“Failure plays an important role in innovation because it offers cycles of learning if you fail early, fail often and learn from your mistakes. If you keeping failing for the same reasons and do nothing about it, that’s the definition of insanity”- Dr. Samuel H. Liggero, Professor of the Practice, Tufts Gordon Institute
Last week I attended the GamCrowd Tech Conference, an event dedicated to the latest technical innovations influencing our industry today. A presentation delivered by Digital Transformation Consultant Marcus Wareham covered the importance of failure in the pursuit of innovation and how we can learn from our mistakes.
Fail fast and carry on, because if you don’t, you won’t succeed”, said Wareham.
Wareham cited several examples of companies in our industry who innovated and failed, learned from their mistakes and tried again. Paddy Power, for example, launched “Paddy Power In-Play” in 2013, an app allowing customers to place bets through Facebook, but the feature only lasted for one year due to its failure to catch on. Fast forward three years and after learning from their failure, Paddy Power is trying again, but this time bets can be placed via Facebook Messenger and customers do not have to bother with downloading an app.
I came across another inspiring example of learning from failure in Eli Afram’s recent interview with Dr. Craig Wright, an entrepreneur who, according to Afram, “provided cryptographic proofs to Gavin Andresen and Jon Matonis identifying him as Satoshi Nakamoto”.
For those of you who don’t know, “Satoshi Nakamoto” is the creator of Bitcoin.
Wright said in his interview with Afram,“I am even more proud of what I’ve achieved in a failing company that I have seen created in certain toxic aspects of this industry. The thing is, none of them are failures. You only fail when you stop trying. I don’t stop trying. I don’t give up. I don’t go away.”
“My failures are not failures because they lead to where I am now. Without them, I would not have learned the value of finance. It’s one thing to learn economics in a University, it is another thing completely to experience it first-hand. To manage cash flows. To run a payroll”, he said.
As far as I’m concerned, Wright is one of the most exceptional innovators on this planet and his “failures” have inspired him to create new technology that has – and will continue to – change our world.
Wright’s mindset is similar to that of Thomas Edison, the American inventor and holder of over 1000 US patents. As my father pointed out to me, Edison once famously said when working on the telephone, “I have not failed. I have just found 10,000 ways that won’t work”.
While failure is an important process in the reinvention through innovation cycle, there are companies that experience failure and never recover. However, anyone who followed the story or even worked within one of those companies at the time, certainly can learn from the mistakes and go on to innovate.
An example of one of these companies is Polaroid, an organization I grew up with because my father, Dr. Samuel H. Liggero, worked there for over thirty years.
The demise of Polaroid shook my family to the core, especially because my father was part of the Senior Management when digital photography crushed Polaroid’s robust revenue stream overnight. This is a perfect example of a company that failed to keep up with the latest technology and as a result, paid the ultimate price.
BBC aired a program about five years ago called “Business Nightmares with Evan Davis” and episode 1, “Doomed Designs”, featured Polaroid and my father. Wareham’s presentation last week reminded me of the program and so I watched it again and recommend you watch it too, here is a summary in the meantime.
Polaroid did not make its money from selling cameras, rather they made their money by selling the film for Polaroid cameras.
“The film was very profitable and this was the engine that drove the company for decades. At its peak, the company shipped about 200 million packs of film per year”, Liggero was quoted.
Digital technology hit the scene in the 80s and Polaroid invested in researching the new technology and even developed a digital chip, but they still couldn’t let go of their historical cash cow.
“The problem was how to come along with systems that made money, that had a business model that worked with the structure that the company had. The deep challenges included the commitment to hard copy. Very difficult to change that. Almost impossible”, Liggero was quoted.
Rather than making a 180 degree change to their business model, Polaroid decided to ignore digital and push ahead with their cameras using instant film. By 2000, digital cameras were more affordable and customers starting making the switch, the face of photography was changed forever and Polaroid was left behind.
“We were losing sales as digital was making inroads, but yet we had the overhead expenses. So the company did what most companies do, is you start to lay people off, you start to close down operations, but now it becomes a race with time, of sales going down, debt going up, disruptive innovations coming in in digital photography. It was the perfect storm for Polaroid”, Liggero was quoted.
Sir James Dyson, inventor of the ground-breaking Dyson fan, was also featured in the program and shared some thought-provoking statements about companies that have experienced failure.
“Research and development is risky and very expensive. If you don’t do it and you continue with an existing product, you’re almost certain to dip down in sales and someone will come along with something better. Polaroid is a very good example of that”, Dyson was quoted.
In 2001, Polaroid filed for Chapter 1 Bankruptcy and my father reluctantly resigned shortly after. However, the lessons my father learned from Polaroid’s demise inspired him to start new businesses, work on new projects and teach graduate students how to learn from failure and go on to disrupt and create.
Polaroid’s story is known throughout the world and companies now have a solid example of why its imperative to take action on the latest technology and to do more than just research it. We must integrate disruptive technology into our business models.
With the invention of Bitcoin and Blockchain, I can’t help but think companies will be left behind if they simply research the technology as opposed to working it into their businesses. I hope we can learn from Polaroid’s journey and try to embrace the disruptive technology available to us today while continuing to pursue the cycle of innovation.