Does the “fail fast” mindset still work in 2024?

When adopting certain mindsets, some companies will adopt the “fail fast” approach for their organisational culture.

Organisations use this mentality to encourage rapid experimentation and early identification of failures, rather than letting them persist or be discovered after much time and resources has been wasted.

But with small businesses struggling to survive in the midst of economic difficulties, mass layoffs and job insecurity in recent years, can the “fail fast” model still ensure companies thrive?

The meaning behind “fail fast”

The “fail fast” mentality is a business management concept where individuals or organisations quickly iterate and identify failures in a product or service, enabling them to determine its viability and swiftly move on to a better approach, without wasting resource or investment. 

Whilst there’s been much discussion about who coined the phrase (our money is on Carol Bartz, former Yahoo! CEO), the “fail fast” approach has been particularly popular in startup culture, software development and agile methodologies since as early as the 1990s. Failure is seen as a positive, as it offers a good learning experience, provides valuable insights to inform future efforts and encourages a culture where mistakes are seen as stepping stones to success rather than setbacks. Companies that prioritise innovation as a core value may find that the approach aligns well with their mission statement to foster creative solutions and explore new ideas.

There are different types of the fail fast approach, including:

• Concept failure: This is when an idea isn’t viable or feasible, such as a lack of market demand or a better alternative already available.
  Example: Sony’s Betamax video cassette introduced in the 1970s failed to gain market dominance, most notably due to shorter recording time, higher cost and fewer available movie titles. Despite its technological advantages over VHS, consumers preferred the more affordable and longer-recording option, leading to Betamax’s decline.
• Design failure: A solution may not meet the expectations or requirements of your customers, users or audience. For example, being too complex or confusing.
  Example: In 2016. Samsung’s Galaxy Note 7 faced a major design failure due to battery overheating and explosions. Despite its advanced features and initial consumer excitement, the device suffered from critical battery design flaws that weren’t caught in testing, resulting in a massive recall and production halt.
• Execution failure: This happens when the implementation of a product doesn’t deliver the desired results or outcome, such as being too slow or having bugs.
  Example: Google+ launched in 2011 to compete with Facebook in social networking. The platform failed to gain substantial user traction despite significant investment and integration with other Google services. Issues included a confusing user experience, forced integration with existing Google products and lack of clear value, ultimately causing Google+ to shut down in 2019.
• Growth failure: A good solution is built, but the product or service isn’t visible or attractive enough, and so fails to reach or retain customers.
  Example: WeWork, once a high-profile startup known for its innovative co-working spaces, encountered significant growth failure due to overexpansion and a flawed business model. The company aggressively scaled its global footprint by securing long term leases while offering short term rentals, leading to financial instability. Issues in leadership and governance further aggravated, resulting in a failed initial public offering (IPO) in 2019 and a significant decline in valuation.

What are the benefits and risks?

The “fail fast” approach can be embedded into new or existing companies looking to change their organisational culture. However, whatever the stage or size of your business, there are numerous considerations to bear in mind when adopting this model. We’ve highlighted the key benefits and risks here:

Pros of the “fail fast” mindset

• Cost efficiency: By identifying the failures early, organisations can prevent investing in resources for future projects that are unlikely to succeed, in turn reducing financial risk.
• Fast learning: Failing fast means that employees can get quick feedback about what works and what doesn’t, allowing them to apply what they’ve learnt and adjust their project accordingly.
• Encourages innovation: Organisations can quickly test and iterate ideas, meaning they can innovate fast and bring new products or features to market rapidly. It can also support a culture where creativity is encouraged and employees can take risks without fear of negative consequences.

Cons of the “fail fast” mindset

• Repeated failures: While failing fast equals faster learning, frequent failures can lead to frustration and burnout among employees, particularly if not managed effectively or if failures are not used constructively.
  
• Encourages mediocrity: As this approach prioritises speed and frequent iteration, it poses the risk of teams focusing on quick and short term fixes rather than deep, thoughtful solutions.
• Missed opportunities: The emphasis on quick results means that there’s a risk of discarding ideas prematurely, which could have been successful if given the chance.
  

Does “fail fast” still work in 2024?

While the fail fast approach has evident advantages and has worked effectively for multiple companies in the past, the current economic climate and developing technologies – mainly AI – has had an impact on its adoption.

In the UK, there were around 98,000 redundancies made in May 2024 with tech companies like Google and Salesforce firing many of their employees. 

This is part of a larger effort to cut costs due to economic uncertainty, as well as readjusting to new market conditions following the COVID-19 pandemic. 

Consulting entrepreneur Luv Tulsidas argues that the strategy no longer works in the modern world with the rise of AI technology. In his book “Failing Fast? The 10 Secrets to Succeed Faster”, Tulsidas advises that businesses should adopt a “more thoughtful and strategic approach” to navigate this new AI-powered landscape. This involves analysing failures thoroughly, understanding the root causes and identifying actionable insights. Additionally, finding the right mentor to help avoid common pitfalls and identify opportunities, as well as investing time in studying the quality of an idea compared to competitors and understanding the strength of market timing.

Conclusion

The “fail fast” mindset has become increasingly prominent in tech and startup companies. It allows employees to think creatively, take risks and learn from their mistakes. Companies like Amazon, Netflix and Spotify have successfully implemented the approach, leading to successful products and services and strong customer relationships. 

However, small businesses need to proceed with caution. Failing fast doesn’t come without its flaws, particularly as repeated failures can impact resources and decrease employee morale. Moreover, with current economic difficulties, concerns over mass layoffs in tech companies and the rise of AI technology, it could be time to adopt a different mindset that enables companies to both learn from mistakes and cultivate a more sustainable approach to innovation.