In this podcast, Motley Fool contributor Rachel Warren talks with innovation consultant Lorraine Marchand, author of No Fear, No Failure, about the "five Cs" of innovation and how investors can distinguish between reckless risks and intelligent failure.
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A full transcript is below.
This podcast was recorded on Feb. 22, 2026.
Lorraine Marchand: One of the things that I have clearly learned is that the organizations that are most effective in growing and growing through innovation reframe failure as learning. They create an environment where experimentation is encouraged, and where people are not afraid to bring their ideas to the table, and in fact, they are encouraged to bring new ideas to the table.
Mac Greer: That was Lorraine Marchand, author of No Fear, No Failure. Five principles for sustaining growth through innovation. I'm Motley Fool producer Mac Greer. Now, Motley Fool contributor, Rachel Warren, recently talked with Marchand about those five principles and about the keys to successful and enduring innovation.
Rachel Warren: Hello, everyone. Welcome back to Motley Fool Conversations. I'm Motley Fool contributing analyst, Rachel Warren. Today, I'm delighted to welcome Lorraine Marchand, author of the book, No Fear, No Failure to the show. Lorraine is an acclaimed innovation consultant, educator, and corporate leader with over three decades of experience in new product development and strategic growth. She is widely recognized for her expertise in the life sciences and healthcare sectors, particularly, in navigating high cost of failure environments. Work has centered on how organizations and investors can take smarter risks by reframing uncertainty rather than avoiding it. Lorraine has served as the executive managing director and general manager of IBM Watson Health now Merative overseeing data and AI strategy, and previous leadership roles include positions at Bristol Myers Squibb, Covance/LabCorp. She has co-founded four Healthcare and Life Sciences Companies, serves on the Healthcare and Pharmaceutical Advisory Board at Columbia Business School, and has advised a myriad of Fortune 500 companies, including Johnson & Johnson and Hewlett-Packard. Lorraine, welcome to the show. Glad to be with you today.
Lorraine Marchand: Thank you, Rachel. It's my pleasure and honor to be with you today.
Rachel Warren: I want to start off our conversation talking about your book, No fear, No failure. There are so many, I think, incredible takeaways from this book that apply to the lessons that we as investors are trying to learn and to make smarter and better investing decisions. One of the core elements of your book because you talk about what you call the five Cs of innovation. I would love if you could walk us through some of the core themes of your book, but also what are the five Cs? How do they apply to businesses that we are evaluating as investors?
Lorraine Marchand: Well, thank you for that question. Very fundamental, and throughout the course of my career, as well as the 120 interviews of executives that I conducted for this book, that really led me to the creation of the five Cs because I was on a mission to better understand what was holding back innovation driven growth at organizations and if we could put the magic in a bottle, what would that bottle contain? At the same time, these are areas that we can also diagnose that aren't going so well. The first C, Rachel, of course, has to be culture. One of the things that I have clearly learned is that the organizations that are most effective in growing and growing through innovation reframe failure as learning. They create an environment where experimentation is encouraged and where people are not afraid to bring their ideas to the table, and in fact, they are encouraged to bring new ideas to the table. Culture is very critical, and I like to emphasize the mantra that I teach as a leader of innovation, try, fail, learn. Our second C is focused on chance. Chance is all about this idea of investing in risk. I'm sure your listeners are very familiar with the golden ratio, 70, 2010, which Sergey Brin applied very aptly at Google, showing that the 10% that the company invested in Blue Sky, Blue Ocean, innovation, transformation, not really sure how it was going to work out. Actually resulted in 70% of the company's growth five years later. What I've observed and learned is that most companies that lead with innovation that are on a very positive growth trajectory follow some similar type of algorithm, maybe not exactly, but something similar and the part that goes along with that investing financially is it's really important to invest in your people. Applying the resources, investing in talent, doing the training, put together programs where individuals know that you're really serious about wanting to make change and invest ahead of the market, if you will. The third C is all around change, and the most forward types of organizations have figured out an algorithm for helping to people embrace change. Here we can get pretty tactical. It's really simple things like delete something first, my very favorite one.
