‘Fail fast’ is one of the biggest buzzwords around today. It’s the notion that if a commercial initiative isn’t going to work, the business needs to know about it as soon as possible, so theycan walk away from the initiative as quickly and waste few resources..
Contrast this with the concept of strategic thinking. This is the idea that a business should follow a long-term plan, and that all its activities must be aligned to the plan.
On the face of it, the two ideas seem to be in opposition. One has a very short-term focus, while the other has a long-term focus. So can they really work together?
EY’s Oceania middle market leader, Schalk Barnard, says for large corporates, strategy remains a key business tool. “But you also need to allow people to be creative and that means allowing them to fail fast, as long as there is a business reason behind it.”
There is, however, a necessary difference in the way start-ups and corporates approach failure. Bernard says for start-ups, the emphasis is on failing fast so they don’t waste precious resources on an idea that’s not going to generate a return. It’s a different situation in bigger businesses, where there’s more to lose if there is a large failure.
Mick Liubinskas, entrepreneur in residence at Muru-D Accelerator, agrees that the notion of fail fast and strategic thinking can work together.
“Fail fast is really [about] testing, and testing is about execution. Strategy is about how you win. You need to start with a strategy but don't assume it is right and spend two years finding out. Set a strategy and do the smallest, fastest test of it to move you towards your goal. Then learn from it, course correct and test again,” says Liubinskas.
“Failing for the sake of it is bad. Failing and learning from it, or ‘flearning’ is how you move towards a goal,” he adds.
So how can businesses fail fast and still stick to an overarching business strategy? Liubinskas says in today's world, the majority of what a business needs to know to succeed on a strategy cannot be known without testing. “You must test your way to success,” he argues.
This is an approach that’s well known to start-ups. But it’s a concept that is often foreign to many larger businesses. However, it doesn’t need to be.
Barnard says one approach corporates can take is to partner with an incubator or start their own incubator – rather like Telstra has done with Muru-D, so there’s a separation between the corporate structure and its riskier ventures.
Muru-D has three locations in Sydney, Brisbane and Singapore. It enables businesses to raise funds and go to market. But as it sits alongside Telstra’s main business, it doesn’t disrupt its day-to-day operations.
“Having an aligned accelerator or incubator allows the business to work on ideas fast. You can make things happen quickly in an accelerator, without having to be involved in the lengthier decision-making process that large corporates follow,” Barnard says.
However, he says it’s still possible to build a fail fast culture into a big business, especially in the mid-market where it’s possible to be more agile than in the larger businesses.
“It’s all about the tone from the top. If failure within the organisation is not tolerated, it won’t innovate,” Barnard argues.
So in such a fast-paced world, where business conditions turn on a knife’s edge, is there really still room for long-term strategic thinking?
Liubinskas thinks there is. “Long-term thinking is needed, but fast testing is also necessary. The long-term will change as you go, but you must know in which direction you should turn when you ‘flearn’ from a test.”
Barnard agrees strategic thinking is still needed. But businesses also need the skills to adjust and adapt to the current environment.
“It all comes down to being agile. But long-term strategy should be there or you don’t have direction. However, you need to be able to flex within that.”
One of the criticisms often cited about the Australian commercial culture is our inability to accept failure as a normal part of business. Liubinskas says we need a more mature approach to failure.
“There is a huge difference between a whole project or a whole business failing and failing 1,000 small tests,” he says.
As to why we don’t embrace the benefits of failing in Australia, he argues that there is a big misconception that failing is negative here. “If you fail a test and learn from it then it's a positive. That's why flearning is better than failing.
He says in Australia there are several mindsets particular to this country that don’t encourage failure. One is the idea that life is really good even if you don't try too hard, so why take risks? Our sports culture is one in which there is one winner and many losers. Plus, our environment is harsh: fail in the desert and you die. These cultural factors combined inhibit a healthier approach to failure.
Barnard agrees we need to be less narrow minded when it comes to failure. “Failure can be success. But in most organisations, people are only rewarded if they are successful.
“Fear of failure comes from the top and businesses need an environment where failure is acceptable. But of course there needs to be a balance between failure and success,” he says.
- Encourage testing of ideas across the entire business.
- When an initiative fails, unpack why it did and take those learnings to the next project.
- Management must lead by example: if they tolerate failure, the rest of the business will too.
- Set timeframes and milestones for initiatives to reach and measure your progress against these.
- If something isn’t working, know when to talk away from it and move onto another idea.