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How Successful People Use Failure

Are you searching for a big idea to meet a goal but mired in complex details? Have you been handed the stepchild project that has sunk a few of your predecessors and don't how to rescue it? Have you found a wildly popular program is really in trouble but don't know how to expose it?

Tim Harford can help.

An economist and best-selling author, Harford's latest book, Adapt: Why Success Always Starts with Failure (FSG, 2011), draws upon research and interviews with prominent thought leaders to reveal "adaptive management"---specifically, how to foster innovation and tackle tough problems in an increasingly complex economy. His thesis is that the way to succeed is to embrace trial and error, develop the courage to risk and know failure--and adapt from those failures with adjustments.

Harford, who also wrote The Undercover Economist, may have produced the best of the wave of behavioral and cognitive change books (I have written about a number of these including Little Bets, The Blame Game and Out of Character ). These authors believe management experts have overvalued grand strategies, big ideas, and charismatic corporate heroes. Instead, they cite psychological studies and market analysis to buttress their argument that you should focus on learning by doing, experimenting, tracking data, and understanding your own behaviors and biases.

Adaptive management in a big company: Accept Failure

Harford says managers face some challenges in large organizations. Big companies offer an attractive machine for carrying out correct decisions, the power of a team all pulling in the same direction, and clear responsibilities producing a proper flow of information up and down the chain of command. But, he notes: "every one of these assets can become a liability...the big picture can become a self-deluding propaganda poster, the unified team retreats into groupthink, and the chain of command becomes a heirarchy of wastebaskets, perfectly evolved to prevent feedback from reaching the top."

Harford's framework for adapative management focuses on accepting and tolerating failure. His tips:

  1. Try new things with the expectation that some experiments will fail.
  2. Make failure survivable..."because it will be common."
  3. And make sure you know when you've failed. When you rationalize or delude yourself about your mistakes, you tend to compound them by making stupid decisions in an effort to deny the failure ever happened (this is why people lose money at casinos).
The case studies Harford builds at the core of every chapter illustrate ways to overcome specific challenges. Here are a couple:
  • When you're on the front lines of a crisis misunderstood by arrogant senior leadership: Harford shows how a few colonels leading operations in Tal Afar and Ramadi in Iraq ignored Donald Rumsfeld and high command to experiment with counterinsurgency tactics learned from their experience working with and next to Iraqis. By building on small successes, they reached a new approach for driving out Al Queda and slowing down Shia-Sunni violence. A minor general named David Petraeus consulted with these innovators (who were blackballed for their lack of orthodoxy) as well as internal defense dissidents, officials from the State Department, human rights advocates and even academics to write a new counterinsurgency manual that eventually led Petraeus to command Iraq after 2004.
  • Managing a project few understand and no one wants to fund: Meet Reginald Mitchell, the brilliant young engineer most responsible for designing the Spitfire, the British fighter plane that turned the Nazi tide early in WW II and prevented a full invasion of the British homeland. Mitchell's designs foundered until he found an outside investor who funded the plane, and was given a small 'skunkworks' team with total independence from the surrounding bureaucracy.
  • How to improve popular programs that could be better: Meet adaptive heroes from the field of development and poverty such as Muhammad Yunus and Owen Reed. Their examples demonstrate how observing and evaluating projects at the "worm's eye view" of daily experience reveals how popular programs are misunderstood and even failing--but can be improved through tactical changes. Yunus improved the practice of microfinance with more local control and peer to peer mentoring--and won a Nobel Prize. Owen Reed figured out how a water project that was the darling of development donors wasn't useful to villagers it was supposed to help--by hanging out and talking to them.
  • How to make your organization a dominant player by embracing failure: Harford's perspective on why Google became dominant focuses on how Google incentivizes experimentation; the company nourishes projects that emerge from the ranks--until they conclusively fail. "If any company can be said to embrace trying new things in the expectation that many will fail," Harford writes, "it is Google."
The world's best companies are likely to follow in the wake of dynamic firms such as Google, Amazon, and Whole Foods that are aggressively decentralized. Their CEOs' faces are still splashed on business magazines, but their genius is in hiring smart people (like you) and allowing them to frequently fail. As Harford quotes, "We should not try to design a better world. We should make better feedback loops."

Have you ever embraced failure, and how has it helped you?


Herb Schaffner is president of Schaffner Media Partners, a consultancy specializing in business, finance, and public affairs publishing expertise, and is found on Facebook. He has been a publisher and editor-in-chief at McGraw-Hill, and a senior editor at HarperCollins. Follow him on Twitter.
Photo by Tattooed Hippie.