Adapt: Why Success Always Starts With Failure

By Tim Harford

We must be willing to risk failure, or we will never truly succeed. That is the theme of Adapt: Why Success Always Starts with Failure by Tim Harford, who believes the process of trial and error is essential in our complex, changeable world.

Harford, a senior columnist for the Financial Times in London, argues that failure is both necessary and useful. He says, “Progress comes from lots of experiments, many of which will fail, and we must be much more tolerant of failure if we are to learn from it.” His book aims “to provide an answer to the challenge” of using an approach that runs counter to our instincts and the way traditional organizations work.

The “adapt” principle has three actions: Try new ideas and expect the majority of them to fail. Make failure survivable, either by creating safe spaces for failure or moving forward in small steps. Know when you’ve failed and how to react.

But what if we can’t afford to fail? That happens when a system is both complex and tightly-coupled, such as an off-shore oil rig or a nation’s financial system. Complexity means there are many different ways for things to go wrong. A tightly coupled process is one that, once started, is difficult or impossible to stop. Unintended consequences proliferate so quickly that there is no time to change or adapt.

Rules and safeguards are often added when the cost of errors is too high to tolerate. But eliminating error completely is an impossible dream. A better alternative, Harford suggests, is to simplify and decouple high-risk systems as much as possible. This includes, regardless of potential controversy, encouraging whistleblowers to identify latent errors and problems. Adapt illustrates this point with several chapters on financial crises in both Great Britain and the United States. Warning signs were ignored, and once the dominos began to fall, financial ruin for many was the result. Had concerned employees been given a voice, disaster might have been averted.

Adapt is filled with interesting and thought-provoking anecdotes, ranging from the war in Iraq to the Piper Alpha oil rig explosion in the North Sea to Lehman Brothers and the financial meltdown. It is often easy to look back and see what should have been done. Adapt offers logical arguments and common-sense recommendations for developing innovative processes and solutions. But human nature gets in the way. The book relies on altruism, whereas short-sighted self-interest is more likely to determine actions.

Encouraging innovation and new technology is another purpose of Adapt. One common method is to offer grants for specific projects or to specific individuals. The U.S. National Institute of Health provides huge amounts of taxpayer money to scientific researchers through a funding system designed to avoid risks. “The NIH’s expert-led, results-based, rational evaluation of projects is a sensible way to produce a steady stream of high-quality, can’t-go-wrong scientific research,” Harford says. In contrast, the Howard Hughes Medical Institute (HHMI) urges researchers to “take risks, to explore unproven avenues, to embrace the unknown–even if it means uncertainty or the chance of failure.” The HHMI program produces a larger number of both failures and influential projects. Harford summarizes the NIH program as “designed to avoid failure” and the HHMI program designed to embrace it. He reminds us, “And in the quest for truly original research, some failure is inevitable.”

Traditional government funding encourages ideas but cannot take on unlimited risk or provide unlimited funds. Significant innovation requires, according to the author, “openness to risky new ideas, and a willingness to put millions or even billions of dollars at risk.” World-changing innovations must come from another source.

Harford advocates prizes. “After almost two centuries out of fashion,” he says, “prizes are now enjoying a renaissance–thanks to a new generation of entrepreneurs and philanthropists who care more about getting solutions than about where they come from.” When a prize is offered, there are no restrictions on who can participate or what ideas can be tried. For example, Netflix, a mail-order film rental company, offered a $1M prize in 2006 to anyone who could design an improved algorithm for recommending movies to Netflix customers. Over 2,500 teams from 161 countries–a total of 27,000 competitors–entered the contest. The prize was awarded in 2009 to an AT&T research team. Harford reminds us, “The wonderful thing about prizes is that they don’t cost a penny until success is achieved.”

Offering prizes for innovation and encouraging whistleblowers to report problems are worthy goals, I think, if idealistic ones. I would like to see these ideas incorporated, and this is a book worth studying. Harford’s conclusion is unarguable: “The ability to adapt requires this sense of security, an inner confidence that the cost of failure is a cost we will be able to bear.” Reality, however, tells us security and confidence are difficult to find.

Does success always start with failure? Most everything we do, even in personal relationships, involves some amount of trial and error. We don’t necessarily consider it failure whenever we try a different approach. Although such a sweeping philosophy can apply to any aspect of life, Adapt: Why Success Always Starts with Failure targets business organizations. I recommend this book to anyone intrigued by the message in the title. You will find it worthwhile.