I was listening to the BBC’s excellent Start the Week podcast the other day, entitled ‘Uncertainty and Failure’. One of the guests, Matthew Syed, has written a book, ‘Black Box Thinking: The Surprising Truth About Success’ arguing that the best way of improving our odds of winning in the future is by being a lot more open about our losing bets.
He talked about surgeons and their fear of failure and even worse, admitting it, since they said medical infallibility was an important factor in the public’s trust of the profession and them as individuals; failure opens them to litigation and of course, ego plays a major role. Any voluntary admission of failure would mean people wouldn’t go to see doctors and that would be bad news on a number of levels.
The airline industry on the other hand, has made supreme efforts and introduced processes to ensure pilots feel comfortable with failure and learning and feed back into the safety of the system
In his book ‘Outliers’, Malcolm Gladwell talks about Avianca Flight 52 - an incident in Long Island in 1990, where a Boeing 707 crashed because it ran out of fuel. To cut a long story short, the co pilot didn’t have what it took to assert himself with both the captain and Air Traffic Control, and so 73 people lost their lives. All sorts of changes were made as a result of that and other disasters and near misses the result of which was best illustrated by the ‘Miracle on the Hudson’ safe emergency landing of US Airways Flight 1549 in 2009.
Mr.Syed cited an excellent statistic which nicely illustrated the point: in the US, ‘preventable’ death was the third biggest killer. That’s 400,000 people or two jumbo jet crashes every single day. However, in the airline industry there is now 1 accident for every 8.3 million take offs.
One of the industry clichés I hear from both ‘innovative’ bankers and their fintech counterparts is that financial services must learn to ‘fail fast’ since that fear of failure is leading to all sorts of costs, delays and lack of agility as system testing often takes longer than its genesis.
They are right, and clearly financial services needs to get closer to the airline industry than the medical profession, but there’s failure and failure. Nobody minds a bad process or horrible customer experience, but when personal data or money disappears, the public rightly loses its sense of humour since trust, safety and security is one of the most basic expectations of any financial institution.
I just don’t believe people when they talk about ‘failing fast’ in banking, or at least it's a phrase which requires qualification. I would like to think that I choose to hire the prospective employee with a string of failures behind her over the candidate with the perfect resume, but isn’t it human nature to wonder whether the string of failures comes from incompetence rather than bad luck or context ?
The Harvard Business Review published an excellent article on this subject recently, 'Why the Fail-Fast Approach Isn't Right for Breakthrough Ventures'. The authors argue that the fail-fast approach is successful for some ventures, usually software companies with modest initial operating expenses, but if you’re looking for something world-changing, the required investment and level of expertise can be high. Funnily enough ‘failing fast’ is so much more popular with the entrepreneurs than the investors footing the bill.
The solution is to make sure you do your homework and aim for success first time rather than giving yourself a ‘fail fast’ safety net. According to Kressel and Winarsky you need four key ingredients:
A large market opportunity with potential for rapid growth
An outstanding team capable of execution. Energy and enthusiasm can go a long way, but there’s nothing like real experience to build capability
A differentiated technology or business solution that trumps the competition
A clear value proposition and business plan that articulate the company’s value and strategy
They say success has many fathers, but failure’s an orphan. People have a tendency to own success and blame failure on external factors. Once I see banks and fintechs alike trumpeting their failures as loudly as their successes, and more importantly, that customers and employers understand the value of failure and remain loyal, I’ll start to fail as fast as I can.