A popular but controversial mantra in innovative organizations is “fail fast, fail cheap.” The idea here is that it is important to get your new ideas in rough form out into the marketplace, and learn from your customers. This is in contrast to the “go–no go” approach where companies want new ideas to be 95% right before taking any action. 1Perhaps this is why IBM’s Thomas Watson, Sr., once said, “The fastest way to succeed is to double your failure rate.” 2
However, fast and cheap are not enough; the innovative organization also needs to learn from the experience in order to make the “failure” pay off. This is where testing comes in. Hence, a key ingredient to becoming more culturally innovative is the importance of designing relatively small-scale, but rigorous tests or “experiments.” For example, Capital One, a highly successful retail bank, was founded on experimental design where new ideas were constantly tested. Tests are most reliable when many roughly equivalent settings can be observed—some containing the new idea and some not. 3 Similarly, IDEO, perhaps the most innovative design firm in the world, is a staunch proponent of encouraging experimenters who prototype ideas quickly and cheaply. 4 In sum, innovative cultures fail fast and fail cheap and learn from their failures.