People get overwhelmed when they have a desk full of bright shiny objects, and they're all supposed to be very exciting, and they're all going to lead to fantastic growth. It can't be possible. As a leader, it's really important that we help our teams reprioritize because they can get overwhelmed. Take something off the plate before you ask them to do something new. The second one that I think so many of us learn through COVID, avoid crisis-driven change. Be watching the patterns, be looking around corners and change before you have to. Companies that really lead with this one, are in the annals of the HBR for companies that are still around. We can talk about Ecolab, Viola. There are a lot of companies that have really withstood the test of time because they know this one quite well. The fourth and my very favorite, of course, is customer first. What I've learned, I'm sure that you've seen it as well. So many companies talk about putting the customer first, and yet it's very easy to start to practice inside out thinking in the echo chamber, believing that we know what's best for the customer, reinterpreting what we hear from the customer through a lens of what we want to push forward because it's of strategic importance or we've got shareholders waiting. We twist things around to some extent, and we can end up getting very distanced from the customer. Had some of my own experience with that at IBM Watson Health. Then the fifth and really a very important one is this idea of collaboration. I think when collaboration first hit the corporate scene, I like to say that it was a behavior on a tent card in the cafeteria, and your KPIs were all around, are you a nice colleague to get along with? Fortunately, it's evolved, and it's now a strategic business imperative. Because the data shows us that when you unite product, with services, with functions, and with other stakeholders in the organization, all around a common set of strategic objectives and all aligned around the customer, you can really achieve breakout growth. When you're evaluating companies to invest in, my mantra is look at the culture, look at what their investment strategy is, what their portfolio approach is. How do they handle change? Are they collaborative and how are they organized, and are they organized to unite around breakout growth? Then how do they really treat the customer? How do they talk about the customer? What do the customer say about them?
Rachel Warren: I think that's so important and these five Cs that you've outlined, there are so many applications across industries. Of course, you have an extensive background in the life sciences that you've advised a wide range of companies. Of these five Cs, so customer culture, collaboration, change, and chance, which one do you find that legacy companies tend to struggle with the most and which do you find tend to be maybe the most easy for those companies to adopt?
Lorraine Marchand: Culture for sure because that's a big one. But I think that at the end of the day, the one that really hits home for the companies that when they fail to follow it through is the customer first. The reason I say that is because we're all so aware of how blockbuster fail to understand changes in the marketplace, changes in customer interests and customer behavior, Kodak, Nukia, Motorola, borders. I think one of the first telltale external signs, that we have of a company that's starting to falter, is when we see that they are failing to listen to the customer, to listen to the marketplace demands. It's just that is one that's easier to spot, Rachel. All of them are important, but sometimes as an investor, it's really hard to get an inside look at what the culture is like, but you can start to spot where their customer misses.
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Rachel Warren: One of the things that you noted, in your book that stuck out to me, was that many organizations and investment teams mismanage risk because they treat failure as something maybe to be avoided instead of a source of essential learning. I think there's a lot of lessons to be gleaned here for individual retail investors, too. Something we talk about a lot at the Motley Fool is the importance of mindset when it comes to long term investing. Maybe you could dig a bit into how to distinguish strategic risk from reckless risk and how that fear of failure can undermine good decision making.
Lorraine Marchand: Well, that's a terrific question. Even my own investment approach includes some of that 7,0 2010. We've got to get into some of the 20%, which might be private markets, we've got to get into some of the 10%, which might be net new high tech start-up. I'm a big advocate of that. But back to your question, which was around how do we identify strategic risk from reckless risk, very important to be able to do that. Reckless first. If we find that you are failing to deliver that customers are complaining that there are operational issues that are making your organization less efficient, that is not the failure that we're going to celebrate. Those are operational, very practical types of misses that you need to fix. We're not going to put those in the category of saying that that failure is OK. The strategic failure is when you take a chance on a new market or maybe you're leading with a new product, and we're not exactly sure whether it is going to resonate with customers, but we have to give it a try or a new market that you're going into a new country. I think those are more on the lines of where we're investing in new strategies, markets, bringing new ideas to the table that would drive top line growth. Then those areas where it's all about delivery, performance, operation that maybe are a little bit more bottom line growth-oriented, that's not where we want to take a lot of risk.
Rachel Warren: Your background includes work at IBM Watson Health, Bristol Myer, Squibb. What in your experience is the biggest capital allocation mistake that large cap companies tend to make when it comes to innovation?
Lorraine Marchand: Well, if I can share a cautionary tale at IBM Watson Health, we all remember the Jeopardy game when Watson Health beat the humans at Jeopardy. I think what happened at that point was Watson Health and the engineers got quite ambitious and enthusiastic about the promise of this technology. They had some big ideas and big bets that they could revolutionize healthcare and in one case, decided that they could jump ahead and develop a cancer diagnostic. In this case, they work to co create a cancer diagnostic with MD Anderson, a very well known healthcare system in Texas. In fact, MD Anderson sunk $62 million into the co-creation of this diagnostic, which for a hospital system is a lot of capital that went into it. Ultimately, unfortunately, it didn't work. When you take the five Cs and you try to analyze and understand what broke down here, it was the engineers did not understand MD Anderson's current processes, their workflows, the data, the limitations of the data. At the time, so much of the data that the doctors were aggregating were handwritten notes. The fact is natural language processing wasn't as advanced as it is today. Yet, IBM, because they were somewhat complacent in their growth and very ambitious, ignored some of these warning signs and moved very quickly, believing that they would be able to bring this product to market. The other thing is, it's important to have one reference customer, but I always tell my students that you have to have at least 100 different customer interviews in order to confirm that there's a market and a need for what it is you're advancing. I don't believe personally that developing a tool or a solution with just one customer based on their particular use case, is ever going to be enough. What happened is, when it didn't work at MD Anderson, for all the reasons I described, there was also nowhere else to go because the use cases and the model was all designed and developed around this one entity. As you know, in healthcare, you talk to one hospital system. You've talked to one hospital system. They likely don't have much in common with any other hospital system. I think it's this lack of proper planning, research, business fundamentals that is what hangs up companies that are a little bit overly ambitious.
