Por: Andrés Pesce, Fundación Chile Business and Companies Manager.
When it comes to risk capitals and ventures, even when we triumph, we fail more than we succeed. In our history (Fundación Chile’s) when risking capital we have failed 75% of the time. In other words, of the 65 ventures we have formed, we have left 56 of them, of those, 14 recovered more than their starting capital, and 42 did not even recover the capital. We have invested US$ 107 million and we have recovered, to the date, US$110 million. This means this 25% of success has paid for the 75% of our failed attempts ¿Or is it the other way around?
In an innovation strategy, whether it is at a national level or through a risk capital fund; what we have to seek is to build a portfolio of options. We do not know which of them will be successful, and we do not even suspect in which way they will do it. In this sense, we must be intelligent when building this portfolio of options, but this intelligence does not fall into the capacity of being able to predict the future nor modeling complex systems with the whimsical premise of erasing the uncertainty and randomness.
Intelligence must be supported precisely in these portfolios benefitting of the unplanned events, the uncertainty, and randomness. We are often tempted to seek recipes and study cases of success, without even realizing that history entails a simplification of uncertain and unexpected events. In the words of Nassim Taleb in his book called Antifragile, he remarks that “life is more, much more, labyrinthine than how it is shown in our memory – our minds are in the business of transforming history in something soft and linear, which makes us underestimate randomness”.
Failed attempts (which are consequences of unexpected events, since no one wants to fail a priori) are essential keys in an innovation strategy. We would do well in building portfolios of options that focus in how to benefit from these failed attempts, recycling relations, teams, information, and learning in new bets. I rephrase, then, what I said before: 75% of our failed attempts have allowed 25% of our successes.
Source: El Mercurio, April 2015