THE FAST-FAILURE FRIENDLY FIRM FAIL
YOUR WAY TO SUCCESS http://www.flickr.com/photos/geyring/

PROLOGUE
WHY IT MATTERS

Pacemakers Post-its Penicillin The Light
Bulb The Microwave Corn Flakes Discovery of the Americas Kitty Hawk

These were all failures that
led to mondo ducats

But, we shouldn't just say
"Whoo hooo! Let's fail more!"

Ideally, we should fail more,
but fail smarter

that means we want to
fail when….

1. the costs of failure
are low and the returns are high

2. we can quickly determine
if we're failing, so that we can pivot quickly

3. we can learn effectively
from the failure

this presentation is about how
managers can build organizations that can do that

PART ONE
WHAT IS FAILURE?

let's first differentiate between failures
and f@*k ups

failures are legitimate
mistakes

It's a legitimate mistake when
you…

fumble because you lacked all
the data, but had to move forward anyway

made a reasonable bet, but
got unlucky with circumstances

invested in a low cost
- high potential reward experiment

f@*k ups are stupid mistakes

It's a f@*k up when
you…

failed to execute due diligence
before or during

failed to learn from a
legitimate mistake and repeated it

invested in a high cost
– low potential reward experiment

PART TWO
WHY FAIL?

let's talk about 8 reasons
why legitimate mistakes can be valuable

REASON 1 Fail regularly to
ensure that you keep striving Failure occurs when you stretch / grow yourself, because you are out of your comfort level. If you’re not failing, you’re likely not stretching. Explicitly track (and record) your rate of personal failures. Ensure 1 meaty screw up per quarter, or force yourself to move into personally uncharted waters.

REASON 2 Fail regularly so
that you continue to be surprised Surprise is a key to innovation because it reveals opportunities. It also stores valuable Return on Investment if you learn from it. Seek out Failure and aggressively run retrospectives (post mortems). Celebrate what you learn positively, widely, and publicly.

REASON 3 Fail regularly to
keep an open mind We are biologically predisposed to calcify assumptions & shy from cognitive dissonance. Shake things up before they can’t be dislodged. Compose a list of 10 things that you believed 15 years ago, which you now know are false, or at least, not quite right. Remember how sure you were.

REASON 4 Fail regularly so
that you remind the ego to stay humble The greatest danger of confidence is over confidence Find and listen to the album “Nothing’s Shocking” by Jane’s Addiction. It has nothing to do with this topic. It’s just a fraking good album.

REASON 5 Fail regularly so
that you build empathy for others who fail Most people fear failure because of how they think others will see them. It is peer pressure which makes us avoid what is innately good for us. Look around for someone who is currently failing and give them a shoulder to lean on. No questions asked. No judgements made.

REASON 6 Fail regularly so
that you build confidence in your resilience One of the reasons that it was so hard to shave my head bald for the Children’s Cancer Foundation Hair for Hope program was the worry that it wouldn’t come back. It did. Compose a list of 3 big mistakes you’ve made in your life thus far. Appreciate that you got through them and that they are not nearly so dire years later.

REASON 7 Fail regularly to
build practical recovery skills so that you get up faster & stronger next time ‘nuff said Go back to the retrospective you ran for Reason #2 and analyse the process after the failure rather than before. Identify 1 thing to improve with recovery next round.

REASON 8 Fail regularly so
that failure becomes less scary & embarrassing Once you train your brain to see failure as an opportunity, it will become one Find someone who has failed (and who may feel privately ashamed) and let them know personally that it’s no big deal.

PART THREE HOW DO YOU
BUILD A FAST-FAILURE FRIENDLY FIRM

if you are a manager
or a leader

and you are now convinced
that a bit more failure would be a good thing for your group

what do you do?

here are 5 simple, practical
things that you can do at any level of an organization

PRACTICE 1 Iterate Faster &
Smaller

PRACTICE 1 Iterate Faster &
Smaller put in place a process to identify low-hanging opportunities where failure is low cost & high return

PRACTICE 1 Iterate Faster &
Smaller do a bit of shot gunning with the results of the low-hanging fruit review. Commission many small bets and let the dice roll

PRACTICE 1 Iterate Faster &
Smaller rewire your infrastructure/administration to support quick-iteration (e.g.: annual budgets….really?!?!)

PRACTICE 1 Iterate Faster &
Smaller add "no-go" tollgates to avoid the basic human hard-wired tendency to throw good money after bad

PRACTICE 1 Iterate Faster &
Smaller require business cases to identify minimum viable product features and customer validation metrics from the start

PRACTICE 1 Iterate Faster &
Smaller define exit plans so that features (and applications) are designed for easy decommission if they don't work

PRACTICE 2
Celebrate Failure

PRACTICE 2 Celebrate Failure make
sure that senior leaders celebrate great post-mortem learnings at townhalls or team meetings

PRACTICE 2 Celebrate Failure heck,
have those leaders give out an award to the bravest or most resilient failing team of the quarter

PRACTICE 2 Celebrate Failure or
at least, have them talk openly and broadly about the importance of smart failure

PRACTICE 2 Celebrate Failure at
every level, use neuro linguistics such as, 'and versus but'

PRACTICE 2 Celebrate Failure look
outside the firm and do positive post-mortems on the mistakes of competitors or other industry players

PRACTICE 3 Share & Learn
from Failure

PRACTICE 3 Share & Learn
from Failure use a tool that helps you effectively share knowledge broadly – check out Jive, or other Enterprise Social Networks

PRACTICE 3 Share & Learn
from Failure make sure all project leads learn how to effectively facilitate retrospectives / post-mortems and make sure they do

PRACTICE 3 Share & Learn
from Failure publish retrospectives broadly

PRACTICE 3 Share & Learn
from Failure every year, circle back and review your library of post-mortems for emergent themes

PRACTICE 4 Habitually Challenge the
Status Quo

PRACTICE 4 Habitually Challenge the
Status Quo have a annual mechanism to challenge all wisdom that has stood for a long time, especially during times of market disruption

PRACTICE 5 Hire & Train
Sherlocks & wackos

PRACTICE 5 Hire & Train
Sherlocks & wackos make sure to hire some folks who are good at forensics

PRACTICE 5 Hire & Train
Sherlocks & wackos and a few oddball outliers to introduce randomness and surprise

SMART FAILURE IS PROFITABLE Characteristics
of Smart Failures: • Costs of failure are low and returns are high • We can quickly determine we are failing so we can pivot • We learn LEGITIMATE FAILURES • You lacked all the data but had to go • You got unlucky with circumstance • Low cost of failure & high returns F@*K UPS • Lacked due diligence before or during • Failed to learn • High cost of failure & low returns WHY FAIL? • Ensure that you keep striving • Continue to be surprised • Keep an open mind • Stay humble • Build empathy for others who fail • Build confidence in your resilience • Build practical recovery skills • Make failure less scary & embarrassing MANAGERIAL BEST PRACTICES • Iterate Faster & Smaller • Celebrate Failure • Share & Learn from Failure • Habitually Challenge the Status Quo • Hire & Train Sherlocks and Wackos

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