The Failure to Fail Big is Killing Us
An executive at a fashion-goods manufacturer once warned his marketers, "We've got to make our mistakes faster." Forbes magazine reports that Limited founder and multibillionaire Les Wexner rewards buyers in part for the big mistakes they make—in his volatile industry, if you're not pushing hard enough to make big blunders, you're not playing the game at the appropriate pace. "Fail forward fast" is the motto of a high-tech executive, who declares he turned his operation around by dramatically increasing new product introduction "at bats."
In the spirit of the above, I offer my choices for "best new products of the '80s": the Apple III and the Lisa from Apple Computer, General Motors' Pontiac Fiero, Citicorp's early '80s nationwide credit-card blitz, FederalExpress's Zap Mail, Airbus Industries' A-320, Ford's Mustang SVO, People Express's no-frills air service and Michael Milken/Drexel Burnham's high-yield securities operation.
While the jury is out on some of the products (e.g., the A-320), each does have at least two things in common: (1) It was an expensive, demoralizing fiasco; (2) it launched its firm (or industry or nation) in a vital, new direction that far overshadowed the dimensions of the original setback.
Apple, while flying high with the Apple II, introduced a brand new product, the Apple III—which bombed. Undaunted, it moved on to the Lisa, another flub. But most successful new companies fail because they don't come up with a second big winner. The Apple III proved that the firm could launch something big while the first product was still performing brilliantly. That next at bat and strike out, the Lisa, paved the way for the Macintosh—which turned Apple into a sustaining company. General Motors' Pontiac Fiero was a poor-quality embarrassment that eventually had to be withdrawn from the market. On the other hand, compared to the vaunted Saturn project which keeps moving further from its initial objective, the Fiero single-handedly reversed Pontiac's stodgy image; now it's the stylish division at GM. GM's nagging problem: It needs more quick, Fiero-style launches, not fewer.
At Citicorp, young John Reed paved the nation with MasterCards. The mindless extension of credit cost the bank a bundle. On the other hand, it was a key step in realizing then-chairman Walter Wriston's vision of creating a nationwide bank. Soon afterwards, Reed succeeded Wriston at the helm. Federal Express took a walloping with Zap mail, an idea at once ahead of and behind its time. But like the Apple III, it presaged a breakthrough—the repositioning of the firm via the
purchase of Flying Tiger to create a truly global delivery network.
The Airbus 320 crashed during a demonstration flight at the Paris Air Show in 1988. Last month in India another one went down; some contend the problem is technology that's ahead of its time (all controls are computer driven). On the other hand, wags insist that Airbus finally has the drop on Boeing with important new technologies—thanks to that same A-320.
I own a rare Ford Mustang SVO. It was overpriced, didn't sell and was quickly shelved. Another Edsel? Hardly. Ford used the SVO as a quick and dirty test for the aerodynamic look and other features that soon turned to gold on the Taurus.
People's Express demonstrated precisely what the deregulated airline business was going to be about. The firm disappeared, but airline customers were the better for the PEX experiment. Likewise, I recently named Michael Milken my "businessperson of decade." The reason: The high-yield securities (junk bond) market that Milken and Drexel Burnham created was the most effective prod for the massive industrial restructuring America needs to be competitive in the 21st century.
If there is a single tragic flaw that mars our biggest enterprises, it is conservatism—the failure to fail, and fail big, in an era of unprecedented volatility and ambiguity. In a chaotic world, your strategy must be chaotic enough (sufficiently failure-strewn) to up the odds of keeping pace with the times.
In short, the message we need to spread—whether through rewards for exciting failures, creation of detached (physically, emotionally) and autonomous units or dramatic boosts in unit manager spending authority throughout the firm—is "fail big fast."
"But what if we bet the company and fail?" you argue. My rebuttal: "You're failing now, whether you know it or not." The '80s saw over 40 percent of the Fortune 500 exit the list. The forces which caused this bloodbath—new technologies, new competitors, explosive entrepreneurship, globalism, new financial instruments—are in their infancy. I don't know which 40 percent of the Fortune 500 will fail in the '90s, but only a fool would bet that the fraction of "disappeareds" will be less than in the past decade.
"If it ain't broke, don't fix it" has been standard management wisdom. My modern rebuttal: "If it ain't broke, you ain't looked." Tempus fugit: Get on with those big—and potentially lifesaving—failures now. Otherwise, be prepared to accept the bitter consequences of conservatism in a decidedly non-conservative environment.
(C) 1990 TPG Communications.
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