First time wrong

NOTE! The views presented herein are those of the author only and do not necessarily represent my affiliations in any fashion whatsoever.

Henry Ford was no stranger to failures. Not only did he struggle to start up, as the quote over indicates, but he had some massive failures years down the road after harvesting massive success with his Ford Model T. It was said that Ford took out iron ore on Monday and on the consecutive Friday the car rolled off the assembly line. He single-handedly changed the automotive industry from being a rich man’s toy to a revolutionary means of transportation we all take it for today. Despite all this success, he nonetheless made a huge bet on solving his rubber supplies by creating an entire town in the Amazonas basis – Fordlandia. Ford had planned for 1 million rubber trees and a plant operating with 50,000 workers. The size was no less than 3,900 square miles! Its enormity was only surpassed by its monumental failure. Not only did Ford impose a lot of rules including square dancing that the people disliked, but more worryingly they had totally misunderstood the biology of the rubber trees. As good mechanical engineers, they lined the trees up in a relatively tight mesh. That was effective from a production point of view, except from the fact that rubber trees want a lot of space and basically cannot stand each other. So, they all died and not a single unit of rubber was ever produced. 

Another corporation that has perhaps profited more from failures than most is 3M. Not only did many of their products result from happenstance – their famous Post-it® notes should come to mind – but their very founding was problematic as well. 3M is actually an abbreviation from a corporate name that illustrates how far they moved from their original purpose – Minnesota Mining and Manufacturing Company. From its founding in 1902 it took 14 years before they were financially stable – and in something completely different than originally anticipated. Both Ford and 3M are far from unique – indeed, discovery has often been the product of happenstance in science as well although some scientists like to portray their work as elegant delineation of axioms and logic, measurements and analysis, and verification and validation. 

This post is no rebellion against the first-right-time credo found in lean. It is better to interpret it as a post emphasizing context above blind application of principles from one domain into a completely different domain. First right time is fundamental once you know what you are to make, but first right time in the innovative process only kills innovation as discussed in earlier posts. 

If the attitude is first time wrong, then we will automatically be in a learning mode. This will produce results much faster and better as well, than trying to squeeze an innovation out of an over-managed, financially-oriented process instituted by people who have little understanding of the innovation process itself. When people try to turn a highly uncertain and risky process, i.e. the innovation process, into a predictable process they ruin the innovation process. This post is no argument for the other extreme, but more a call for respecting the inherent risks and uncertainties in innovation and instead of seeing it as a problem, use it as a source for continued innovation. 

We all know about the successes of Apple and Google, but what about all their failures? Well, check the illustration below. 

Because they are financially very strong, and as far as we are all concerned; these two corporations are highly successful.  If they were not doing well, it would be completely different, but the innovation process is inherently the same. The major difference is that a financially strong corporation has the financial means to absorb the risks if they materialize whereas a financially weak corporation will succumb to a similar situation. Yet, the innovation process is the same. 

The point is that the innovation process cannot be managed in the same way as many other processes to achieve predictable outcomes, and because of that failure is an inevitable part of innovation efforts.  Once management understands this they will also resist the temptation to start over managing innovation processes.  The best way of managing innovation processes is actually incredible simple, but quite rare in many corporations; trust your people to act intelligently on the behalf of the corporation – they are after all closest to the facts.  This will give them the necessary mental room for being creative and ultimately innovative.  This is no call for lax management but rather for using implicit methods of management.  

A historical analogy might help. A historian some decades ago wrote that the principal reason for the Roman empire to last so long was that they did not have telephones.  While this is a humorous statement on the surface, it is deep and profound.  The problem with telephones is that they give an impression of immediacy and closeness.  This is just an illusion. It only gives some aspects of immediacy and some aspects of closeness – many are completely lost such as seeing things for yourself.  Because the Romans did not have the technological capabilities of falling into this trap, their huge empire offered no other solution than having local governors.  The critical element of this was that these governors had to be trained and trusted.  The modern corporation has largely done away with both and in the process lost the innovative capabilities.  

Apart from a few tech giants, the multinational corporation has been on a losing ground over the last five years or more and the trend is not improving.  Three important reasons for this is 1) the end of the privatization wave, 2) there are no new significant emerging economies and 3) the level of affluence is stagnating.  On top, the emerging economies are now producing their own multinationals which means that the market is getting increasingly crowded and profit margins have been hit hard (and that will continue).  A less apparent problem for many of them, is their overhead and bureaucracies which not only gives a cost disadvantage over local competitors but as argued in this post – they kill innovation as well.  The benefits of scale are waning away as new technologies reduce the need for mass production and allow mass customization.  Thus, the only multinationals appearing to be innovative are those that have the financial muscles to acquire smaller corporations and integrate them well.  Yet, with falling profit margins this seems to also be a losing game.  

It turns out that the Romans were not so ‘stupid’ anyway.  Trusted governors kept overhead to a minimum while being highly responsive because they were trusted and given the necessary means to enact executive powers at their will on behalf of Rome.  Today’s corporate governors are entangled in a web of functions, processes, promotions, reporting and excessive financial focus.  The corporate straightjacket therefore inhibits intelligent risk-taking and hence success.  

The Roman governors did not await orders from Rome – rather, they did what was necessary to avoid orders from Rome.  The best turned failures into success, but Rome did not offer huge support structures for inept leaders. They were removed.