Innovation by means of repeated failures

Thomas EdisonThe work of Gustave Manso, a Brazilian-born finance professor who’s now on the faculty at MIT’s Sloan School of Management, applies both to conceptual and experimental approaches to innovation, judging from a Boston Globe report that’s cited in the “Innovation Tools” blog.

It covers both conceptual “thinking big” and experimental “trial and error.”

Manso proposes incentives that allow employees to fail — “slow-vesting stock options, golden parachutes, debtor-friendly bankruptcy laws, and, in academia, tenure.”

“By contrast, the pay-for-performance model ubiquitous in business today compels employees to exploit existing approaches and technologies instead of trying something new,” Manso suggests.

In Manso’s scheme, the privilege of failure is important both for conceptual and experimental innovators. The major difference, judging from the patterns that David Galenson discovered, would be that experimental innovators will typically think they’ve failed, even when they’ve succeeded. Conceptual innovators will be happier with their achievements.

Jeffrey Phillips makes a similar point in his “Thinking Faster” blog, citing an example of Thomas Edison’s experimentation and one of his failed conceptual innovations:

“It has been frequently said that Edison knew 1000 ways not to make a lightbulb. Edison didn’t invent the bulb, or the electric light. He actually dramatically improved the longevity of the bulb and how the bulb and the electrical socket (and eventually electrical distribution) would work. But only after trying thousands of combinations of filaments and bulbs. This record of experimentation and failure gave him a great base of knowledge and helped increase the odds of success. What’s not so well known is that Edison championed direct current (DC) power rather than alternating current (AC) and so lost the advantage to others in the long run on electricity distribution.”

For more on experimental vs. conceptual approaches to innovation, see ArtsOfInnovation.com.

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