My dear friend Dave Pottruck was co-CEO at Charles Schwab (along with Chuck himself) when they reinvented themselves from being just a bricks and mortar discount broker to the best combination of online and offline service in the field. He was later fired in 2004 because he did not turn the company around fast enough after the dot com downturn. Needless to say, Dave understands risk and its consequences. Moreover, Dave is a very wise man and over the years has taught me the difference between failure and what he calls "noble" failure. By Noble Failure Dave meant that the team:
Performed a careful and thorough analysis of the opportunity;
Prepared a thoughtful and comprehensive plan (including contingencies) to attack the opportunity;
Was completely committed to the success of the venture and worked endless hours to make it succeed;
Gathered the resources needed to do the job right;
Effectively executed the plan and adjustments to the plan;
Took personal accountability and went back and did a post mortem to maximize the learning from the failed effort.
If you did all 6 then you have noble failure.
This kind of failure doesn't get you rewarded or promoted. But it doesn't get you fired either. You aren't penalized for taking the chance to do something bold. Arguably you are ahead of the game in that you are more valuable to the organization since you are now experienced at why innovations are hard to pull off.
What Dave was not willing to tolerate was ignoble failure. He said the two problems with accepting just any failure is that you don't know if the idea or the execution was wrong and you sent an demotivating message to the organization that sloppiness might be tolerated on something as important as innovation.
Dave's notion of Noble Failure reminded me of the Spartans and the Battle of Thermopylae in which King Leonidas of Sparta lead a much smaller Greek army of about 7,000 against the force of Persians led by King Xerxis I which history says numbered over a million. After holding them off for seven days and upon learning that his army was being outflanked, Leonidas sent the bulk of the army in retreat but personally stayed to lead 300 Spartans, joined by 400 Thebans, and 700 Thespians. (This last stand was the inspiration for the recent Frank Miller movie 300.) Almost everyone was lost in the battle, but this Noble Failure has stood throughout history as an example of how freemen, aided by great training, and using the terrain well, could "force multiply" their strength in an attempt to defend their homeland and cause the aggressor great losses.
Innovation and "Noble Failure": Lessons from Dave Pottruck — John Sviokla
Relevant or recent posts:
Knowledge Workers and Radically New Technology: Understanding Failure and Success (A Sloan Management Review Article on a multi-year study of new technology in insurance field salesforces.)
Marketspace Markets: Factors for Success and Failure (A book chapter on successful and unsuccessful electronic markets.)
The Calculus of Commerce: Why business models are aging faster and what to do about it (A research paper with Caroline Calkins on why businesses lose their lead and what to do about it.)