University of Toronto Magazine University of Toronto Magazine
Illustration of a crumpled paper ball falling into a basketball net with a circuit board as the backboard.
Illustration by Matt Chase

Failing is Part of Innovating

How an early defeat helped my company, OpenText, succeed

In 1998, OpenText was in the business of Internet search when a small startup called Google came along. Below, Jenkins – at the time the company’s CEO – writes about how OpenText’s failure against Google allowed the company to “pivot” and become one of the world’s largest software and cloud companies.

OpenText originally set out to be the primary search engine of the Internet and it failed. From a Canadian point of view that’s very important, because part of the dilemma we have in Canadian innovation, invention and competition is that we shy away from failure. If somebody fails, we avoid looking that person in the eye. It’s a stigma.

OpenText’s stock price collapsed from $20 to $2 in less than six months. It was a very public failure. At the time, articles about the collapse of our business model and the abandonment of our search engine were appearing in various newspapers – not unlike the articles that have been published about the decline of BlackBerry, Nortel and Valeant. My friends in Waterloo, Ontario, my family, and other people I know in Canada lost large amounts of money on OpenText stock. When you take the garbage out to the end of your driveway, and realize that many of the homes you see belong to people who lost a good chunk of their money because of your failure, it’s very personal and very painful.

What came out of that failure?

OpenText turned to business-to-business applications, which was a less competitive market but no less lucrative than the public-facing business of search engines we moved out of. OpenText was far more profitable in the long run. However, if we had not failed with our first strategy, re-­evaluated and pivoted when we did, we never would have realized this success.

This is, I hope, the single most important learning: no matter what happens, you must stick it out, adapt, evaluate and pivot with confidence because, on your 131st try, it’s going to work.

Successful entrepreneurs are actually serial failures. Thomas Edison is perhaps the greatest serial failure in the modern era – but we don’t think of him that way. We think of him as a successful entrepreneur and as a successful inventor. In fact, he failed time after time. He used his failures as opportunities to learn what didn’t work.

Failures are part of the journey toward success. As Edison and so many other innovators have proven, to fail is not the worst thing that can happen. But Canadians are myopic about it. Canadian companies such as Nortel and Research in Motion have had very public collapses. So have many others. The reality is that failure is going on all the time, and it is part of the innovation process.

At OpenText, we were fortunate to change direction in the nick of time. OpenText was able to take some of its resources, some of its money, and the technologies that it had built, repurpose them to a different market and a different application, and succeed. Our failure was only temporary, since the pivot proved to be the right decision. That would not become apparent, though, until many years later. OpenText began to grow in its new business and went on to be the market leader in designing and building software for corporate intranets and the cloud. Today, OpenText is one of the largest software and cloud companies in the world and never left its home in Waterloo. Today its headquarters for more than 12,000 people is located just a few steps away from where its first Internet search product, OpenText Index, was created in 1995.

Tom Jenkins (MASc 1985) is chair of the board of the OpenText Corporation and chair of the National Research Council. This article is adapted from Canadian Failures: Stories of Building Success (Dundurn Press, 2017).

Recent Posts

Leave a Reply

Your email address will not be published. Required fields are marked *