Last Tuesday (14 June) NESTA hosted a lunchtime discussion with the ‘Undercover Economist’ Tim Harford* to celebrate the UK launch of his latest book: Adapt. The discussion was entitled: ‘Problem solving in a complex world’, and was a chance for Tim to discuss some of the ideas he raises in his new book. Tim believes that today’s world is too complex for ready-made solutions, and that the public, as well as businesses and leaders, need to adapt and change in order to tackle issues such as climate change, poverty and the financial crisis.
One of the most interesting ideas that Tim raised in his talk was about the place of failure in society, particularly within business and politics. Tim argues that our current systems reduce innovation and experimentation because we are too afraid to fail, and this is harming society. One example of this is the difference between the contribution of East Coast banks in America, which are now deemed too-big-to-fail, and West Coast companies such as Google, where executives say that 80% of their products don’t succeed.
At the drinks following Tim’s presentation I met two Masters students from Imperial and we had a lively discussion on the role of failure within business, commenting that most company reward schemes are focused entirely on success. We agreed that if we want to increase innovation we must create an environment in which people are willing to take risks and try new things. Therefore, we must reward those who experiment, for example through a monetary bonus or with verbal feedback in a review.
Tempering this, there is of course a need to protect against incompetence and ensure that the risks taken are calculated and proportionate to the reward on offer. Tim offered three rules for ‘successful failure’: a willingness to try a variety of things; making sure the failures you do have are survivable; and learning to quickly recognise the difference between success and failure. The companies and organisations that succeed in the coming years will be those that establish boundaries but accept that not all new ideas will succeed and yet encourage their employees (and clients and partners) to try new things anyway.
However, I believe that we must also change the language that we use. The word ‘failure’ has almost entirely negative connotations – it is the opposite of ‘success’. Yet every great innovator will tell you that their ‘failures’ taught them crucial lessons without which they would never have achieved their successes. We are taught from an early age that we should “learn from our mistakes”, with the assumption that we will make some, but for many people this instruction changes when they enter the world of work to “don’t get this wrong”. The implication is that failure is unacceptable, and therefore almost no risk is worth taking. This dampens creativity and reduces innovation, without which society will never improve.
* For those who don’t know him, Tim Harford writes a regular column for the Financial Times, as well as being a television and radio presenter and author. He is a gifted public speaker and writer, with an ability to explain complex economic theories in language that ordinary people can understand. His blog, at www.timharford.com, is definitely worth a read.
Jo Nussbaum, Linstock Consultant (jo@linstockcommunications.com)
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