-Thomas Watson, IBM

That’s a pretty succinct way to say make a point that I was trying to get a couple of weeks ago.

The key point here is that you can fail at different levels. I’ve talked before about a taxonomy of economic failure. We can actually think of failure as a hierarchy that looks something like this:

• System failure (the collapse of communism)
• System component failure (stock market crashes)
• Major firm failure (Enron going out of business)
• Start-up failure (pets.com going out of business)
• Product failure (New Coke tanking)
• Idea failure (Apple Navigator prototyped but never launched)

As you go down that list, failure gets less expensive. When I talk about tolerating failure, I’m talking about trying to set up systems that encourage cheap fast failure. This is usually at the level of ideas.

I think that this is the point that Watson was making as well. He’s not advocating big, expensive, public failure. He was advocating quick, cheap experiments.

We need to push our failures down that list, so that we are testing ideas and finding the ones that don’t work when they are still ideas, rather than things. One of the key skills in this is prototyping – figuring out a small-scale way to test your idea.

As Diego Rodriguez says, anything can be prototyped, and you can prototype with anything.

(photo from flickr/polapix under a Creative Commons License)