I was drawn to an article on Slate: The Google Graveyard. It’s actually not an article but a memorial service for Google services they pulled from the market. You can leave a flower at each grave to show your postmortem appreciation.
The post reminded me how important it is to experiment when innovating. And with experimentation comes failure (preferably the fast and cheap kind), much like many Google products on the Graveyard can be considered failures. But as those two practices (experimentation and fail fast) are widely described the post also reminded me of a strategy that is less often related to innovation best practices: burning bridges.
Burning your Bridges
Burning your bridges is though a widely described strategic practice in real options and game theory (pdf). I was introduced to the ‘strategic concept’ at a London Business School course some 10 years ago now. I even put it to practice in the Marktstrat strategy game we played over the course of the, well, course.. Let me explain the concept of Burning your Bridges by telling you about how we played the game:
Game Theory Gamification ;)
The game is played with several teams in several, but limited, number of rounds. And halfway through the game our company was not doing very well. In fact, we ended prior to last just three rounds from the final. By that time we had been investing a lot of money in our ‘legacy’ product (They where named ‘Sonites’) but others were beating us with better products.
At the same time we were trying to start-up in a new category that showed stellar growth opportunity, named ‘Vodites’. Because we were not doing very well, and after some heavy debate, we decided to step out of the Sonite market completely and put all our resources (and capabilities) into Vodites. And by doing so, we were reducing our options to win the game, since we could now only win in just one of the two competing markets, leaving behind a very large market.
We did not do this recklessly of course, but after carefully studying and weighing our options. And although we were not certain this “burning our bridges” strategy would work, we did know we would die in sub-mediocrity if we didn’t. So, we put our money where our mouths were and started improving our existing Vodite and even brought to market some new ones. Each targeted at a specific Customer segment. And you know: by the very last round our (new) product grew the market to stellar proportions which we largely owned and our Company gained so much steam that shareholder value outgrew all of our competitors and our team won the game.
Now of course this may just be a game, but it taught me a few important lessons I’m still practicing today:
Lesson one: Focus
For starters it taught me that one can best focus on doing some things right, instead of trying to do everything right. And it taught me that focus requires freeing up resources (cash and people) to allow them to give the very best at what (or who!) really matters.
And yes, following a burning bridges strategy might also mean your people need to let go of products, services or practices that they have given birth to. Or, if like me, you’re in services, it may even feel a lot more difficult because it is real Customers (and recurring revenue) one is abandoning!
But holding onto these products, services and Customers might just be what’s hindering innovation. Innovation of practices, products and/or services that might not only be bringing an even more prosperous future to your company, but is serving your chosen Customer segment much better than what you are currently offering.
Lesson two: Understand our options
It also taught me to carefully and rigorously map the options and their respective estimated outcomes, even when depending upon a lot of unknown variables, most of which I can’t control myself. Without understanding options and when there is a need – or the right context – to make a decision you would in fact not pursue your goals strategically, you would just be pursuing your goals (period). And how likely do you think you will be meeting those goals without a strategic approach?
Lesson three: You don’t leave everything behind
Most importantly, the game and some decisions I made over the years following a burning the bridges approach, taught me that, even if you burn your bridges and move out of a certain (no longer strategic) market or category, you do not lose the capabilities you so carefully developed.
In the game it was clearly not the product that won us the game, it was our joint capabilities to approach the problem strategically, analyze Customer needs and their (future) development and how to focus our resources to get done what needed to be done. Even in the case of fast failures there’s a lot you learned that you can very well use after crossing and burning the bridge. Understanding this is important as it helps reducing loss aversion.
If you want to be a good innovator you not only need to experiment and fail (fast). It’s not the graveyard that shows how successful you are. You also need to learn how to explore your options and understand that burning your bridges might be the best one to call if you want to be successful at growing a market, eh… Customer base ;)
What do you think?
Another interesting post.
As you know, I have used real-options thinking for years in planning, implementing and operating business activities. In a world of increasing uncertainty, real-options allied with dynamic capabilities can provide a degree of flexibility that allows you to reconfigure business activities quickly in response to changing circumstances and to make decisions under uncertainty.
But therein lies a problem. Many today seem to have developed a fetish for failing fast and failing often, almost as though failure is a good thing. This woolly-headed thinking is particularly prevalent in innovation and service design circles at the moment. Let’s be absolutely clear about this. FAILURE IS A BAD THING. It wastes time, scarce resources and valuable opportunities. It is to be avoided at all costs, particularly where the alternative is success.
But that doesn’t mean that we shouldn’t run discovery experiments. That is something completely different. As real-option thinking shows, information has a value. If you don’t have all the information you need to make a decision you have a range of choices; you can make the decision without the information and hope for the best, you can make assumptions about the missing information and hope for the best, or you can conduct experiments to discover the missing information and plan for the best. Even though the experiments may not work out as expected, the information gathered by doing them is invaluable. This is what Dave Snowden calls Safe-Fail (see http://cognitive-edge.com/blog/entry/4501/safe-fail-or-fail-safe/ for more details), in contrast to ordinary failure and its many variants.
Failure is a bad thing. But if you don’t have all the information you require to guarantee success you should consider running Safe Fail experiments to improve your odds. The information helps decide how to rearrange your capabilities to maximise the likelihood of success. Real-options provides a useful framework to manage this process of decision making under uncertainty.