The Importance of Failed Innovation

Scott Anderson wrote a post today: The Importance of Failed Innovation. He writes,

(O)ne way out of this problem is to increase the innovation success rate. A noble aspiration for sure. But be careful. Following that seemingly sensible path can lead to some perverse behavior.

He's right about that: fear of failure can drive innovation towards the tyranny of incrementalism, where breakthrough ideas get filtered out before they have a chance to prove themselves.

He lists countermeasures like "Lower the cost of experiments," "Change the order of experiments" and "Increase the pace of decision-making."

Of course, a well-designed set-based process that evaluates multiple options to burn down risk accomplishes all three - while also increasing the likelihood of success.

I agree with Scott that innovation needs the freedom to generate lots of ideas that fail. But if you know what your strategic objectives are going in and you evaluate a set of ideas that will meet those objectives at the same time, your likelihood of achieving the results that you desire increase dramatically - which is what we all really care about.

Do Labor Laws Foster or Inhibit Innovation?

The latest MIT Sloan Management Review reports on a new study that surprised me.

Researchers Viral Acharya, Ramin Baghai-Wadji, and Krishnamurthy V. Subramanian correlated labor laws with patent and economic data to show that labor policies that make it harder to let people go seem to correlate with more innovation and greater economic growth:

Why would laws that make it more complicated for employers to let workers go have a positive effect on innovation? One reason, the authors suggest, is that such laws may make employees more willing to take the greater risks associated with attempting innovation.

I have to admit that I'm skeptical about the authors' reasoning. For one thing, the quantity of patents is not a good measure for innovation or risk-taking, although I see it used frequently. Perhaps the engineers are producing a lot of "incremental improvement" patents because they have to keep themselves busy during slow times.

You also have to look at the economic utilization of the patented ideas, and how many of the patents represented true breakthroughs vs. incremental improvements.

Personally, I'll take flexibility any day.