[IMGCAP(1)]“Failure” is a word that has a definite negative connotation in the vocabulary of a managing partner or CEO, but in the new concept of leadership management a collaborative failure should not be observed as a bad occurrence.

It is an entrepreneurial undertaking that forces a firm or company to recognize its limitations in developing new services and products and remain a viable entity in the maturing life-cycle quadrant.

It is often reported that the famous J.C. Penny failed seven times in businesses before creating a successful business with department stores. He often claimed that these failures with his team prepared him for success because with each failure he eliminated a tactic that helped cause the failure. As usual, if the planned strategy is correct, any number of tactical errors will not impact the success of the firm or company.

In our first article in this series of three, we identified the life cycle of a firm or company, its services and products, and its markets all being linked together into four quadrants: starting with the emerging quadrant where these entities enter; and then if they are accepted, they move into the growth quadrant; with sustainability in the maturing quadrant; and finally dying in the aging quadrant (see Leadership Management: Are You Growing or Dying?).

Like it or not, each of these three entities will eventually die. The conundrum for the managing partner or CEO is how to keep firms or companies from moving into the aging quadrant where dying companies perish, by introducing the life-saving nutrients of new products and services while they are still in the maturing quadrant. It is easier said than done.

All new services and products emanate initially from maturing services and products, which is why the company or firm usually finds itself in the maturing quadrant with them. However, without a continual introduction of new products and services, the organization will undoubtedly move from the maturing quadrant into the aging quadrant.

It is the responsibility of the managing partner and CEO to continue to grow the firm or company. While many professional firms achieve growth by merger or acquisition, this is only a short-term fix without the continual introduction of new products and services, and we are not speaking about line extensions. Eventually that firm either runs out of prospective firms to gobble up, or it becomes a prime candidate for being devoured itself.

Driving new products and services out of maturing ones is a critical ingredient to sustaining growth in a company. Quite often it is brought on because a competitive, successful new product or service within the marketplace is creating a different market than previously existed.

This is where collaborative failure comes in during the innovation process of all new services and products. By definition it is the capability of a partner or manager to provide collaborative strategy and plans based upon having failed at achieving an objective with metrics over a period of time.
Innovation in new services and products is a fleeting exercise usually performed by a team of individuals at the firm or company, of which only a handful are the true innovators. The remaining portion of the innovation team provides input but usually follows the one or two true innovators, because few people have true innovative skills to see through obstacles.

Whenever innovation brings forth a service or product that is unsuccessful in the emerging quadrant—a failure—it has an immediate impact on those on the innovation team who are not true innovators, and over a series of failures the innovation team will decline in numbers. This is why innovation without success has a very short lifespan.

Collaborative strategy and plans come from this failure of future products and services, much like J.C. Penny did in failing seven times. Those managing partners and CEOs who evaluate their teams positively on how many failures occurred through use of collaborative strategy will end up winners in the long term.

Leadership management in the 21st century is all about achieving objectives through and with others. Successful new products and services must be innovative, and the innovation teams need to have entrepreneurial senses instilled within their charter. Failure should be described as an obvious occurrence within this framework, and only a managing partner or CEO can highlight that collaborative failure is a part of the process.

As the old saying goes, “Success is failure turned inside out.”

Greg Weismantel is president of Epic Group, a management consulting firm and advisor on strategy for small and large firms and companies. It partners with clients to identify their primary driving force while recognizing strategic opportunities of their markets, products and services that will deliver the highest value for ongoing growth and sustainability.