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  • Why Leaders Don't Learn from Success

    What causes so many companies that once dominated their industries to slide into decline? In this article, two Harvard Business School professors argue that such firms lose their touch because success breeds failure by impeding learning at both the individual and organizational levels. When we succeed, we assume that we know what we are doing, but it could be that we just got lucky. We make what psychologists call fundamental attribution errors, giving too much credit to our talents and strategy and too little to environmental factors and random events. We develop an overconfidence bias, becoming so self-assured that we think we don't need to change anything. We also experience the failure-to-ask-why syndrome and neglect to investigate the causes of good performance. To overcome these three learning impediments, executives should examine successes with the same scrutiny they apply to failures. Companies should implement systematic after-action reviews to understand all the factors that led to a win, and test their theories by conducting experiments even if "it ain't broke."
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  • Failing by Design

    It's hardly news that business leaders work in increasingly uncertain environments, where failures are bound to be more common than successes. Yet if you ask executives how well, on a scale of one to 10, their organizations learn from failure, you'll often get a sheepish "Two-or maybe three" in response. Such organizations are missing a big opportunity: Failure may be inevitable but, if managed well, can be very useful. A certain amount of failure can help you keep your options open, find out what doesn't work, create the conditions to attract resources and attention, make room for new leaders, and develop intuition and skill. The key to reaping these benefits is to foster "intelligent failure" throughout your organization. McGrath describes several principles that can help you put intelligent failure to work. You should decide what success and failure would look like before you start a project. Document your initial assumptions, test and revise them as you go, and convert them into knowledge. Fail fast-the longer something takes, the less you'll learn-and fail cheaply, to contain your downside risk. Limit the number of uncertainties in new projects, and build a culture that tolerates, and sometimes even celebrates, failure. Finally, codify and share what you learn. These principles won't give you a means of avoiding all failures down the road-that's simply not realistic. They will help you use small losses to attain bigger wins over time.
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  • "I Think of My Failures as a Gift"

    Lafley, the former CEO of Procter & Gamble, is regarded as one of the most successful chief executives in recent history. But like everyone else, he's had his share of mistakes. Politicians and winning sports teams draw their biggest lessons from their toughest losses, he says, and the same has been true for him. The company learned more from its failed new brands and products than from its successes. Among Lafley's favorite examples is the color-safe low-temperature bleach that P&G test launched in the 1980s under the brand name Vibrant. It chose Portland, Maine, as the test market, hoping to escape notice from Clorox, which was headquartered in Oakland, California. But Clorox got wind of the plan in time to distribute free gallons of Clorox to every household in Portland, making all P&G's advertising dollars, sampling, and couponing irrelevant. "Game, set, match to Clorox," Lafley says. But the good technology behind Vibrant remained, and when, a few years later, Clorox tried to enter the laundry detergent business, P&G modified that technology to create Tide with Bleach, which grew into a business worth more than half a billion dollars. Lafley also talks about systematically analyzing 30 years' worth of failed acquisitions to uncover five root causes: no winning strategic reason for the acquisition; integrating poorly or too slowly; expecting synergies that didn't materialize; incompatible cultures; company leaders who "couldn't play together in the same sandbox." That analysis led to changes that informed P&G's highly successful acquisition of Gillette in 2005.
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  • How to Avoid Catastrophe

    Most business failures-such as engineering disasters, product malfunctions, and PR crises-are foreshadowed by near misses, close calls that, had luck not intervened, would have had far worse consequences. The space shuttle Columbia's fatal reentry, BP's Gulf oil rig disaster, Toyota's stuck accelerators, even the iPhone 4's antenna failures-all were preceded by near-miss events that should have tipped off managers to impending crises. The problem is that near misses are often overlooked-or, perversely, viewed as a sign that systems are resilient and working well. That's because managers are blinded by cognitive biases, argue Georgetown professors Tinsley and Dillon, and Brigham Young University's Madsen. Seven strategies can help managers recognize and learn from near misses: They should be on increased alert when time or cost pressures are high; watch for deviations in operations from the norm and uncover their root causes; make decision makers accountable for near misses; envision worst-case scenarios; be on the lookout for near-misses masquerading as successes; and reward individuals for exposing near misses.
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  • Building Resilience

