A couple of weeks ago, i was attending the Web 2.0 Summit. Actually, it is the Web² Summit (read as Web Squared).

If you want to stay up-to-date a little bit, a must read is the Web Squared Whitepaper. You can read it online here or download it here.

One morning, i was taking the elevator to have breakfast. In front of me in the elevator was somebody i never met, but he had a conference badge. So i started a chat. By the time we got to the ground floor, i understood i was chatting with Don Dodge, Director Business Development Emerging Business Team at Microsoft. UPDATE: just learned via Don’s blog that he has left Microsoft

I identified myself as part of SWIFT’s Innovation Team, we got connected, and Don invited me to join him for breakfast.

We chatted about innovation cultures and where we were coming from. About our deep DNA of FNAO (Failure is not an Option), and how people in such culture usually feel reluctant to come up with idea of dare to take risks.

Don told me i gave him inspiration for a new blog post on The Next Big Thing.

Never thought he would do this, but hey ! Today i received from Don a mail with a link to his post. I have copied it here below in it’s entirety. Don’t hesitate to comment on this blog on on Don’s blog.

BTW: i have invited Don to be part of our Innotribe @ Sibos 2010 in Amsterdam in Oct 2010 :-). Hope he accepts.

PS-1: I am not an “Exec”. I am just part of SWIFT’s Innovation Team.

PS-2: “Make a mistake and you are fired” is of course a metaphor to indicate that an FNAO culture does not promote taking risks and being innovative. Sometime to the contrary. But that metaphor does not change anything to the important message Don has for big and small companies trying to innovate.

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Failure is NOT an option – Why this can be a bad strategy

An exec at a large European financial company recently told me his former CEO believed “Failure is not an option”. Great, I thought. This means they will do whatever it takes to succeed, try five or ten different approaches until it works, get the whole company focused on the goal, etc. No, he told me. What it means is “Make a mistake and you are fired.” Wow! Another example of the difference between startups and big companies. I have worked most of my career in startups where you are always pushing the envelope, taking big risks, where there are no obvious answers, and you just keep trying until you find the combination that works.

Startups play poker, big companies play chess – This “failure is not an option” discussion reminded me of the huge differences between startups and big companies. Success is not easy in either case, but the approaches are radically different. Using a game analogy, startups are more like poker players. They take big risks, they bluff, they make quick decisions, change direction constantly, and they keep their competitors off balance. Poker is an aggressive game where if you play your cards right you win big, and win fast. If you lose a hand you can come back and double your money in the next hand. There is no time to wallow over a loss. You did your best. Move on and your luck will be better next time. Chess is a different game. Both require incredible skill and talent. A great poker player is rarely a good chess player.

Big companies think long term. Like chess players they think four or five moves (years) ahead. They protect their assets, play defensively, think strategically, and carefully consider the options before making a move. Big companies have a lot to lose, while small companies don’t. Big companies leverage their assets (conservatively) and flex their muscles where they can. They go for incremental improvements in position. Big company CEOs, like chess players, work a long term strategy. Each short term move plays a part in a longer term strategy that is not visible to the casual observer. In fact, their strategy is often kept secret, and they take care to make sure their short term moves don’t reveal their long term plan. Strategy is a competitive advantage.

There is another interesting topic on how to make the transition from startup to successful big company, but we will save that for another day.

Fail Fast – If you are going to fail, do it fast and move on to the next thing.More in depth thoughts here. The only thing better than a “Yes” is a quick “NO”. When you are raising money, selling a customer, or trying to get a deal done, it is the long drawn out process that never ends that will kill you. It is the same thing with startups. Being successful is always the goal, but if it is going to fail…Fail fast.

Bill Warner, founder of Avid Technologies, Wildfire Communications, etc, said recently “Some of you guys are so smart you turn what should have been a one year failure into a five year death march.” Entrepreneurs are resourceful, smart, and have that indomitable spirit that doesn’t allow them to quit. This can be good and bad. Sometimes it is better to “fold” and move on to the next game.

Hold ‘em or Fold ‘em? – “You got to know when to hold em, know when to fold em, know when to walk away, know when to run.” Kenny Rogers. The toughest decision any entrepreneur makes is giving up on a company. It just isn’t in their DNA to do it. In fact, they rarely decide to do it, it is the investors who finally make the call. How do they decide? It is really about passion and commitment – from the founders, investors, employees, and customers. If the passion is lost in any two of the four groups…it is probably time to “fold” and move on.

Fine line between success and failure – There are no easy and obvious answers. If it were easy everyone would have already done it. Timing and luck play a big part in success…bigger than most people will admit. There are four key elements to success in any business; great people, great idea, great timing, and luck. If you don’t have any two of the four…you are probably going to fail. I have seen startups with great people and a great idea that were too early (timing), or had bad luck on things they couldn’t control. They failed. The same idea tried five years later succeeded. Timing matters. The market needs to be ready to adopt your ideas. The answer is never obvious. You don’t know for sure until you try.

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