business news in context, analysis with attitude

Business Insider covers a speech given in London by Amazon's vice president for global innovation policy and communications, Paul Misener, in which he talked about the key role that failure has played in the company’s evolution and revolutions.

Some excerpts:

• ”It's OK to be wrong, it's OK to make mistakes — it's OK to fail," Misener said. "That's the key part I want to communicate to you today is the importance of failure in any sort of innovation. At Amazon, we have a lot of experience with failure. We have failed many times — some very public, colossal ones, some private. But we are failing and we will continue to fail. Many times we will fail going forward, I'm confident of that.”

• ”This willingness to fail, it's a big deal. I get that that's hard to adopt because you've got all sorts of people — maybe your boss, maybe an investor, maybe the press — looking for failures. That's not a very fun thing to go through. No one likes to fail. But if you accept that failure is necessary for innovation, it's actually quite important and it becomes a lot easier to deal with.”

And, the story says that Misener “cited Amazon.com Auctions — an early eBay competitor — and zShops — mini-shops for other retailers within the Amazon site — as examples of past failures. But he said the learnings from these experiments contributed to the success of Amazon Marketplace, which allows other people to sell over the website. ‘It turns out now that fully half of the things sold on Amazon are not sold by Amazon but through other partners. It's introduced a new class of customer for Amazon, the seller customer.

“'It was this willingness to fail and trying to get things right eventually finally that led us to this very beneficial way of doing business’.”
KC's View:
To be honest, the notion of failure - especially so-called “fast failure” - gets a lot of lip service in business, especially in retailing. People in my line of work love to pontificate about how important it is, and I see executives talking about it all the time.

But the thing is, the ability to cope with and grow from failure has to be built into an organization’s DNA, and very few companies are engineered that way. They worry about stock prices, which rarely go up when initiatives fail. They worry about the cost of labor, which doesn’t tend to go down when you have people working on initiatives that end up failing. Their CEOs worry about their own futures and compensation, which don’t tend to look as promising when they have failures on their resumes. Mid-level managers are almost programmed to resist uncertain initiatives, because running programs that fail usually don’t lead to raises and advancement. And even if you say you’re trying to get beyond all these factors, saying it and actually doing it are two different things.

Companies that have this built into their structures from the beginning have an advantage in this way. Companies that do not have an enormous challenge facing them if they really want to be innovative.