Failure
Models of Failure
 Engineering model: FMEA (Failure Modes & Effects Analysis)
 Disease model: Collins “How the Mighty Fall”
 Innovation Driven: Innovator’s Dilemma
 Scenario based planning
 Aviation Model: Checklist Manifesto
 Incubator model: YCombinators “18 Mistakes that Kill”
FMEA
Failure Modes and Effects Analysis
Engineering View of Failure
Design
Plan for
Failure
Learn From Failure
Iterate
Test It
Break It
FMEA
Failure Modes and Effects Analysis
An engineering methodology to analyze and discover:
1.
2.
3.
All potential failure modes of a system
The effects these failures have on the system and
How to correct and or mitigate the failures or effects on the system.
The correction and mitigation is (generally) based on ranking of
the severity and probability of the failure.
Source: NASA Lewis Research Center
FMEA
Benefits
 Key tool for reliability analysis
 Provides detailed insight into systems interrelationships and
potentials for failure.
 • FMEA and CIL (Critical Items List) evaluations cross check
safety hazard analyses for completeness.
 If undertaken early enough in the design process by senior
level personnel, can have major impact on:
•
Removing causes for failures
•
Developing systems that can mitigate the effects of failures.
Source: NASA Lewis Research Center
Failure Modes and Effects
Analysis
Procedure Flowchart
Design
Get
System
Overview
Revise Design
Perform
FMEA, ID
Failure
Modes
Source: NASA Lewis Research Center
Establish Failure
Effect
Determine
Criticality
FMEA: Take Away for Entrepreneurs
Agile Development Methodologies
Plan out 1-4
weeks work
Create
product
needs
Strategic
planning
Improve
process
Meet
daily
Review
product
FMEA Take Away for Entrepreneurs
Traditional Development Process
• Customers only
involved at beginning
and end of process
• No Iterations
• Takes a long time.
• “Make-or-break”
• Rarely delivered
according to plan
FMEA Take Away for Entrepreneurs
Agile Software Development
 Early customer involvement
 Welcome changing requirements
 Deliver working software frequently
 Business people and developers must work together
 Face-to-face conversation.
 Working software is the primary measure of progress.
 Agile processes promote sustainable development.
 Continuous attention to technical excellence and design enhances agility.
 Self-organizing teams.
 Constant tuning of processes
Agile Software Development
Customer Involvement and Rapid Iterations
•Markets
•Customers
•Biz Models
•Strategy
•Portfolios
•Funding
•Customers
•Sales
•Marketing
•Support
•Upgrades
•EOL/EOS
Jim Collins
“How the Mighty Fall: and Why Some
Companies Never Give In”
How the Mighty Fall
Stage 2:
Undisciplined
pursuit of more
Building from
stage one is
people chasing
goals that take
them away from
their core, their
competitive
advantage all in
the name of
growth, or the
grand strategy.
Stage 3
Denial of risk
and peril
chasing things
that are not part
of your core,
fail to see the
problems..
Stage 4: Grasping
for salvation
The silver bullet,
abandoning the
flywheel and chase
things outside the
core.
Adapted from: Jim Collins, “Hoe the Mighty Fall and Why Some Companies Never Give In”
Stage 4: Grasping
for salvation
The silver bullet,
abandoning the
flywheel and chase
things outside the
core.
