The Lean Startup book

The Great Learning Opportunity of Failure

By Matthew Tomlinson / Founding Partner, Nuon AI

What may be viewed as failure to some, may actually be an organisation’s strength, because this is how you learn, evolve and grow, and in times like these, where Covid has disrupted almost every aspect of our lives, a willingness to test, experiment and fail may actually be the thing that allows a business to survive.

Love him or loathe him, Elon Musk comes close to the truth when he said: “Failure is an option here. If things are not failing, you are not innovating enough.”

Now, this may sound counterintuitive, but it is one of the fundamental ideas behind lean principles. Failure is the ultimate opportunity to learn, and without it, stagnation is inevitable.

It is worth noting that there are many different degrees of failure, things that did not work out in the way we expected, some things are small, and the learnings from which may result in tweaks or refinements. Whilst others may be much larger misfirings, requiring fundamental changes and new directions. What is key is that we always build in non-judgemental learning and that you react.

As a company, Nuon AI operates in the insurance space, a traditionally conservative sector, but one that witnessed a new breed of tech-savvy disruptors joining the party.

Many of these companies are highly agile and adaptive, employing lean principles at their core. Certainly, at Nuon, it is part of who we are, and even the design of our products reflects this philosophy, constantly learning and evolving to fit the world as it changes. But we are not unique.

Take electric scooter insurance as an example, it’s a new market, the risk isn’t fully understood yet and it has a relatively small premium income. To some, this is perceived as a really high risk, a line of business that should not even be considered, but that may be missing the point. In a recent interview on Sky News, Sten Saar, CEO of Zego, spoke about why Zego has embraced this line of business. He talks about shifting trends towards urbanisation and the way people move around cities is changing.

Today, pay and go electric scooters may represent the start of this changing trend, but they will not be the last change we see in personal transportation, so to really understand what is happening, you need to be engaged with it.

For Zego, it would seem that they view the risk not in the unknowns of this new line of business, but in not taking the opportunity to learn from it. By experimenting within it, observing what is happening and learning, they can transform the way they operate and take advantage of changes as they happen. Zego is not taking a risk, they are reducing future risk.

It is possible for companies to seemingly thrive without risking failure, when times are good, when general market trends are on the up, a false sense of security can occur. But a company with the cruise control on, not paying attention to the world around it, can often find itself suddenly having to react to problems without having developed the proper tools to do so. Often, the result is, they do too little, too late.

With Covid, we have recently experienced one of the greatest shocks to the system which has hit everyone incredibly hard. It is the companies who are used to failure, who have built it into their philosophy and culture, who deliberately push the boundaries so they can constantly learn and evolve, that will come out of this crisis the strongest. They are the ones who have developed the tools to learn and react quickly, decisively, and successfully. It is not the event that dictates the result, it is the reaction to the event that is important.

Now I am not trying to suggest that every company who operates lean principles will survive, not all will, but they are the companies who have given themselves the best chance. They are the organisations whose teams have developed the tools to observe, learn and react. They are the organisations who are reducing the impact of unknown future risks.

Recommended Read

The Lean Startup – by Eric Ries

Sten Saar, Zego CEO, Sky News Interview 11th Match 2021

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