You don't fail enough!

Failure is an essential part of innovation. A successful company:

• must be hedge failure—many risks should result in a reward, but if every "risk" succeeds you are not pushing any boundaries. If every
• take risks—if you fail because you didn't take risks your clients fled to the competition or substitute products. If you don't innovate you become a dinosaur.
• should accept failure—this point is very important, not just because of best practices for innovation. If you don't accept failure, employees are often fearful for their jobs and could try to coverup mistakes until they blow up. If you accept that even the best employees will fail, you can manage their projects better.
• learn from its failed projects and review them.

There's a big stigma around failure; it's costly, it wastes time, it's demoralizing, and many don't want to advertise a culture that embraces failure. Managing innovation is a messy process because it includes managing failure. Set milestones, avoid the sunk cost fallacy, make cheap early prototypes or "reality checks" for projects, and make sure that failures are reviewed.

The pharma industry knows these things very well; it fails consistently and seeks to find alternate uses for its failures. Several companies review and buy failed drugs cheaply, and try to find alternate uses; even the wildly successful Viagra was a failed blood pressure medication (imagine Pfizer didn't review that failure and abandoned that drug). Even if a company had no strategic or monetary use for a failure, if it learns something—about itself, its market, its employees, or its industry—then failure adds value. This means that when attempts to innovate are consistent with what the company strives to do, you never lose.

Some failures seem inexcusable but, if an employee is pursuing your vision by acting according to your mission, then it's a learning experience.

Reviewing a failed venture properly means that you're not seeking a responsible party but a root cause, valuable information, and the most positive outcome for your business. For example, a new mineral extraction process that's pending approval for years, then denied by the EPA gives a company new knowledge that could result in: a modified the process that get it approved, a spin-off into a regulations consulting practice, hiring experts, or learning that the company's competencies are completely inadequate. The same thing applies to any failed venture: you can learn how to circumvent obstacles, use the knowledge for new business, contract outside expertise, or define your competencies better.