How the Mighty Fall
Stage 3
Denial of Risk
and Peril
•Arrogance
•Entitlement
•Lose sight of
what made
success
•Role of luck
Stage 2
Undisciplined
Pursuit of More
Stage 4
Grasping for
Salvation
Stage 1
Stage 5
Hubris Born of
Success
Capitulation to
Irrelevance or
Death
Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”
How the Mighty Fall
Stage 3
Denial of Risk
and Peril
Stage 2
Undisciplined
Pursuit of More
Stage 4
Grasping for
Salvation
Stage 1
Stage 5
Hubris Born of
Success
Capitulation to
Irrelevance or
Death
•Overreaching
•Stray from
disciplined creativity
•Leaps into unknown
Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”
How the Mighty Fall
Stage 3
Denial of Risk
and Peril
Stage 2
Undisciplined
Pursuit of More
Stage 4
Grasping for
Salvation
Stage 1
Stage 5
Hubris Born of
Success
Capitulation to
Irrelevance or
Death
•Ignore negative
data
•Spin
•Outsized risks
•Risk denial
Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”
How the Mighty Fall
Stage 3
Denial of Risk
and Peril
Stage 2
Undisciplined
Pursuit of More
Stage 4
Grasping for
Salvation
Stage 1
Stage 5
Hubris Born of
Success
Capitulation to
Irrelevance or
Death
•Previous risks
become apparent
•“Radical
transformation”
•“Cultural
revolution”
Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”
How the Mighty Fall
Stage 3
Denial of Risk
and Peril
Stage 2
Undisciplined
Pursuit of More
Stage 4
Grasping for
Salvation
•Accumulated
setbacks
•Eroded
financial
strength
•Abandon hope
Stage 1
Stage 5
Hubris Born of
Success
Capitulation to
Irrelevance or
Death
Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”
How the Mighty Fall
Stage 3
Denial of Risk
and Peril
Stage 2
Undisciplined
Pursuit of More
Stage 4
Grasping for
Salvation
Stage 1
Hubris Born of
Success
Adapted from: Jim Collins, “How the Mighty Fall and Why Some Companies Never Give In”
Recovery
and
Renewal
The Background: Deal at Philips
 Corporate venture capital and strategy for a major
global consumer electronics player
Background: Deal at Philips
Deliverables
 Strategic plan unifying disparate units
 High impact strategic venture capital investments
 Forge strategic alliances
 Develop transformative vision of industry future
 Visionary “projects on the edge”
About Scenario Planning
Scenario Planning: An Overview
Forecast Based Planning
Knowns and trends
-10%+10%
Knowns
TODAY
Scenario Planning: An Overview
Forecast Based Planning
Scenario Based Planning
Knowns and trends
Unknowns and uncertainties
-10%+10%
Unknowns
Knowns
Unknowns
Knowns and
trends
TODAY
TODAY
Unknowns
Scenario Planning: An Overview
Scenario Based Planning
Unknowns and uncertainties
 Scenarios are alternative
visions of the future
 Scenarios are generated
by analysis of what we
don’t know, not just
what we do
 Scenarios are used to
envision and “try out”
multiple futures
 Scenarios are used to
work backwards in time
to today
Unknowns
Unknowns
Knowns and
trends
TODAY
Unknowns
Rethinking Industry Dynamics
Embryonic
Growth
Mature
Aging
• Philips has a sophisticated way of planning for the future when operating in a
mature industry environment
• But there are emerging forces that threaten to disrupt--and recycle-- the entire
industry, and the current view of dynamics
• Forecast-planning is sufficient for a mature industry. But it’s
inadequate when industry transformation is taking place
CONFIDENTIAL
- 28
Breaking Out of our Preconceptions
 They are stories that help suspend disbelief in possible
futures
 We have a tendency to fixate on one future, or at most, two
 Scenarios are a powerful tool for forcing us to abandon
previously fixed ideas
 Scenario-based planning allows managers to deliberately try
to break the rules of their business
 Scenarios are about the world, not about us
How they help us
 They enable us to “practise” for different futures
 They are a tool for envisioning, not predicting
 They suggest the strategies, deals and alliances that we
would need to prosper in different worlds
 The process of creating scenarios makes you smart about a
space
Scenarios
 Tool for embracing uncertainty
 Tool for play & provocation
 Tool for envisioning value creation & migration
Tool for upsetting the world
(within our minds & outside)
& strategic transformation
Checklist Manifesto
Checklist Manifesto
 Atul Gawande
 Checklists allow one to manage complexity
and cognitive overload.
 Roots in aviation industry
 Wide use in medicine emerging
Checklist Manifesto
 Checklists are the means, during complex situations, to
consistently apply the knowledge that is available in our minds
but that we might forget to use.
 Checklists permit us to manage the assembly and integration of
knowledge that is held by different members of an enterprise
when facing a complex situation.
