# How to Fail Profitably
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-09-22
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Innovative Experimentation in Business: A Strategic Approach for Success
Meta Description: Learn how careful and considered experimentation can lead to long-term business growth and success, despite short-term setbacks. Let's start innovating
URL: https://financedigest.com/how-to-fail-profitablyhtml

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_By_ **_Julius Černiauskas,_** _CEO at Oxylabs.io_

Experimentation drives innovation. However, experimentation has to be approached in a calm, collected, and reasoned manner. A spray-n-pray approach is likely to [lead to a lot of failure without little gain](https://www.financedigest.com/ftse-100-opens-higher-informa-leads-gains.html "FTSE 100 opens higher, Informa leads gains"). In some cases, the exact opposite can happen but those failures can lead to projects and products that [improve the standing of a business](https://www.financedigest.com/improve-your-business-while-saving-the-planet-and-your-back-with-easycat.html "Improve your business while saving the planet and your back with EasyCat").

**Thinking longer-term**

A lot of [businesses like to measure success by very specific metrics](https://www.financedigest.com/5-fx-metrics-your-business-should-be-tracking.html "5 FX METRICS YOUR BUSINESS SHOULD BE TRACKING"). If profitability (or any other metric) falls below a certain threshold, the strategy [needs to be changed](https://www.financedigest.com/a-mindset-change-is-needed-in-the-financial-services-industry.html "A mindset change is needed in the financial services industry"), even if the drop happened for just a quarter. Most experiments [last longer](https://www.financedigest.com/brand-loyal-brits-have-longer-relationships-with-their-car-than-their-last-lover.html "BRAND-LOYAL-BRITS HAVE LONGER RELATIONSHIPS WITH THEIR CAR THAN THEIR LAST LOVER") than that, not to mention showing results.

Some [financial businesses](https://www.financedigest.com/how-to-create-financial-goals-for-your-business-in-2021.html "How To Create Financial Goals For Your Business In 2021") avoid everything that can’t be measured with surgical precision, even if these fields have been shown to generate a positive ROI. For example, predicting SEO effectiveness and returns to every [dollar for every quarter is nearly](https://www.financedigest.com/dollar-near-one-week-high-as-traders-prepare-for-powell-payrolls-tests.html "Dollar near one-week high as traders prepare for Powell, payrolls tests") impossible. However, anyone who is not a [marketing junior knows that proper SEO can outperform most other marketing channels in regards to revenue](https://www.financedigest.com/sodium-cyanide-market-to-reap-excessive-revenues-by-2027.html "Sodium Cyanide Market to Reap Excessive Revenues by 2027 ") generation.

Thus, many metric-driven businesses avoid experimenting as that might reflect negatively on the [bottom line](https://www.financedigest.com/why-investing-in-wellbeing-can-boost-your-bottom-line.html "Why investing in wellbeing can boost your bottom line") for some short amount of time, usually a quarter. In fact, most [experiments require support](https://www.financedigest.com/adverty-releases-unity-sdk-4-0-with-2d-games-support-and-a-refreshed-suite-of-high-quality-ad-assets-for-the-ultimate-in-game-advertising-experience.html "Adverty releases Unity SDK 4.0, with 2D games support and a refreshed suite of high-quality ad assets for the ultimate in-game advertising experience") and a run-time much longer than one quarter.

A recommendation I can give to any business that’s looking to innovate and [move forwards](https://www.financedigest.com/life-is-moving-forward-china-declares-new-covid-phase.html "‘Life is moving forward’: China declares new COVID phase") with experimentation is to think of each one as if a new company was starting. I’m sure most people in [business school are taught not to expect massive profits](https://www.financedigest.com/pizza-firm-dp-eurasia-delivers-profit-rise-evaluating-russian-business.html "Pizza firm DP Eurasia delivers profit rise, evaluating Russian business") in the first 12 months (or less) of any business. While the turnaround time, so to say, will be less as there’s a support structure in place, we shouldn’t be expecting attempts at innovation to succeed in 3 months.

Additionally, each [project is a unique](https://www.financedigest.com/digitally-projected-revenue-to-be-the-unique-selling-point-of-aerosol-therapy-market.html "Digitally projected revenue to be the unique selling point of Aerosol Therapy Market") undertaking. Metric-driven businesses often [set hard deadlines with extremely specific goals](https://www.financedigest.com/norways-wealth-fund-tells-firms-to-set-net-zero-emission-goals.html "Norway’s wealth fund tells firms to set net zero emission goals") in mind. If a project [falls short](https://www.financedigest.com/analysis-china-property-financing-tweaks-fall-short-of-investor-expectations.html "Analysis-China property financing tweaks fall short of investor expectations") of the goals, it’s stripped of any support. However, there’s really no “experimental project” template. If any template could exist at all, it would be called “careful consideration”.