    Failure is a familiar trauma in life, but its effects on people differ widely. Some reel, recover, and move on with their lives; others get bogged down by anxiety, depression, and fear of the future. Seligman, who is known as the father of positive psychology, has spent three decades researching failure, helplessness, and optimism. He created a program at the University of Pennsylvania to help young adults and children overcome anxiety and depression, and has worked with colleagues from around the world to develop a program for teaching resilience. That program is being tested by the U.S. Army, an organization of 1.1 million people where trauma is more common and more severe than in any corporate setting. Nevertheless, businesspeople can draw lessons from resilience training, particularly in times of failure and stagnation. The program is called Comprehensive Soldier Fitness, and it has three components: the Global Assessment Tool, a test for psychological fitness (administered to more than 900,000 soldiers to date); self-improvement courses following the test; and "master resilience training" (MRT) for drill sergeants. MRT focuses on enhancing mental toughness, highlighting and honing strengths, and fostering strong relationships-core competencies for any successful manager.
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  • Failure Chronicles

    Seven CEOs, entrepreneurs, and venture capitalists tell stories of personal failures-and what they learned from them. Doug Rauch, a former president of Trader Joe's, admits to being a "control-aholic" and recounts how his micromanagement hindered the chain's East Coast expansion. Linda Rottenberg talks about her mantra, "Go big, or go home," and how she made the call to close her business in India. Anthony Tjan describes the ups and downs of his start-up when the irrationally exuberant dot-com boom went bust. Roger McNamee frankly discusses his failed bid to change the world. Wayne Pacelle, head of the Humane Society, talks about the importance of closing the deal. Peter Guber recounts a life-changing experience with Muhammad Ali. Whitney Johnson looks back on her first venture: investing in a friend's dream. Dave Strubler, a mountain climber and business professor reflects on making it almost to the top.
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  • How China Reset Its Global Acquisition Agenda

    China's economic progress has been so dazzling that people often forget that China, Inc. has seen its share of failures too. Just look at the first cross-border acquisitions that Chinese companies made. Many of those high-profile deals-including TCL's acquisition of France's Thomson, SAIC's takeover of South Korea's Ssangyong Motor Company, and the D'Long Group's purchase of America's Murray, Inc.-ended badly. But for the Chinese, failure is not about falling down; it's about refusing to get up. They quietly changed course, altering the kinds of targets they pursued and their rationale for M&A. Chinese acquirers have learned to steer clear of deals that involve costly turnarounds or tricky integration. Instead of buying brands, sales networks, and goodwill, they now look for hard assets, like mineral deposits and oil reserves, or state-of-the-art technology and R&D. And where they once tried to buy market share abroad, today they focus on acquisitions that will help them strengthen their share in China. Most telling of all, they're more willing to walk away-perhaps one of the surest signs of M&A sophistication.
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  • Can You Handle Failure?

    Handling failure and blame is key to managerial success. But roughly 70% of Americans have a personality type that tends to react inappropriately when things go wrong. Some people are extrapunitive, always pointing a finger at someone else. Others are impunitive, denying there's a problem or that they played any role. And still others are intrapunitive, heaping too much blame on themselves and seeing disasters where none exist. Fortunately, there are ways to fix such flawed responses. The first step is to cultivate self-awareness; several personality tests can help you assess your interaction style. Next, deepen your political awareness to better understand what messages others are receiving. Once you've identified your bad habits, you can move toward more-adaptive responses. Dattner and Hogan describe several strategies that can benefit any of the personality types. You should make sure to listen and communicate well, reflect on the situation and the people involved, think carefully before acting, and look for lessons when mistakes do happen. Using detailed examples, the authors illustrate how people with the various personality types are apt to react to specific failures and explain what they might do differently. They also offer insights to help you recognize when your bosses, peers, or subordinates fit into one of the problematic categories and suggest ways to influence their behavior. The taxonomy and tactics they present will help you approach failure with an open mind and react in a balanced, constructive way.
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  • The Would-Be Pioneer

    After many shorter stints abroad, and extensive experience in China, Linda Myers took a job in human resources with Korean firm SK Holdings - but was unprepared for the culture clash. In her two years in Seoul, Myers not only experienced social isolation at the office but also found that, like many change agents, her ideas went unimplemented. Yet as one of the first American female executives at a Korean firm, there was no one she could turn to for advice. The experience drove home several lessons: Learn as much as possible about the obstacles you'll face and acknowledge when they might be too much for you, understand your mandate and communicate in advance about the scope of your position with your employer, don't let day-to-day misunderstandings bother you, and take more time than you think you need to introduce even small changes. What she learned - the hard way - will be helpful to anyone considering an expat assignment or working for a foreign firm.
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  • Life's Work: Ricky Gervais

    Comedian Ricky Gervais on office dysfunction, creative control, his controversial comedy and why the greatest failure in life is not enjoying what you do.
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  • Why Most Product Launches Fail

