Fail cheap

Prevention Costs: Fail Early and Cheap

by Dec 15, 2020Business

The high price of fixing an error late.

One of the fundamental concepts I learned as an engineer was the cost of repairing an error; prevention costs. The key lesson was that it’s always cheaper to fix an error early on. What’s interesting is that you can apply this same lesson in your business today in all your processes.

To show you what I mean, let’s use an example from the world of design engineering where I learned this idea. Let’s say that I am designing a new product and I find an error in my blueprint or on my CAD system. At this point, the cost to fix this error might be $1, literally a few clicks of the mouse.

If that same mistake makes it through to the prototyping and testing stage, it is more expensive to repair. Perhaps $10. The design must be redone, and the prototypes must be fabricated, costing money and time.

Now, let’s go to the next step: production. If I begin manufacturing my product and, in a quality-testing phase, uncover an error in my design, this is now going to cost me $100–or 100 times the cost of finding the error during the design phase. Of course, the lost time is far more material as well.

But what happens if I begin making the product at scale and ship it out into the market to my customers only to uncover the design flaw then, forcing me to recall the product and completely re-engineer it? At that point, the error will cost me $1,000–or 1,000 times the cost of uncovering it early on.

I have seen something similar happen to a client of mine. They shipped out a product to customers only to discover that a piece of metal failed after minimal use. It then cost them millions of dollars to recall and fix that product to the point where it was acceptable to the customers.

The expensive lesson this company learned was that the longer you go before uncovering a design flaw, the more expensive it will be. They are designing a new product now and have doubled down on the early part of the design and validation process to make sure another expensive mistake doesn’t escape the customers.

1. It’s More Than Just Failing Fast

The idea of “failing fast” has become increasingly popular these days. The idea is that you want to move quickly, experiment, and find things that don’t work before you invest more heavily in them. But we need to add to this rule by saying fail fast–and fail cheaply. Don’t go too far into your launch process before realizing you have made an error.

Consider another example: cybersecurity. In the wake of the pandemic, where remote work has exploded, cybersecurity has become a top priority for every organization out there.

The challenge for organizations, though, is that as they roll out new infrastructure to support their remote workers, they might be trying to move fast. That likely means leaning on lots of workaround solutions because, in most cases, the company’s IT infrastructure was never designed with extensive remote work in mind.

2. It’s Failing Cheap

This is particularly true as companies try to secure their information and access in a hastily constructed WFH system. It gets expensive, and the solution will always be less than optimal. If the security had been designed from original principles by a selection of software and infrastructure that is natively secure, the system would be cheaper and superior.

What if, because you’re not taking the time to test those new changes–or even to rethink your entire IT approach and whether it can handle the changes–you’ve actually increased your risk of being hacked? What kind of cost could that represent to your business?

Again, the point is to uncover errors as early as possible in all processes so that you can fix them as cheaply as possible. And this rule applies to everything inside your business: product launches, pricing, marketing, websites, sales policies, and service offers. Fixing errors is far cheaper during the design phase than after you have deployed something new into the field.

The goal should be to fix it when it’s cheap and not fail. If you can do that effectively, you’ll be winning!