Hamel and Prahalad's take on failures
Generally, I do not read so much of business books but I wanted to have a glance at "Competing for the Future" (Gary Hamel, C. K. Prahalad) because it deals with issues I am interested in: futures and the importance of foresight research. Although the vocabulary is idiosyncratic and turned to a certain category of people ("managers", "leader"), there are some interesting parts. More specifically, I was of course curious about how the authors dealt with "failures", a research topic I came to cherish for a while. Some dog-eared pages excepts below.
First about what constitutes a failure, p.267:
"Verdicts of new product failure rarely distinguish between arrows aimed at the wrong target and arrows that simply fell short of the right target. And because failure is personalized - if the new product or service doesn't live up to internal expectations it must be somebody's fault - there is more often a search for culprits than for lessons when initial goals are not reached. Even worse, when some salient new facts comes to light as a result of market experience, the manager in charge is deemed guilty of not knowing it in advance. With risk so often personalized, it is not surprising that when failure does occur, there is often a race to get the body to the morgue before anyone can do an autopsy. The result is a missed opportunity to learn.
Not surprisingly, if the personal price of experimentation is high, managers will retreat to the safety of test-it-to-death, follow-the-leader, do-only-what-the customer-asks-for conservatism. Such conservatism often leads to much grander, though less visible failures. (...) Failures is typically, and we believe wrongly measured exclusively in terms of dollars lost rather than dollars foregone. In which traditional US computer company, for example, has a senior officer lost his or her job, corner office, or promotion for surrendering leadership in the laptop computer business to others? Managers seldom get punished for not trying, but they often get punished for trying and coming up short. This is what promotes the obsession with hit rate, rather than the number of hits actually generated."
And further out, p.268:
"Failure is often the child of unrealistic expectations as it is of managerial incompetence. (...) IBM0s ill-fated first attempt, in the late 1983, to enter the home computer market with PC jr. Widely criticized for having a toylike keyboard and for being priced too high, the PC jr. was regarded by both insiders and outsiders as a failure. Yet at the time, it would have been difficult for anyone to predict exactly what product would appeal to home users whose computer experience to date withe home computing was likely to be playing video-game on an Atari or Commodore. The real failure was not that IBM's first product missed the mark, but that IBM overhyped its entry and was thus unable to find a quiet refuge from whence it could relaunch a calibrated product. (...) The point is not that the ambitions of IBM were too grand, but rather that what constitutes failure depends on management's initial assumptions about how quickly and easily success should come."
Interestingly, given that the book has been written in the 90s, there are some striking examples that are brought under scrutiny... and which eventually makes a lot of sense today. See for instance the iphone/newton resurgence:
"If the opportunity is oversold and risks under-managed, failure and premature abandonment of the opportunity are preordained. Overhyping damaged Apple's early experiment with handwriting recognition in the form of the Newton Message Page. While the Newton was a failure in terms of Apple's optimistic predictions, it may not be a failure in the longer-run battle to create a market for personal digital assistants (...) this is partly the price of being a pioneer. (...) Thus one can't judge success or failure on the basis of a single product launch"
And, of course, there's a short part about how to spot one's failure on p.270:
"it is, though, a mandate to learn when inevitable setbacks occur. When a product aimed at a new market goes astray, management must ask several important questions. First, did we manage the risks appropriately or barge in like a bull in a china shop? Second, did we possess reasonable expectations about the rate at which the market will develop? Third, did we learn anything that will improve our chances on the next attempt? Fourth, how quickly can we recalibrate and try again? Fifth, do we believe that the opportunity is still for real and does its size warrant another attempt? And sixth, if we don't try again, have we just taught our competitors a valuable lesson that they will use to get to the future ahead of us? Failures should be declared only if the answer to all these questions is no."
Why do I blog this? working on the outline of the next book leads me to collect material about failures and their importance in foresight/design. These excerpts come from a very business/management sciences angle but they bring interesting aspects to the table that I will quote and re-use.