Today the press appropriately lauds Apple for the success of its iPod-branded digital-music players. advertisingage_130x130Apple seems to have done everything right: A great product combined with a brilliant marketing strategy has created a multibillion-dollar product line.

Step back a decade, however, and you’d see the popular press pounding Apple for the failure of its Newton-branded personal digital assistant. The company spent $350 million and failed. So did Sony, Motorola and Hewlett-Packard. All told, these companies blew about $1 billion in failed efforts to capture the PDA space.

Palm Computing succeeded where these titans stumbled. But in reality, Palm failed too. Its first product was called the Zoomer, which, according to one press account, “did lots of things, most of them badly.” Because Palm’s first bet was a smaller one, it could learn from its failure, modify its strategy and create a booming growth business.

Generally, when it comes to innovation, failure is the key to success. Substantial evidence suggests that successful innovation almost always springs out of a period of fumbling and failure. In other words, failing in the right way can position a company for success.

Generally, the worst time to fail is after spending hundreds of millions of dollars and thousands of hours creating a product or service that is hard to modify. But what if that failure comes early, with significantly lower investment in time and money?

Companies that fail in this way-fast and cheap-can develop critical competencies that help them improve their ability to create growth through innovation.

To embrace fast-and-cheap failure, companies need to change the way they approach innovation.

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