The Positive Power of Failure - Vijay Govindarajan - Harvard Business Review
Friday, March 18, 2011 at 01:10PM 
There are three variables in the innovation equation:
Innovation = ƒ(Strategy + Creativity + Execution)
The need to experiment and fail inexpensively in Execution is where most of the focus is these days. Ironically, the relatively low risk and low cost of experimenting with seemingly dead ideas during Creativity is still one of the keys to lowering the high risk, high cost and high rate of failure in Execution. How many times does someone in your organization say, when a competitor launches a big success, "We thought of that but it died!"
There are also three variables when it comes to experimenting successfully with new ideas:
Ideation Success = ƒ(Encourage + Fail + Combine)
1. Encourage constant low-cost experiments
2. Hope for failure, because it will mean the organization is stretching
3. Learn how to Combine failed ideas to form exciting new ones.
Here is an example. The Disney MGM Studios theme park opened in 1989, with far higher initial attendance than was anticipated. The park needed to quickly add attractions and other infrastructure like restaurants and retail shops. We were asked to work with a cross-functional team to invent new restaurant concepts.
During the course of one two-day session, we ran a number of exercises (commonly known as "excursions') to get them to stretch. The first one asked everyone for examples of "Vanishing Americana." One participant offered the drive-in movie. Later, a breakout group tried to Play with a drive-in restaurant concept, but nothing they came up with could manage enough guest turns to be financially viable. It was more an attraction than a restaurant. So the idea died.
Another excursion (we ran several) asked people for something from a favorite TV show. One person offered Happy Days and Arnold's Diner. This time a breakout team was asked to Play with the Arnold's Diner theme and this time the idea failed because they weren't interested in just a sit-down diner. The appeal of their idea was serving food carside, but they just couldn't come up with a way to have a lot of people sitting in cars around the exterior of a diner. After a day of some minor hits and many failed experiments, they were pretty gloomy.
On the second day we again broke them into teams, but this time we told them to pick any two or three dead ideas and combine them to form something workable. One of those teams combined the drive-in movie and Arnold's Diner into something that became the Disney Sci-Fi Restaurant. The setting was a drive-in movie. It felt as if you were outside, with a beautifully moonlit, starry night above. It had a constant loop of silly scenes from horror movies like Attack of the 50 Foot Woman, and Attack of the Killer Tomatoes. Guests sat in classic 1950s-era cars. The wait staff would roller-skate from the "diner" at the back of the drive-in to the cars with electronic devices for taking orders.
It was a big hit and it continues to win awards. And it started with two seemingly failed ideas.
This post was written with Mark Sebell and Jay Terwilliger, managing partners at Creative Realities, Inc. a Boston-based innovation management collaborative.
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