“Don’t you know that Rome wasn’t built in a day”

On a recent trip to Tokyo (see above the spectacular view I enjoyed from my hotel room one evening after a storm had passed), to kill some time on a 14-hour flight I watched one remarkable movie, “The Russian Five”, and one interesting movie, “General Magic.” The latter got me thinking about the way Silicon Valley celebrates failure as a virtue.

As the title suggests, General Magic recounts the story of a company that had a remarkable vision, but was ahead of its time. General Magic envisioned the smartphone (more like the PDA, really) back in the ’90s. Despite a stellar team – many employees were former Apple during Steve Jobs’ first tenure – good funding – the company went through a so-called concept IPO, the first of its kind, essentially an IPO of a company with neither sales nor revenue – and respectable commercial partners, General Magic failed spectacularly. Through a combination of lack of execution, bad timing and fierce competition, among others, by Apple [1], the company was liquidated in 2004. Most of its employees from the early days went on to become very successful through other ventures, and even today many of them have become the sort of high-tech gurus so revered in the Silicon Valley.

There is a culture that permeates today’s tech world, especially the Silicon Valley, that celebrates failure as a sine qua non for success. The famous adage “Move fast and break things” could very well be modified to “Move fast and break things, and don’t worry about failure.”

What is wrong with the celebration of failure? Nothing per se. Learning from one own’s mistakes is a crucial component of any critical strategic thinking. We all know that any development and learning activity – from evolution to professional development – inevitably goes through setbacks and mistakes. I am personally a big fan of postmortem analysis of all projects, successful and unsuccessful.

Yet, the tech world today suffers from a so called “survival bias”. Survival bias is fundamentally the result of failing to recognize that correlation and causation are two very different statistical concepts. Survival bias is the logical fallacy that occurs when the selection process of a trial favors certain individuals or things that made it past a certain selection process and ignores those who did not, and who are generally less visible.

A typical example of survival bias occurred during World War II, when statistician Abraham Wald counterintuitively suggested that armor be added to aircrafts in areas that showed less damage. Researchers from the Center for Naval Analysis had conducted a study of aircrafts that had returned from missions (see picture above) and had suggested exactly the opposite, that armor be added to the wings. Their analysis, Wald noted, was flawed because did not take into considerations those aircrafts that did not return from missions. The holes in the returning aircrafts were areas where a bomber could take damage and still return safely.

We all know how much praise, acclaim and visibility is given by the tech industry to companies that were started in a garage and are now multi-million-dollar public corporation. As if starting from a garage is some sort of a predictor of future success. Unfortunately, we often forget about the many more companies that started from a garage and are still in a garage, or do not exist anymore. LinkedIn is another example of a platform where survival bias is widely noticeable. The celebration of those “who made it” and how they made it (often praising their multiple failures) does not take into account those who failed and did not make it. Because who would ever read a LinkedIn post about someone who did not make it big? We tend to overlook survival bias in many circumstances. And yet, no rational person would ever follow the advice of a lottery winner: “Play the lottery every week. That’s what I did, and look at me, I won!”

Ultimately, I tend to agree more with Larry Ellison, founder and CEO of Oracle, who said: “Great achievers are driven, not so much by the pursuit of success, but by the fear of failure.” Without the fear of falling, a toddler will not improve his walking skills. The fear of failing an exam is the main motivator for most students to burn the midnight oil, often much more than eagerness to learn!

But there are some unintended consequences of the “move fast and break things” mentality. A fallacy of our times suggests that technology pace is constantly accelerating, and development must acknowledge ever faster technology cycles. This may be true in some industries but not across all industries. Take telecom, my industry, or pharma as two examples where development cycles still require several years to reach maturity. A further consequence of this fallacy is the idea that patent protection does not have a role in today’s R&D, and alternative tools and development models should be used to facilitate transfer of knowledge. In other words, “move fast, break things, and don’t bother protecting your ideas.”

Surprisingly, the failure-as-a-requirement and the no-patent-necessary paradigms have something in common: at a macroscopic level, they give an advantage to established players with scale. All venture capitalists know that one only needs a very small subset of investments to go well, while the vast majority will fail. Big corporations whose innovation strategy revolves around acquisitions also know this rule very well. And they might not even need to acquire, when ideas that are not protected by patents can be simply taken at will. If you are an entrepreneur, however, knowing that more than half of all startups in the U.S. fail, the lack of patent protection in favor of speed speed speed might not necessarily work in your favor.

“To climb steep hills requires a slow pace at first.” – William Shakespeare

Footnotes:

[1] John Sculley, at the time CEO of Apple, was a board member of General Magic. Despite the great secrecy of the developments at General Magic, Apple eventually announced the development of its own hand-held computer, de facto going into head-to-head competition with General Magic (and possibly accelerating its failure). While these events are mentioned, great admiration towards Apple transpires throughout the film. Interestingly, the authors and the interviewees seem to almost condone or justify Apple “stealing” General Magic’s idea. As if it were somewhat inevitable that good ideas are copied (stolen?) in the Silicon Valley!