart failure as long as some thought has gone into it. So I think in companies day in and day out, depending on which part of the operation you’re in, which tasks you have, there’s ample opportunity for smart failures, but they are more numerous in r and d than in execution of operations. But even in operations, let’s say you have an idea, a hypothesis about a way to speed up the line a little bit and you test it in a small way and it doesn’t work, right? That’s an intelligent failure in a routine setting, but it’s a very small one indeed.

John (09:31): And now a word from our sponsor. Work better now. Work better now provides outstanding talent from Latin America, hand matched to your business with over 40 roles across various industries, including marketing. They’re a reliable partner for consistently finding the perfect fit for your business. Simply tell them what you need and they’ll handle the rest. We have two work better now, professionals on our team, a marketing assistant and a marketing coordinator. And we’ve been blown away by their abilities, responsiveness, and professionalism. They’ve really become an essential part of our growing team. And to top it off, each dedicated and full-time work better Now. Professional is 2350 per month and there are no contracts to schedule a 15 minute consultation with a work better now rep and see how they’ll support your business growth goals, visit work better now.com. Mention the referral code DTM podcast, and you’re going to get $150 off for your first three months. That’s work better now.com. And don’t forget that DTM podcast code, do you ever run the risk with a lot of emphasis on failure? Do you ever run the risk of people sort of preparing to fail and so it’s like, yeah, we’re going to try this thing, it’s probably not going to work, and so then it doesn’t, right? Does that ever crop up?

Amy (10:51): I haven’t actually thought of that. I haven’t seen that. But I love the question and it would be worth keeping an eye out for it. I think most of the time that risk is counterbalanced by our very human desire to do well. Even when we know we’re in novel territory and there’s a real risk that it might not go well, we’re still hoping that we’re going to be the ones who gets it right? So even a scientist who, like my husband who says 70% of the experiments in his lab fail even there every day, every scientist, every young scientist is sort of hoping that they’re the ones who are in the 70, not in the 30 that day. So I think of course, motivation can be missing. You can have a place when people aren’t, are apathetic and don’t really care. And then it would be a bigger risk.

John (11:44): I think of a lot of venture capitals that often talk about, they bet on 10 companies kind of almost with the hope that one’s going to be a unicorn, knowing that seven are going to fail. And that probably becomes a bit of a mentality. It

Amy (11:59): Can become a self-fulfilling prophecy because, and this goes back to the old research on teachers where if you start to expect this one’s a winner and this one’s not a winner, you’ll start to unconsciously do things that help the winners and toward the losers. And so you do have to be honest with yourself and thoughtful about how am I thinking about this company, this project, this person? And if your honest answer is, I don’t think they can make it, test that, think a little more carefully if you really think so. Maybe it’s time to pull out now, maybe you’re wrong. What are you missing? Have an honest, difficult conversation with them or with the executive team. It’s always important to step, be able to step back later and say, I think I did everything I could.

John (12:50): Yeah. So it’s very common. People will say it was only a failure if you didn’t learn something from it. What are some of the, other than learning from failure, what are some of the other return on investments that an organization can start to see by, well-designed failure experiments.

Amy (13:07): It’s mostly learning. And learning means learning’s a pretty encompassing category. It means a lot of different things. It can mean very technical things that now we know to do this and it’ll work. Or it could mean just, Ooh, when we don’t try hard enough, we don’t get the results we want. So there’s lots of things we can learn and those are really important dividends from any failure. But I think we also, the other positive output from a failure that we take the time to learn from is that we learn, sorry, I used the word we discover that we didn’t die of embarrassment or something else. So our failure muscles become a little strengthened. We learned that we’re still okay. And so that’s a kind of confidence enhancer, even though it was a failure. There’s a little bit of a more robust and healthy ego as opposed to unhealthy ego.

John (14:06): I don’t know if you have any examples of this, but there are some people that tried something as a hypothesis experiment, it didn’t work, but they accidentally created Velcro or Right. Like that mean, so are there some potential benefits of by trying more stuff, you’re going to accidentally, right? That was the one I was trying to think of. Yeah, this guy, right?