Rachel Warren: That's a really interesting cautionary tale, as you noted. Looking, whether from your own experience or just observing the public markets, you talked about a really prime example of a move toward innovation that was not successful. What are some examples of a successful push toward innovation, whether it's digital transformation or otherwise that you have seen?
Lorraine Marchand: Well, it's hard to talk about innovation success without pointing to some of the magnificent seven, these days, I'm sure. Nvidia is a company that with its GPUs and its chip systems and all of its innovation. They have wrapped themselves around the customer. All of their use cases, extending and expanding what it is they're offering to solve additional needs. We see the results that that is bringing to bear. They're a major player when it comes to infrastructure now that is enabling AI, and it's hard to talk about anybody that's advancing any tool or solution in AI that isn't very dependent and integrated with Nvidia. They have invented along with beside through and with their customer, and I think that has really been critical to their success.
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Rachel Warren: Something else that stuck out to me as I was going through your book was you talk about the concept of intelligent failure. This is something I think is applicable to individual, smaller investors, as well as, of course, we see that a lot in some of the top institutional and individual investors and how they deliberately designed for these small information rich failures to get big wins more efficiently. Could you dive into that methodology a bit for me.
Lorraine Marchand: The idea of intelligent failure is it's the right wrong because we learn from it. I think it's very important in innovation that we're not just looking at financial metrics, which I've alluded to, but that we also have learning objectives. Because if we have learning objectives, then we will know what are the other aspects of this experiment that we want to help us to learn from, to advance our business, our market, our understanding of the customer, our operational acumen. We always need to be thinking about a couple different learning objectives. It also helps us diversify some of the risk because if we're not just focused on the binary outcome of whether this is going to measurely improve revenue or growth, but we're allowing ourselves to say, well, we're going to learn a lot about a new market, or we're going to find out about how this new technology works or whether it really matters to our customers. That way you can bring all those findings back into the company, and they might lead you to pivot and move in new directions, but it's investing in your teams and their understanding. One small example, Rachel, is a company called Ecolab. I'm very fond of them because they're a 150-year-old hygiene company. During COVID, they have a field team of 3,500 engineers, and all they do is go into the field every day watching customers, observing them, talking to them, understanding what their pain points are. Really, really powerful and to me, one of the main reasons that Ecolab continues to be innovative and growing today is that approach that they take. But during COVID, they visited their hospital customers. They noticed that the patients were standing outside waiting, and they found out that one of the reasons they were waiting is that they were waiting for sanitizing sprays to dry so that the hospital staff could let the next person into the hospital. Armed with this information, they demanded faster drying sprays. They chose a cohort of hospitals, and within two weeks, they had sprays that were drying in seconds over minutes. Getting patients into the hospitals in seconds over minutes, happy customers, revenue growth, and then they scaled from there. I think a great example of being on the ground, seeing a problem, a small cohort to make sure that this was real and that you were solving a need and that they were willing to pay for it before we scaled. To me, that's a classic example.
Rachel Warren: Final question, and I wanted to end on a forward looking note. Looking ahead over the next 3-5 years, what are the maybe one or two innovation trends, whether the public markets or an example of a specific companies that excite you the most?
Lorraine Marchand: Well, I'm very excited about the opportunities in space, whether it comes from the efficiency, the capabilities of being able to harness solar power and natural resources and being able to utilize those. I think it's really fascinating some of the work that's going on with space logistics and how we might be able to move things a little bit faster or do experiments that are based in space. I think a lot of the work that's going on with drones and autonomous information gathering, being able to understand where there's even things like human trafficking. Some of these drones that are able to do surveillance, and see things like that. I'm very excited about that. Then I do think that quantum computing is going to be a really fascinating area that is going to help us with the advances in genomics and all types of Omics, and being able to go from the Cloud to quantum computing and being able to just crunch data so much faster and bigger magnitudes of it. I think that's really going to catapult us into an age of much faster, more accurate drug discovery and development, but also other areas, as well. I just happened to be deep in Pharma.
Rachel Warren: For sure. Well, a lot for investors to be excited about and to our listeners and viewers, check out Lorraine's book No Fear, No Failure. Lorraine, thank you so much for joining me on the show today.
Lorraine Marchand: It was my pleasure, Rachel.
Mac Greer: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Money team, I'm Mac Greer. Thanks for listening and we will see you tomorrow.
