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Managers learn better from others' failures than they do from their successes, study suggests

April 12, 2017

For more information, contact: Ben Haimowitz, (718) 398-7642, press@aom.org

"If it bleeds it leads" goes an old adage in newsrooms. And journalists are hardly unique in thinking so: psychology research provides abundant evidence that bad events have more impact on people's thinking than good ones do.

Yet, this lesson has been largely absent when it comes to the training and education of managers, according to a paper in the current issue of the journal Academy of Management Learning and Education. As the report explains, "Best-selling managerial books and case studies, such as Jim Collins' Good to Great or General Electric's success story during Jack Welch's reign, are expressions of a one-sided focus on other people's successes...Although [case studies] typically describe a manager whose organization is facing a challenging situation that could lead to failure, virtually all of the cases turned into successes for the organization."

As a result, the paper contends, "current learning practices [in management] fall short of fully utilizing the learning potential inherent in other people's experiences...Drawing lessons from other people's failures is a particularly effective but underused form of learning. Hence, the best practice...is to focus not only on others' best but also on their worst practice – and to share with others not only one's success but also one's failure stories."

Reaching these conclusions through an experiment in a classroom setting, the authors see their findings as highly pertinent to business practice. Comments co-author Ronald Bledow of Singapore Management University, "Our findings certainly apply to informal learning on the job – for example to the reluctance managers may have about revealing past failures, even though such stories are particularly likely to be of value to workers who find themselves in similar situations."

Adds management consultant Diana Bister, who collaborated with Prof Bledow on the research (along with Bernd Carette of KPMG Belgium and Jana Kühnel of Ulm University in Germany), "Employees should be encouraged to see errors as natural byproducts of learning that help lay the basis for further improvement. Yes, a primary aim of organizations is to avoid errors, but mistakes are inevitable, and encouraging workers to talk about them openly isn't lax management – it’s good management."

All the more so, the study suggests, because failure is not just a useful alternative to success as a teaching tool but a better one. "Failure stories lead to more learning transfer than success stories," the researchers find. Why? Because "people respond to failure stories with a heightened level of elaboration," a term that "refer[s] to the extent that people allocate cognitive resources and display self-directed learning when processing vicarious experiences."

In short, failure stories move managers to reflect harder than tales of success do.

The researchers reached this conclusion through an intricate experiment involving 50 university students in the social sciences, whose average age was about 24 and 30 of whom were women. The study consisted of sessions lasting about an hour in which up to six participants worked individually without any interaction. Participants listened to five fictional stories, each read as a first-person narrative by a different actor portraying a manager. Each story dealt with one of five important aspects of management – recognizing changes, analyzing a market, managing time effectively, dealing with conflict, and providing leadership. Half the participants heard five stories that ended with success, and half heard five tales of failure. The structure of the scenarios and the training content were similar for both conditions, even while differing in their positive or negative outcomes.

For example, one story was about a young man who wants to open a bar selling unusual coffee creations and thinks the best location would be near a university. In the success scenario, he invests in a market analysis, despite a tight budget, and is advised that students are unlikely to have the money to spend on his unusual creations and that a better location would be in the city center. The result is a flourishing business. In the failure scenario, the young man is not willing to spend for a market analysis and follows his inclination to set up shop near the university. With students being unable to afford his coffee creations, the business lasts only a few months.

After each of the five stories, participants were asked to write down what they could learn from it – in other words, to reflect on how it might be of use to them. The number of learning points students derived from the scenarios became measures of elaboration.

To see how these lessons would be applied to another situation – that is, for the researchers to obtain a measure of learning transfer – participants were next presented with a case study about an advertising agency and asked to respond to five management questions related to issues raised in the prior success and failure scenarios. For example, they were asked to plan a meeting where an employee would be dismissed, a task thematically related to a prior scenario dealing with conflict. Learning transfer would be demonstrated if participants indicated they would prepare the employee for the meeting, as was done in the success scenario but not in the failure case. Two independent raters who did not know in which condition participants had been trained rated their responses by how many elements of the prior stories they applied to the transfer task.

In general, failure scenarios proved significantly more likely to result in learning transfer. In the words of the study, researchers found "higher elaboration and training transfer in the failure-story condition...Failure stories led to more elaboration and as a consequence to higher learning transfer."

Experimental results notwithstanding, the authors urge that the findings "should not be misunderstood as a general recommendation to replace success stories with failure stories...Success stories serve as inspirational examples and...can build learners' confidence in their abilities, in particular when they see similarities between themselves and a role model...Failure stories may be particularly effective in learning contexts where learners need to intensively elaborate a topic, to develop differential and flexible knowledge...[or] when learners lack the motivation to elaborate on a subject because they underestimate its difficulty. Failure stories could then serve as wake-up calls."

The authors concede that "managers who have experienced failure firsthand may hesitate to share failure stories to avoid being viewed as incompetent…[even though] protagonists who have a history of successes...may even be viewed in a more positive and humane light if they also share their failure stories." They cite several initiatives that have successfully used failure as a learning resource, such as After Event Reviews, originally developed by the U.S. Army but now more widely used, and Fail Forward, an award-winning management consultancy.

In conclusion, they endorse "a culture in which employees at all organizational levels are willing to share their erroneous actions... The top-management team of an organization can set a powerful example by openly discussing past failures. Organizations can also institutionalize communication about failures by providing a platform for employees to share failed experiences.”

The paper, “Learning from Others' Failures: The Effectiveness of Failure Stories for Managerial Learning,” is in the March/May issue of Academy of Management Learning & Education. This peer-reviewed publication is published quarterly by the Academy, which, with about 19,000 members in 128 countries, is the largest organization in the world devoted to management research and teaching. Its other publications are Academy of Management Journal,Academy of Management Review, Academy of Management Perspectives, Academy of Management Annals, and Academy of Management Discoveries.

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