Is "Fail Early, Fail Often" Just a Slogan?

Last week, I watched the movie "Argo" for the second time. It is terrifically satisfying entertainment. Unlike my first viewing however, this time it caused me to consider what if Ben Affleck's CIA operative Tony Mendez character had simply accepted his "stand down" order from his manager and allowed the US to pursue a military rescue option as directed? The fact that in reality this operation (Operation Eagle Claw) was severely operationally flawed and ultimately aborted can lead us to conclude that this likely would have led to a much less satisfying movie outcome for the hostages (as well as American entertainment seekers). Argo is inspiring to viewers because the protagonist defied his superiors' orders and assumed tremendous personal and professional risk in order to pursue his personal conviction and because it all worked out.

In the corporate world, professionals often face situations where it is simpler and safer to adopt a risk-averse posture. In essence, if in doubt, elect a "no go" decision. There may be consequences for not adopting a more risky stance, but there is rarely downside for rejecting a new opportunity if the choice is between maintaining the status quo and accepting an alternative that is almost certain to require significant cost investment and has formidable uncertainty and unknowns attached to it. In the Argo example above, I have cited a very high risk undertaking with human lives at stake. Most everyday business decisions don't carry that degree of risk magnitude although many put substantial costs and resources on the line.

 
Still, it is often said in the context of new product innovation that one should fail early and often to test uncertain and otherwise unknowable options and to learn while still facing relatively low cost and consequence downside risk. How many companies actively encourage (or at least tolerate) the assumption of such risks? Or is this simply a noble ideal?

I think that many would argue that failing early and failing often applies to intelligent test design and planning, not to the willingness to assume risk in and of itself. Professionals should focus on determining if there are low cost, low risk ways to gain learning necessary to make smart business decisions and thereby to minimize total development cost. By focusing on risk tolerance alone, we lose the bigger and broader picture.
 
All of this said, one would assume that movie studios should be able to reasonably accurately predict the box office prospects of such box office bombs as "The Lone Ranger", "John Carter" or successes such as "Argo" before they green light such enormously expensive films. Why is it that they don't or can't seem to? 
 

What are your thoughts, including how is the topic of risk managed at your company?

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