Failing fast: Google Wave’s real business lesson

A key philosophy underlying much of Silicon Valley’s successful companies is the “fail fast” concept – where a business releases a rough version of a new idea and asks the world what it thinks. Should people like the idea, it gets developed and if they don’t, it gets dropped and everybody moves on to the next brainwave.

The “fail fast” philosophy was behind Google Wave’s demise last week, as CEO Eric Schmidt said at the Techonomy Conference on the day it was announced: “….we release it and see what happens. It works, you announce product, you ship it…”

Until recently, “failing fast” was restricted to hot shot internet businesses, but as the cost of product development falls due to better collaboration tools, testing methods and global outsourcing, it’s become easier for all businesses to experiment without risking an organisation’s future.

This is very different from the old style of doing business. A good example of how things used to work was Boeing’s development of the 747 jumbo jet, which was a $2 billion bet ($14 billion in 2010 dollars) on a big lumbering subsonic jet in the mid-1960s when the future of aviation seemed to be with sleek supersonic aircraft like the Concorde.

While Boeing’s bet paid off, it took 15 years and nearly sent the company broke.

Most of today’s businesses aren’t locked into $14 billion and 15 year investment cycles as we can test products with simulation tools, computer-aided design programs, fast prototyping and outsourcing services like oDesk for labour and alibaba.com for manufacturing without risking the farm.

For most businesses, it’s not even a matter of spending time and money actually developing ideas, usually it’s something as simple as testing a new idea by buying a domain name and setting up a low cost website on a cheap hosting service for under $200. If the idea flies then you start looking at spending real money on making the product ready for the broader market.

Failing fast presents a great challenge to the traditional organisation where the slightest failure is a stigma. In the new economy, a risk adverse culture is going to be punished by competitors who accept that not every idea is right for its time and learn lessons rather than punish those associated with the unsuccessful project.

While this is bad news for large organisations run by risk adverse managers, it is one of the great opportunities for nimble and smart companies. If your business is prepared to take small risks, learn from the misses and celebrate the wins, then your business could well be on the way to being the next Google.

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Paul Wallbank is a writer, speaker and broadcaster on technology issues. He founded national support organisation PC Rescue in 1995 and has spent over 14 years helping businesses get the most from their IT investment. His PC Rescue and IT Queries websites provide free advice to business computer users and his monthly newsletter has over 3,000 subscribers.