I heard a billionaire once say that his company welcomed failure so long as it was net positive. This is a nice idea but it’s tricky. What makes a net positive failure? Seems like a solid method to escape accountability.

“I know I was supposed to wash the dishes. I just didn’t get to it. But in my failure, I learned a lot about procrastination so this is a net positive failure.”

Sure. And ultimately, failure has been glorified far too much in recent literature. Failure, in and of itself, somehow needs to be reaffirmed as a bad thing in most cases. So again, what makes a failure net positive?

There are two ways: first, when the failure answers a really difficult question that couldn’t be answered without the risk. Second, when your endeavor is styled as an experiment. This echoes the core concepts behind Karl Popper’s idea of falsification. You have a belief, a thing that you think is right and will create success. It might be a negotiation, a new program, whatever. So you try it, collect the results, and see how it has either proved your belief right or wrong. On the side of being correct with your belief, all conditions must fully affirm. On the side of being “wrong”, only a single condition must deny your belief.

Nothing about that sounds like failure to me. It sounds like an experiment. It’s a bet. We know that many bets don’t pay off. I don’t think anyone walks away from the slot machine saying “I failed”.

You Won’t Know Until You Try

The net positive here is that you learned something in a structured manner that you couldn’t have learned otherwise. It’s a new contribution to the knowledge base.

But what about when money is on the line? Well, now your “net positive” has a different meaning. It’s not about the mere lessons you learn while actively losing money. But as described in the interview, “if someone had 3-4 failed experiments and it was a wash. That won’t be deducted. But if you have a dumb failure, that cost $10 million, and a success here that earned $25 million, you get credit for $15 million. We net it out.”

Seems fair. Experiments are a wash a’la your R&D department. Dumb failures (failures not styled as experiments) are tolerated by the margin. $1 above zero is a net positive. You protected the margin and presumably had your faulty beliefs falsified in the process. Such failure is tolerable because it is directionally correct.

This directional correctness reminds me of a great line from tomorrow’s book review: “Failure can be managed”. It’s an interesting thought and a better way to make sense of these silly blanket statements I’ve seen elsewhere. “Failure is good”, they say. Maybe. But only a certain kind.

Photo from Charles Thompson’s Flickr account