Amy (14:28): Yeah. Post-it, the epitome of that story. But penicillin was an accident in the book I described oyster sauce, which was a small failure of overcooking the oysters, and they burnt and turned into yucky goo. And then it turns out, if you taste that yucky goo, it’s delicious. And there was born a multi-billion dollar industry from that young chef more than a hundred years ago. So yes, I call that the happy accident failure. And those are not the dominant category, needless to say. So if you’re sort of hoping that your screw ups will always yield like wonderful dividends, that’s probably not the best strategy for failing. Well, but if you don’t take the time to pause and taste or dig into the failure, the glue that wouldn’t stick properly and think deeply about and create the conditions where other people can team up to think deeply about the implications of that failure, then you stand no chance of a real success at the end of the tunnel.

John (15:36): I know a great deal of this work is targeted at the decision makers, strategic thinkers, but down the line, how do we empower our managers and team leaders to give people permission? Because part of it, we’re not going to try stuff that we think will work better if we don’t. Culturally, it’s not acceptable. So how do they bring that environment?

Amy (16:01): I wish more than anything to speak to the team leaders, to the managers, to anyone in a project or people management role, because they’re the ones who are shaping the climate far more than executive leadership. They matter, but it’s the local interactions that are really shaping our mental models about what’s possible, what’s acceptable, what’s not. Okay. And if you get that message either explicitly or implicitly that ever coming up short is not okay, then you’re going to either hide when the news isn’t good, or under undershoot specified targets or goals that you know can make rather than ones that are a stretch and bring a risk, and you don’t want people doing that. So I speak, I think primarily to all of those sort of leaders in the middle who are responsible for setting the stage, for describing the world in which we are working as one that brings necessary uncertainty and necessary human fallibility. And when we accept that, those two things like uncertainty in the world around us and fallibility of ourselves and our teams, then and only then are we well set up to actually do our best because we can be honest about it. We can be as ambitious as possible about beating the odds, but we can be honest about when things aren’t working.

John (17:35): There was a book I had the author on recently, and the premise of the book was that it’s actually easier sometimes to think in terms of doing something really big. 10 x is actually how he defined it as opposed to just two x, which is basically like 20% more. We can probably just do a little of what we’re doing harder, but 10% or 10 times growth. We truly have to innovate. We truly have to take big risks. I’m curious of how your thoughts on that mentality. That’s

Amy (18:02): Interesting. Okay, so my first thought when you said that was, well, that’s kind of crazy. I don’t mean that in a bad way, but we’re not going to just do 20 x or 10 x next year. We can’t. But I thought so that might by saying, so that might lead people to kind of go, okay, it’s not discussable, but that’s nuts. As long as it’s actually an explicit exercise, then I think it’s brilliant because then the idea is we won’t think differently if we just say, okay, this piece. But if we say, just for fun, let’s imagine 10 x, what would have to be true? So it’s a way of unlocking our team’s thinking rather than a kind of new ogre who’s come in and said, you must do 10 x, which would be crazy.

John (18:53): Exactly.

Amy (18:54): But as a thought device to get us to think out of the box as it were, I think that’s really fun.

John (19:03): You’d have to have a whole different set of hypotheses, right, for that. Right.

Amy (19:08): You couldn’t just do more of, you’d have to

John (19:11): Do different. Exactly. Yeah. Well, Amy, I appreciate you stopping by the Duct Tape Marketing Podcast. Is there someplace that you would invite people to find out more about your work and obviously find a copy of right kind of wrong?

Amy (19:22): Sure. So the book is for sale everywhere, I think, more or less. But if you go to amy c edmondson.com, there are links to the book, which I really hope you’ll read, and also to other papers and articles, and even some fun little videos here and there. Awesome.

John (19:40): Again, I appreciate you taking a few moments to speak with our audience, and hopefully we’ll run into you one of these days out there on the road.