Want to Innovate? Embrace failure.

Interview with Business Tycoon and Magnate Mouli Cohen.

We recently caught up with business magnate and entrepreneur Mouli Cohen for an interview in which he talked to us about what it takes to achieve continuous innovation and ultimately long-term success. What follows is a transcript of that interview.

Mouli, you’ve talked a lot about innovation in many of your interviews and speeches. How do you define innovation?

Mouli: Innovation is the process of making improvements by introducing something new. While innovation typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organizational forms and practices. Organizations that do not innovate effectively may be destroyed by those that do. Hence innovation typically involves risk.

How do you ensure that your organization continuously innovates?

Mouli: You’re got to set the right expectations from the top of the organization. Put smart people in charge and give them clearly defined rewards for achieving innovation. They need to be empowered to drive change and push the boundaries where necessary. Innovation does not come naturally. It requires push, risk and a strong conviction in achieving greatness. The minute you think you are wining is the moment you are in deep trouble. You must be a restless organization and continuously re-invent yourself. I also think that the best companies have a diverse group of people with a non-traditional approach to doing business. Putting the right type of diversity on a project that requires innovation is the key to delivering innovation.

What happens if you keep failing? How much do you need to rely on blind optimism?

Look, there’s no magic formula that says after X number of failures you will succeed. Also I would not call it blind optimism. You definitely need to believe in your goals and vision but at the same time you need to adapt and be agile as you go. Take Thomas Edison, for example. He invented the electric light, the central power station, the phonograph and recorded 1,000 patents, but his effort to extract low-grade iron ore from sand cost him millions of dollars and was dubbed “ Edison’s Folly” in the late 1800s. Agility is the only sustainable edge in business.

You’ve commented that people and companies should celebrate failure. Can you explain this?

It’s important to talk about and even celebrate failure. It’s the only way to learn from our failures. Take Intuit, for example. A few years back they launched a site called RockYourRefund.com to take the drudgery out of filing your tax refund. It was a complete failure. Scott Cook, the chairman of Intuit, gave the creators an award, stating “It's only a failure if we fail to get the learning.”

Take a company like Coca Cola. Remember products such as Choglit, OK Soda and Surge? How about New Coke? All of these products were complete, utter failures. Coke’s chairman Neville Isdell embraces risk. "You will see some failures. As we take more risks, this is something we must accept as part of the regeneration process." He wants Coke to take bigger risks, and to do that, he knows he needs to convince employees and shareholders that he will tolerate the failures that will inevitably result. That's the only way to change Coke's traditionally risk-averse culture. And given the importance of this goal, there's no podium too big for sending the signal. "Using [the annual meeting] occasion elevates the statement to another order of importance," Isdell said in an interview.

As a leader of a company how do you balance failure with success? For example, you don’t want employees to think that failure is the acceptable norm. It’s important to learn from failure but you need successes in order to have a thriving business.

That is an excellent point. It is critical for a leader to design ways to measure performance that balance accountability with the freedom to make mistakes. Most people may fear failure, but they fear the consequences of it even more. Few executives are able to successfully balance these two disparate components. Some organizations have tried to measure performance in a way that accounts for these opposing pressures. IBM, for example, measures performance over a three year time period. So if you have one bad year due to heavy experimentation—or whatever is the case—it doesn’t necessarily reflect badly on you. The bottom line, however, is that you never should reward someone for repeatedly making the same mistakes. At the end of the day you need more wins than losses. Remember the words of Thomas Edison. “I am not discouraged, because every wrong attempt discarded is another step forward.”

About Mouli Cohen

In his career as an entrepreneur, Mouli has been one of the few to have success in biotechnology and high technology. His start-ups have generated well over $3B in shareholder value. In recognition of his ability to generate mega investment in the economy and the creation of thousands of ion> jobs, Mouli was awarded the first-ever "Millionaire Residency" with full citizenship status by President George H. Bush. For press inquiries and more information please visit www.moulicohen.com or contact the Press Agent at 415-902-2802.

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