Finally, the skillset of those assigned to the project should be [carefully assessed](https://www.financedigest.com/home-care-chemicals-market-is-expected-to-expand-at-a-cagr-close-to-5-over-the-assessment-period-of-2021-and-2031.html "Home Care Chemicals Market is expected to expand at a CAGR close to 5% over the assessment period of 2021 and 2031"). Even the best ideas can fail if the wrong people are assigned to them. Since the teams will be small, taking a few additional managerial [steps to ensure success](https://www.financedigest.com/ten-steps-to-a-successful-start-up.html "Ten steps to a successful start-up") is required.

**Creating elite** [task forces](https://www.financedigest.com/britain-says-it-is-committed-to-leading-a-nato-task-force-in-2024.html "Britain says it is committed to leading a NATO task force in 2024")

Any [experiment needs](https://www.financedigest.com/people-need-people-humanising-the-digital-banking-experience.html "People need People – Humanising the digital banking experience") proper support. [It’s extremely easy to dedicate a skeleton crew to manage](https://www.financedigest.com/intelligent-receivables-management-why-its-a-businesss-greatest-ally.html "Intelligent Receivables Management: Why it’s a business’s greatest ally") a project, have it eventually fail, and think that nothing else could have been done. Such an approach eventually leads to the thinking that no [experiments work](https://www.financedigest.com/remote-working-during-covid-a-successful-social-experiment.html "Remote working during COVID: a successful social experiment").

Of course, to have a reasonable shot at success, every experimental project needs a [task force](https://www.financedigest.com/european-privacy-watchdog-creates-chatgpt-task-force.html "European privacy watchdog creates ChatGPT task force") that will be dedicated at least mostly to it. Each [project will have its own unique composition of developers](https://www.financedigest.com/cordant-projects-to-develop-eleven-moxy-hotels-across-uk.html "Cordant Projects to develop Eleven Moxy Hotels across UK"), marketers, salesmen, and product owner(s).

However, most businesses won’t have the luxury to pick out their best people and put them on an experimental project. After all, something has to support it financially and [moving all of the elite people away from the primary project can cause a reduction in company efficiency](https://www.financedigest.com/tips-for-moving-office-how-to-use-packing-boxes-efficiently.html "Tips for Moving Office: How to Use Packing Boxes Efficiently"). So who has to be a top performer?

From my experience in the industry, the highest-level [manager assigned to the project usually has to be a top performer](https://www.financedigest.com/goodbye-excel-spreadsheets-hello-performance-management-tools.html "Goodbye excel spreadsheets, hello performance management tools"). New projects often need the very basics set up first such as developing the MVP, creating a website, and [setting up marketing](https://www.financedigest.com/digitized-overhaul-to-drive-the-bone-block-fixation-sets-market.html "Digitized overhaul to drive the Bone Block Fixation Sets Market") campaigns. However, right at the start of a project little to no advanced work is needed (unless the project is technically complex).

Focusing on the minute [details and trying to squeeze out a few percentages of effectiveness does nothing if the project](https://www.financedigest.com/future-market-insightss-detailed-report-on-cat-litter-market-offers-projections-of-potential-impact-of-corona-virus-outbreak.html "Future Market Insights’s Detailed Report on Cat Litter Market Offers Projections of Potential Impact of Corona Virus Outbreak") isn’t doing much either way. On the other hand, experimental projects often have a drawback of being on the verge of failure. They won’t produce amazing results in the first few months, which can be demoralizing to some. No one likes to work on a “doomed” project.

That’s why a highly-skilled manager is required – [experiments usually have a very bumpy road to success](https://www.financedigest.com/why-transforming-the-back-office-is-key-to-customer-experience-success-in-financial-services.html "Why Transforming the Back-Office is Key to Customer Experience Success in Financial Services"). Not only does the person [need to know](https://www.financedigest.com/4-things-you-need-to-know-about-mortgages.html "4 Things you Need to Know About Mortgages") how to effectively allocate resources, but they should also be perfectly capable of assuaging fears of failure.

Even if the project fails, a good [team will be able to pick out what worked](https://www.financedigest.com/finance-teams-have-been-left-in-the-dark-on-the-real-cost-of-working-from-home.html "Finance teams have been left in the dark on the real cost of working from home") and what didn’t. These lessons can become the foundation for [future experiments](https://www.financedigest.com/key-considerations-for-building-an-inclusive-digital-banking-experience-fit-for-the-future.html "Key considerations for building an inclusive Digital Banking Experience fit for the Future"). Eventually, one of them will end up being a tremendous success.

**Conclusion**

Blindly following metrics that measure success through profit each quarter [stifles innovation](https://www.financedigest.com/telecoms-mega-mergers-innovative-or-stifling.html "Telecoms mega-mergers: innovative or stifling?"). All experiments are at best a reasoned guess that something would be useful. Assigning extremely specific metrics to them should be out of the question.

If you want to innovate, go data-driven, not metric-driven. You can measure everything. You just won’t be right some of the time. Allow some data-driven freedom when [experimenting to innovate](https://www.financedigest.com/how-partnerships-fuel-fintech-innovation-and-help-banks-deliver-a-better-customer-experience.html "How Partnerships Fuel Fintech Innovation and Help Banks Deliver a Better Customer Experience") in a positive way.


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