Theory of errors in innovation failure and strategic management of winning by failing

The risk of failure in innovation projects affects organisational behaviour and the performance of firms. This study develops a theory of errors in innovation project-level failure. Error is a set of faults that generates deviations in phases of the R&D process in projects, decreasing the expected results. From a systemic perspective, innovation failure in a project is due to a set of errors that generates a negative outcome. The proposed theory clarifies the general determinants of innovation failure in projects that are due to errors in design, execution and market orientation. Case studies in the drug discovery industry and pharmaceuticals validate the consistency of the proposed theory, giving examples of errors in projects leading to innovation failures. The payoff matrix of success/failure occurrences predicts that the probability of failure in innovation projects can double by setting a difficult goal compared to an easy one. Inductive implications of the proposed theory are that organisations reduce innovation failure in projects with better adaptedness to changes that minimise errors and learn from them. The proposed theory can guide R&D managers, designers, etc. in detecting critical errors in the R&D process to apply strategies of problem solving based on a winning approach by learning from errors that lead to innovation failure in projects to enable the organisation to adapt, take advantage of important opportunities and cope with consequential environmental threats for achieving goals and sustaining the competitive advantage in turbulent markets.