I recently came across an interesting article in Business Week about the importance of failure. Not the importance of success, but failure.

Failure and innovation go hand in hand. If your business goal is innovation, then you must also prepare for a good deal of failure.

I'm sure this article caused a major case of cognitive dissonance on behalf of their readers... but it is nevertheless correct.

To truly innovate, you must not be afraid of failure. If you are trying to do something that nobody else has done before, mistakes are inevitable. You must learn to ignore the idea that failure is bad -- the only thing that is bad is the failure to learn from mistakes.

My primary training is as a Physicist, so I'm not in the least surprised that failure is important for success. In Physics, you are always pushing the envelope on not only what is known, but what is knowable. Mistakes are inevitable. Sometimes some of the best breakthroughs occurred because somebody made a huge mistake.

In business, it is naturally different. Lets face it: innovation is the exception, not the norm. You don't make money by taking huge risks. Just like Will Hamilton warned Adam Trask in East Of Eden, "I'm the only one in my family who never had ideas, and I'm the only one who ever made a dime."

To make money, you need discipline. Buy low, sell high. Go for the sure thing, and execute better than the next guy. Well, that's certainly how Warren Buffet made his billions, but its not how Steve Jobs made his billions.

No wonder most of the innovative ideas come out of small companies...

The problem is that with the internet, business needs are changing much faster than in the past. Big companies need to shed their fear of failure. They need to measure how much failure they can tolerate, and encourage special teams to push the envelope. To fully accomplish this, however, they need to remove the political stigma of failure from their corporate culture.

My favorite example of people not afraid of failure? Turnaround CEOs.

These guys appear to be inspired and energized by failure; how else could they do what they do? They are not afraid to buck the system and try new things. Even when failure is all around them, they remind their team that failure is fine; as long as you can learn from your mistakes.

The result? The political stigma of failure is eased, and people are more willing to admit previous errors. This allows people to feel comfortable enough to admit when their team did wrong, without fear of finger-pointing and blame costing them their job. If you cannot lose this fear, the company is doomed. Middle managers are far too preoccupied with saving their skins to do what is best for the company.

Kudos to Business Week for pointing out this important fact... I'm curious if anybody will pay attention.