Page 182 - HBR Leader's Handbook: Make an Impact, Inspire Your Organization, and Get to the Next Level

Innovating for the Future 171

in further product testing. But if clicks on the ad are low, then the company
doesn’t invest further, which saves time and money, and the failure then
frees up space for testing the next new idea quickly and frugally. Intuit uses
this approach frequently as a way of quickly learning whether a new
product or feature will have traction with customers or not.
Another way to encourage risk taking, failure, and learning is to set up
a separate unit for developing a new business, product, or service, similar
to what we discussed as part of disruptive innovation. In his HBR arti- cle
“Planned Opportunism,” Vijay Govindarajan stresses that this kind of
“new-co” operates with a different set of metrics and expectations so that it
can operate more freely and not have to hit the targets that would ordinar-
ily apply and might stifle risk taking in the “core-co.” He describes IBM’s
use of “emerging business opportunity” units that can test embryonic busi-
ness ideas without the usual requirements to return capital, achieve reve-
nues, and so on. This doesn’t mean that the teams in these units don’t have
goals, but that the goals are more appropriate to a nascent idea than to an
established business. You can also set up an incubator within your com-
pany to serve this function.

How to learn from failure
Processes for encouraging failure are one thing; learning from it is another.
In their HBR article “Increase Your Return on Failure,” Julian Birkinshaw
and Martine Haas suggest three steps to make sure that you use your mis-
takes to grow: learn from every failure, share the lessons, and identify pat-
terns. The after-action review (AAR) process originally developed in the
military is a structured and systematic way of doing this. In their HBR
article “Learning in the Thick of It,” Marilyn Darling, Charles Parry, and
Joseph Moore explain that AAR consists of a series of meetings and dis-
cussions with participants in a project or innovation team to assess what
worked or what did not, what assumptions were used, and what should be
done differently to improve either the current project or the next one. The
outcome is not just a report, but also provides specific lessons linked to
future actions, with clear accountability assigned for putting them into
practice.