/ business

Failure can be a feature too

What’s the common thread between design, failure, and innovation? Disparate elements they all are, to be sure, but nonetheless, after reading my thoughts on some of the points brought up by some of today’s leaders in tech entrepreneurship, I think the connection will be clear as day.

Last Wednesday, I attended the Chicago Ideas Week Tech & Web MegaTalk. The speaker list was a veritable who’s-who of tech innovators (taken from the talk’s web page):

  • Bo Fishback: Founder & CEO, Zaarly
  • Bruce Mau: Co-Founder, Massive Change Network
  • Eric Lefkofsky: Managing Partner, LightBank, Chairman, Groupon
  • Gian Fulgoni: Executive Chairman & Co-Founder, comScore
  • Julie Novack: SVP Mobile Solutions, Vibes
  • Lifelens Team: Microsoft Imagine Cup Winners, 2011
  • Mitch Lowe: President, Redbox
  • Peter Barris: Managing General Partner, New Enterprise Associates
  • Ted Leonsis: Founder & Chairman, Monumental Sports & Entertainment
  • Tim Westergren: Founder & Chief Strategy Officer, Pandora Media, Inc.
  • Travis Kalanick: Co-Founder & CEO, Uber

The event’s format was very simple: put speakers on the stage, and let them wax on whatever subject they felt was relevant. It kicked off with an on-stage discussion between Eric Lefkofsky (of Groupon fame, among other ventures) and Ted Leonsis (contemporarily known for his sport assets portfolio, but also known for his work at AOL during AOL’s hey-days as well as his work with many other ventures, including some small company called Apple). Other speakers there made some incredibly salient points on other aspects of innovation but this post is focuses on the first presentation’s material since I think that it is so pivotal to the meta- aspect of ideas and innovation. I’ll follow up with some analysis and summaries from other speakers and their topics at a later date, but here’s a quick run-down on some of the other speaker’s topics that I’ll dive into at a later date.

  • Mitch Lowe made my developer ears perk when he highlighted the importance of simplicity in both user interaction as well as within a business concept (reminiscent of the SRP for you developers reading this)
  • Bo Fishback gave a humorous talk about past, present, and future marketplaces. The French phrase plus ça change, plus c'est la même chose (the more things change, the more they stay the same) comes to mind when thinking about this.
  • Bruce Mau waxed very eloquently about the importance of design, not in furniture, software, or graphic areas, but in education, government, and business. My main thought during his talk was that while his mouth kept saying “design”, what he really meant (or what I simply heard) was “engineering”. Two sides of the same coin.

Understandably, given the recent passing of Steve Jobs, the two sang paeans to him for a bit after the introductions, but before their entire discussion turned into a Jobs retrospective they connected it back to the topic at hand. Leonsis related a few anecdotes from his personal relationship with Jobs, which really helped to underscore Lefkofsky’s points on innovation and failure.

Why is failure a feature of innovation? The answer to that rhetorical question derives from understanding an essential difference between Silicon Valley and my home town of Chicago as relates to the tech industry. This is a topic I’d been putting a lot of thought into, but until then, I hadn’t been able to come up with anything solid. Eric and Ted’s comments answered my questions with a simple answer I’ll paraphrase and hopefully not mangle too much below (emphasis mine):

How innovators are regarded for their failures is one of the driving assets of the Silicon Valley revolution. Failure literally *is* an option, because the price of it is so low. People who innovate are lauded for the very fact that they attempted to make their ideas a reality. Chicago only lauds those who actually succeed in their attempts. Failures are vilified in the community and in media, stifling innovation because no one wants to even attempt something unless there’s a high chance of success. One of the biggest things that Chicago needs to change in order to compete is to lower the cost of failure… Failure is essential to the learning process. Learning how to fail and deal with failure is one of the most important lessons an entrepreneur can learn. Silicon Valley’s low cost of failure gave innovators a chance to learn their lessons [Ed: cut their teeth] early on, giving them an advantage in future startup concepts.

Indeed. Discussing the reasons behind why failure is so risky in the Windy City, the duo had a couple of different theories. Perhaps it is something to do with the Midwest work ethic, or maybe it’s because the number of startups is relatively smaller, giving greater focus and hence scrutiny to each venture. It could be that the monetary cost of getting even a modest startup off the ground is high enough to discourage attempts. I think that those reasons are all valid, but there are some that I’d like to add to the list in a future post. I’ll post an outline of those reasons here so they can serve as a reference for a future post where I’ll go into them in more detail.

  1. A dearth of talented, passionate, young developers in need of ‘real-world experience’ and willing to take chances – and more importantly, learn from their failures. (see what I did there in tying it to the theme of this post?)

  2. Related to the first point, it is currently pretty expensive to obtain top-notch development resources in the area, as the majority of “rock star” class developers are in comfortable positions that they are unlikely to leave for the a risky (and low-paying) gig with a startup

  3. Geographical distribution. On a map, the Chicago metropolitan area seems to cover a relatively small area in the northeastern portion of Illinois, but in reality, the metro area covers over 10,000 square miles! Consequently, and despite the fact that Chicago ranks 4th in the world of Most Important Business Centers according to the MasterCard Worldwide Centers of Commerce Index (source: http://en.wikipedia.org/wiki/Chicago#Economy), businesses are sprinkled around the city and suburbs. I believe this is important because like a mass of Uranium, innovation needs a critical mass concentrated in a small area in order to start a chain reaction. I believe that’s exactly what happened in Silicon Valley – a high mass cluster of innovators there kicked off a self-reinforcing feedback loop (what those in the know call a positive feedback loop) of innovation. Innovation begets innovation.
  4. Basic research cuts. Aragon National Laboratories and Fermi Lab are home to some of the greatest innovations of the last 50 years, but years of budgetary neglect and cuts have gutted the research capabilities of these institutions. The institutions have created many partnerships with businesses, but because those partnerships are generally narrowly focused on a specific topic (they would have to be – shareholders are more and more concerned only with short-term profitability, basic blue-sky research generally only pays dividends over the long term, although that payoff can be huge – ask IBM, Motorola, and Xerox). Of course, it was defense spending cuts and economic downturns in the 1970’s in what would come to be known as Silicon Valley that helped create the technically skilled and unemployed (read: bored) workforce with nothing to lose by trying, but justifying basic research cuts in that way would be throwing the baby out with the bathwater.

Of course, there are many more factors involved than can be easily broken down into a set of bullet points, but hopefully this is a good starting point for discussion. Future posts will break these down into greater detail and discussion as we explore this complicated but extremely important issue further.

Josh Elster

Josh Elster

A long-time veteran of the software industry ranging between enterprise architecture to creative site design and many points in-between, each challenge only shows how much there is to learn out there!

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