Adapt why success always starts with failure by Tim Harford

This book looks at how tolerating, in fact thriving on, failure is the best way to make progress and foster innovation.  That applying the evolutionary approach to innovative development is the most efficient in the long run.  It also covers why our psychology makes it so tough for us to accept this course of action.

It covers three principles:
1) seek out new ideas and try new things;
2) when trying something new, do it on a scale where failure is survivable;
3) seek out feedback and learn from your mistakes as you go along.

Predictions about Russia from experts on Russia were no more accurate than predictions about Russia from experts on Canada.Read more at location 159 •
Most accounts of Tetlock’s research savour the humbling of the professional pundits. And why not? One of Tetlock’s more delicious discoveries was that the more famous experts – those who spent a lot of time as talking heads on television – were especially incompetent.Read more at location 161 •
The market has solved the problem of generating material wealth, but its secret has little to do with the profit motive or the superior savvy of the boardroom over the cabinet office. Few company bosses would care to admit it, but the market fumbles its way to success, as successful ideas take off and less successful ones die out. When we see the survivors of this process – such as Exxon, General Electric and Procter & Gamble – we shouldn’t merely see success. We should also see the long, tangled history of failure, of all of the companies and all of the ideas that didn’t make it.Read more at location 239 •
Astounding complexity emerges in response to a simple process: try out a few variants on what you already have, weed out the failures,Read more at location 246 •
In fact, Stuart Kauffmann and John Holland, both complexity theorists affiliated with the multidisciplinary Santa Fe Institute, have shown that the evolutionary approach is not just another way of solving complex problems. Given the likely shape of these ever-shifting landscapes, the evolutionary mix of small steps and occasional wild gambles is the best possible way to search for solutions.Read more at location 299 •
We should not leap to conclusions based on an abstract mathematical model, but Ormerod’s discovery strongly implies that effective planning is rare in the modern economy. I wouldn’t go so far as to suggest that Apple might as well replace Steve Jobs with a dart-throwing chimpanzee – even though it would certainly liven up Apple product launches. But the evidence suggests that in a competitive environment, many corporate decisions are not successful, and corporations constantly have to cull bad ideas and search for something better.Read more at location 350 •
We will have to make an uncomfortable number of mistakes, and learn from them, rather than cover them up or deny they happened, even to ourselves. This is not the way we are used to getting things done.Read more at location 369 •
The Soviets failed at both: they found it impossible to tolerate a real variety of approaches to any problem; and they found it hard to decide what was working and what was not. TheRead more at location 415 •
What Palchinsky realised was that most real-world problems are more complex than we think. They have a human dimension, a local dimension, and are likely to change as circumstances change. His method for dealing with this could be summarised as three ‘Palchinsky principles’: first, seek out new ideas and try new things; second, when trying something new, do it on a scale where failure is survivable; third, seek out feedback and learn from your mistakes as you go along. The first principle could simply be expressed as ‘variation’; the third as ‘selection’. The importance of the middle principle – survivability – is something which will become clear in chapter six, which explores the collapse of the banking system.Read more at location 442 •
If we are to take the ‘variation’ part of ‘variation and selection’ seriously, uniformly high standards are not only impossible but undesirable. When a problem is unsolved or continually changing, the best way to tackle it is to experiment with many different approaches. If nobody tries anything different, we will struggle to figure out new and better ways to do anything. But if we are to accept variation, we must also accept that some of these new approaches will not work well. That is not a tempting proposition for a politician or chief executive to try to sell.Read more at location 494 •
There is a limit to how much honest feedback most leaders really want to hear; and because we know this, most of us sugar-coat our opinions whenever we speak to a powerful person. In a deep hierarchy, that process is repeated many times, until the truth is utterly concealed inside a thick layer of sweet-talk.Read more at location 517 •
All four examples – poker, Paris, Deal or No Deal and share portfolios – show a dogged determination to avoid crystallising a loss or drawing a line under a decision we regret. That dogged determination might occasionally be helpful, but it is counterproductive in all these cases and in many others. Faced with a mistake or a loss, the right response is to acknowledge the setback and change direction. Yet our instinctive reaction is denial. That is why ‘learn from your mistakes’ is wise advice that is painfully hard to take.Read more at location 590 •
The three essential steps are: to try new things, in the expectation that some will fail; to make failure survivable, because it will be common; and to make sure that you know when you’ve failed.Read more at location 604 •
‘In the absence of guidance or orders, figure out what they should have been … ’ – part of a sign on a command-post door in west Baghdad, commandeered by David PetraeusRead more at location 618 •
Friedrich Hayek in an article published in 1945. What Hayek realised, and Allende and Beer did not seem to, was that a complex world is full of knowledge that is localised and fleeting. Crucially, the local information is often something that local agents would prefer to use for their own purposes.Read more at location 1157 •
Return on investment is simply not a useful way of thinking about new ideas and new technologies. It is impossible to estimate a percentage return on blue-sky research, and it is delusional even to try. Most new technologies fail completely. Most original ideas turn out either to be not original after all, or original for the very good reason that they are useless. And when an original idea does work, the returns can be too high to be sensibly measured.Read more at location 1329 •
Grants, unlike prizes, are a powerful tool of patronage. Prizes, in contrast, are open to anyone who produces results. That makes them intrinsically threatening to the establishment.Read more at location 1715 •
‘Your first try will be wrong. Budget and design for it.’ – Aza Raskin, designer at FirefoxRead more at location 3464 •
Disruptive innovations are disruptive precisely because the new technology doesn’t appeal to the traditional customers: it is different and for their purposes, it’s inferior. But for a small niche of new customers the new disruptive product is exactly what is needed. They want smaller, cheaper hard drives, or cameras that produce digital files, or email that you can access on any computer – and they are willing to tolerate the fact that the new product is inferior to the old one along all the traditional dimensions. That foothold in the niche market gives the new technology an opportunity to develop into a true threat to the old way of doing things.Read more at location 3778 •
researchers find that self-employed people tend to be happier than the employed: they receive implicit approval of what they do every time somebody pays their invoice, whereas people with regular jobs tend to receive feedback that is both less frequent and less meaningful.Read more at location 4025 •