Dispelling the Myth that Organizations Learn from Failure

Abstract

There are some movements within the project management profession to adopt a new posture regarding project failures. According to this new line of reasoning, failure should be embraced since it provides a learning opportunity to firms (Gino and Staats, 2015; Edmondson, 2011). This paper takes a contrasting point of view. Namely, that failure shouldn’t even be in a firm’s vocabulary. To learn, from failure or otherwise, a firm must have an organizational learning capability. If the firm has the learning capability in the first instance, why not apply it at the beginning of a project to prevent a failure, rather than waiting for a failure to occur and then reacting to it. A better use of this learning capability would be to anticipate the technologies to be encountered by a project, and develop up-front management approaches for handling them. By successfully handling these technologies, a firm improves their absorptive capacity in that subject area, and increases its capacity to learn new content in the area as well. This paper argues that a firm must succeed to learn the important lessons of how to develop and implement competitive strategies.

A look backwards to past lessons learned, or to previous failures, or an overreliance on historical best practices, won’t even identify the challenges a new project might encounter, much less the mitigation approaches for handling them. Project management professional organizations offer knowledge maps of historical best project management practices that end up influencing practitioners into using similar processes universally. These firms tend to find a management approach that works, and then attempt to apply it across all of their projects. But each project is unique and requires different management approaches. The result of this overreliance on historical best practices is a fundamental failure of project practitioners to assess the forward-looking challenges a project is likely to encounter. Since the challenges are not identified, mitigation plans for handling them cannot be developed. The result is an industry where 95 percent of all new product development projects fail, and 83.8 percent of all IT projects are deemed unsuccessful.

Keywords: embracing failure, historical best practices, knowledge maps, fear of failure, backwards focus, proactive planning, overreliance on best practices

JEL Classification: D82, D83, M10, M11, M12, M14, L22