The impact of innovation failure: Entrepreneurship adversity or opportunity?

Abstract

Innovation is key to the economic performance of firms. However, several types of risks and uncertainties often lead to high failure rates in innovation projects, to the extent that failure is now considered a typical step in an innovation process. If innovation failure was provoking stress in the past, the current socio-economic contexts makes if it something to regularly deal with and learning from. However, there still is a dilemma on whether innovation failure should be considered as an opportunity or a trauma for the firm. Exploring the three steps of an innovation failure, that is identifying, analyzing and experimenting, the present research offers new insights on the nature of innovation failure at an individual and team levels. In particular, via an inductive approach this study provides fours key approaches to understanding innovation failure. First, we have uncovered a wide range of approaches to organizational management and ‘Spaghetti’ organizational models of innovation that perceive failure as an opportunity for the innovation process. Secondly, our study identified what seems to be a widespread perception of innovation failure as a trauma, which encourages the culture of openness to failure and to share knowledge of failing innovations. Such views apply not only at organizational but also at individual and team levels. Third, our results serve to encourage individuals, teams and organizations to find new ways to learn from failures in innovation projects, and to have a less centralized management and control over innovation. Fourth, in our perception of the domain, failure could become the ‘new normal’ and a mean to generate new knowledge. This stimulates new directions in the decision-making process, towards novel pathways to innovation.