Photo: Scott Pham
Try this thought experiment: Maybe America’s Great Stagnation isn’t happening because we’re failing — maybe it’s happening because we’re not.To illustrate, consider the most straightforward example: Wall Street megabanks were propped up and lavishly resurrected, and your grandkids will likely still be paying the price — because they were too big to fail.
But if you look closely, you might see those dynamics just about everywhere.
Detroit, of course, received a de facto bailout, too, but that’s the tip of the iceberg: when you stop and think about it, the economy’s rife with subsidies, hidden and overt, to largely industrial-age stuff (the McMansions that were subsidized by Fannie and Freddie, the oil that’s subsidized by whomever’s going to clean up the sky should there be anyone left to do so, the McBurgers whose water, beef, and obesity are all loaded not just with calories, but with tons of agro-subsidies).
And that’s just the economy. What about the polity — Congress? Rarely have more constituents been more disappointed with their so-called representatives — but the whole lumbering institution’s too entrenched and cronified to fail.
Hence, argue with me if you’d like, throw binders full of rosy forecasts from your favourite think tank straight at my forehead if you want, but I’d gently suggest: America just might be terminally deficient in terms of one of the fundamental drivers of 21st century competitiveness: what I call economies of failure. Just as economies of scale might be loosely said to competitively refer to, roughly speaking, the savings, investment, and ultimately returns that an organisation realises from greater output than its rivals, so
economies of failure are the savings, investment, and returns an organisation realises from intentionally, consciously making greater mistakes than its rivals.
The unforgiving truth is that failure — the ability to fail gracefully, relentlessly, consistently — has never mattered more. In a world where volatility is punching past the outer limits, where global hypercompetition is reaching breakneck speed, where the most talented people won’t settle for humdrum routine and stifling busywork, where the velocity with which the self-organising people formerly known as “consumers” can deconstruct your latest, greatest yawner of a hit down to the tiniest omission has gone terminal, where investors have their zombified eyes locked on the bottom line but rarely the prize, and last but very definitely not least, in a world where yesterday’s tired, threadbare conceptions and definitions of success are ever less resonant — well, in this world, those who can’t fail are likely to end up a little bit like America: stagnant, stuck, and struggling to redraw the boundaries of prosperity. A system that fails to fail lacks the capacity to evolve — much less to gain resilience, or, above all, wisdom.
Beancounters and bureaucrats, welcome to the 21st century: its time to get lethally serious about failing bigger cheaper. That’s my three-word definition of economies of failure. And the art of failure is being mastered by a new generation of radical innovators.To illustrate, consider the first half of my tiny definition: failing cheaper. It’s something that today’s venturescape is struggling and sweating to master. Silicon Valley’s latest buzzword is the “pivot” — geek-ese for “this isn’t working: let’s change it up.” And to make it happen, they’re learning to shed the red tape, meetings, managers, and memos that made industrial-age business such a dreary, dismal drag.
If an ideal organisation is a mechanism to attain economies, the venturescape’s luminary thinkers and investors, like Eric Ries and Fred Wilson, are reimagining it not merely for scale, as in “the ability to churn out a trillion of the same mass-produced widgets, at the lowest cost, with zero defects” — but as a lean, streamlined, nimble machine that can fail radically cheaper than ever before.
That’s nice, but its not enough. Failing cheaper is just half of the equation: failing bigger is the other. The Valley is learning to minimize the costs of failure — but what about maximizing the benefits? A dog chases his own tail, and so it too often is with those seeking economies of failure. Stripped-down organisations also seem to lose a sense of bigger purpose, of larger destiny — and end up focusing on tiny, me-too features instead. So while failing cheap is crucial, so is failing big: in the process of striving to change the world radically for the better.
On this dimension, I’d say the lumbering giants of yesteryear are doing a tiny bit better. Though it’s soul-suckingly awful and strategically naive to think that you can continue to “profit” from mass-producing and hard-selling toxic sugar water to the least fortunate around the globe (you think soda’s the drink of choice for urbane, moneyed yuppies?), Pepsi’s taking baby steps, by, for example, embracing water positivity. That’s big: it’s about changing the world’s supply of humanity’s most vital resource.
If I had to sum up the challenge, I’d put it like this. A decade into the 21st century, it has never been clearer that not letting yesterday’s institutions, products, services, “business models,” roles, tasks, assumptions, and beliefs fail — that our endemic, systemic failure to fail — is a titanic roadblock standing in the way of a more authentic, enduring prosperity.
The future’s not predicted — it’s created. So create it. Fail bigger cheaper.
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