Companies responding to high profile failures tend to learn from the experience and ultimately prove more successful, according to research from the University of Colorado Denver Business School published in the Academy of Management Journal. The study focused on organizations involved in space launches and exploration.
Co-author Vinit Desai, assistant professor of management, said:
"We found that the knowledge gained from success was often fleeting while knowledge from failure stuck around for years. But there is a tendency in organizations to ignore failure or try not to focus on it. Managers may fire people or turn over the entire workforce while they should be treating the failure as a learning opportunity."
Vinit Desai and co-author Peter Madsen, assistant professor at Brigham Young University School of Management, found little evidence that organizations learned significantly from successful projects but acknowledged that that the process may be different in other settings.
Researchers compared responses to the flight of the space shuttle Atlantis in 2002 and the subsequent flight of the Columbia. A piece of insulation broke off during the first voyage, damaging a solid rocket booster but not impeding the mission or the overall program. Researchers found there had been little follow-up or investigation into the incident.
When the Columbia was launched another piece of insulation broke off, destroying the shuttle and its seven-person crew. This prompted the suspension of all shuttle flights and a major investigation that resulted in 29 recommended changes to prevent future disasters. The researchers suggest that the difference in response reflects the fact that Atlantis was considered a success and the Columbia a failure.
Vinit Desai commented:
"Whenever you have a failure it causes a company to search for solutions and when you search for solutions it puts you as an executive in a different mindset, a more open mindset."
Researchers identify the airline industry as one sector of the economy that has effectively learned safety lessons as a result of failures.
Vinit Desai said:
"Despite crowded skies, airlines are incredibly reliable. The number of failures is miniscule and past research has shown that older airlines, those with more experience in failure, have a lower number of accidents."
The researchers suggest that organizations should analyze less significant incidents and apply lessons learned rather than wait for major failures.
Vinit Desai concluded:
"The most significant implication of this study...is that organizational leaders should neither ignore failures nor stigmatise those involved with them. Rather leaders should treat failures as invaluable learning opportunities, encouraging the open sharing of information about them."