Just A Routine Operation
 http://www.vimeo.com/970665
Checklist Manifesto
Objections
 Call for a broad checklist regime would be counterproductive
— fraught with all the dangers of bureaucracy
 Spontaneity and imagination are important in many jobs
Checklist Manifesto
 YC’s 18 Reasons Startups Die as Checklist?
Redefining Failure
Seth Godin
Common Types of Failure
Seth Godin
 Design Failure. If your product or service is misdesigned,
then people don’t understand it, don’t purchase it, or may even
harm themselves when they use it, and you have failed.
 Failure of Opportunity. If your assets are poorly deployed,
ignored, or decaying, it’s as if you are destroying them, and you have
failed.
 Failure of Trust. If you waste stakeholders’ goodwill and respect
by taking shortcuts in exchange for short-term profits, you have failed.
 Failure of Will. If your organization prematurely abandons
important work because of internal resistance or a temporary delay in
market adoption, you have failed.
Common Types of Failure
Seth Godin
 Failure of Priorities.
If your management team chooses to focus on work that doesn’t create value,
that’s like sending cash directly to your competitors, and you have failed.
 Failure to Quit.
If your organization sticks with a mediocre idea, facility, or team too long
because it lacks the guts to create something better, you have failed.
 Failure of Respect.
If you succeed without treating your people, your customers, and your
resources with respect and honesty, you have failed.
 Failure to See.
And, of course, the most self-referential form of failure is the failure to see
when you’re failing
END
Learning From Failure
“Fast Failure”
Learning From Failure
The Traditional Way
Idea
Inception
Learning From Failure
The Traditional Way
Idea
Inception
Learning From Failure
The Traditional Way
Idea
Inception
Choose
Alternative
Learning From Failure
The Traditional Way
Idea
Inception
Choose
Alternative
Learning From Failure
The Traditional Way
Range Of
Outcomes
Idea
Inception
Choose
Alternative
Learning From Failure
The Traditional Way
Range Of
Outcomes
Idea
Inception
Choose
Alternative
Feedback Too Late
No Resources left
No Fallback Position
No Useful Learning
“Fast Failure”
The “New” Way








Failure = Normal = Good.
Reward excellent failure.
Punish mediocre success.
Fail faster. Succeed sooner.
Fail. Forward. Fast.
Educate for Risk-taking, Creativity, Independence.
The Great Comeback
Video Link
Source: Tom Peters
“Fail Early and Often”
The “New” Way
 Theory of Small Failures
 Test components, not the whole thing
 Control the environment – don’t risk everything,
e.g. small test markets
 Expect failure
 Gain feedback
 Redesign component
 Embrace market reality by testing assumptions
against realities
 Save resources for fallback position!
Intelligent, Fast Failure
The “New” Way
I
n
c
e
p
t
i
o
n
Intelligent, Fast Failure
The “New” Way
I
n
c
e
p
t
i
o
n
Intelligent, Fast Failure
The “New” Way
Choose
I
n
c
e
p
t
i
o
n
CustomerF
eedbackc
Customer
Feedback
Customer
Feedback
Intelligent, Fast Failure
The “New” Way
Choose/
Test
I
n
c
e
p
t
i
o
n
Customer
Feedbackc
Choose/
Re-Design/
Re-Test
Customer
Feedback
Customer
Feedback
Customer
Feedback
Customer
Feedback
Customer
Feedback
Intelligent, Fast Failure
The “New” Way
Choose/
Test
I
n
c
e
p
t
i
o
n
Customer
Feedbackc
Choose/
Re-Design/
Re-Test
Customer
Feedback
Customer
Feedback
Customer
Feedback
Customer
Feedback
Customer
Feedback
Range Of
Outcomes
Intelligent, Fast Failure
The “New” Way
Choose/
Test
I
n
c
e
p
t
i
o
n
Customer
Feedbackc
Choose/
Re-Design/
Re-Test
Range Of
Outcomes
Customer
Feedback
Customer
Feedback
Customer
Feedback
Customer
Feedback
Customer
Feedback
Fallback Strategy