    Veteran product launch PR executives Joan Schneider and Julie Hall examine the five most frequent reasons why new products flop: The company can't support fast growth, the product falls short of claims and gets bashed, the item exists in "product limbo," the product defines a new category and requires substantial consumer education but doesn't get it, and the product is revolutionary but has no market. The authors describe real-world examples of each kind of failure and suggest how companies can avoid these pitfalls.
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  • How to Deal with Customer Shakedowns

    It's one of the most basic aphorisms of business: The customer is always right. But when companies, especially large ones, try to rectify a service failure, they may run into opportunistic customers who try to take advantage of the situation. Treating customers justly can allow companies to settle grievances without giving in to over-the-top demands, the author finds. He argues that companies should do three things to resolve complaints without being exploited: ensure that compensation is fair, provide a convenient claims process, and express friendliness and concern. They should also offer any compensation promptly, which is apt to lessen excessive demands and leave customers feeling more satisfied.
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  • Why Serial Entrepreneurs Don't Learn from Failure

    Company founders have to be optimistic and resilient. But new research shows that serial entrepreneurs-those who involve themselves in only one project at a time-tend to be so overoptimistic that they don't learn from failure. Some venture capitalists factor this in when making investment decisions, and they tend to have better results than those who don't. Other potential investors should perform this due diligence, interviewing candidates about the causes of their past successes and mistakes.
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  • Hurt Feelings? You Could Take a Pain Reliever...

    An assistant professor at the University of Kentucky examines the similarities between people's responses to physical pain and their responses to social rejection, including the surprising finding that taking acetaminophen decreases hurt feelings.
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  • Cultivate a Culture of Confidence

    One difference between winners and losers is how they handle losing. Even a winning team might make mistakes, fumble, and lag behind before the game is over. But it recovers quickly and gets back on course. Kanter's Law is "Anything can look like a failure in the middle." The culture that surrounds high performers helps them resist the behaviors that losing can produce: panicking and throwing out the game plan; scrambling for self-protection and abandoning the rest of the group; hiding the facts and hoping things will get better by themselves; denying that anything needs to be learned or changed. Performance under pressure is the key.
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  • Entrepreneurs and the Cult of Failure

    Daniel Isenberg on why "embracing failure" to encourage entrepreneurship is bad policy.
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  • When Failure Looks Like Success

    Efforts to bring clean water to Bangladesh by installing tube wells appeared to be a huge success, but over time they led to epic failures: widespread arsenic poisoning, a rise in crime and prostitution, a projected increase in diarrheal diseases as villagers resume using groundwater.
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  • When Unhappy Customers Strike Back on the Internet

    This is an MIT Sloan Management Review article. After finding his guitar badly damaged by United Air Lines' baggage handling, and after enduring nine months of fruitless attempts to secure restitution from the company, an exhausted customer retaliated by posting a YouTube video about his misadventure. A year later, the video has become viral and generated more than 9 million hits. This musician's course of action is but one example of a bona fide movement, and not only is online public complaining becoming more prevalent, but this form of customer response could also be very costly for companies. So what can companies do to deal with online complainers? Based on their eight years of research, the authors summarize their understanding of this phenomenon and provide actionable recommendations. They organize their conclusions into a two-by-two matrix. First, the matrix's rows differentiate between (1) understanding complainers' motives and behaviors and (2) recommendations whereby offending companies may change those behaviors. Second, the matrix's columns distinguish between the before and after of the online complaints, as motives and behaviors change over time. The authors' recommendations highlight how companies can prevent, or at least reduce, online complaining, and how companies should respond after an online complaint happens anyway. In particular, they show that the best way to avoid the triggers of online complaining is to develop fair processes and a triage system for initial non-online complaints. Also, they show that companies should respond to online complaints as quickly as possible-in any case, no later than four weeks after the online complaint posting-and that the nature of the apology should depend on the type of customer involved.
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  • Flat World, Hard Boundaries: How To Lead Across Them

    This is an MIT Sloan Management Review article. While technological innovations have revolutionized the workplace, it is ironic that relational boundaries -- obstacles to productive human interactions -- remain largely unchanged. The authors identified five types of such boundaries: Vertical boundaries are the floors and ceilings that separate groups according to rank and privilege. Horizontal boundaries are the walls that separate them according to areas of experience and expertise. Stakeholder boundaries are the doors and windows of the organization. They open it up to, or shut out, parties such as vendors and local communities. Demographic boundaries result when workers are defined, say, by gender, race, education or ideology. Geographic boundaries are represented by the physical office location as well as by the electronic connections used to bridge time zones and distances.
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  • Why Project Networks Beat Project Teams

    To research the factors that affect the success of teams working on knowledge-intensive projects, the authors studied a companywide recognition program for project teams at a large multinational food company. Based on that research, the authors introduce the concept of the project network as an important tool for accomplishing knowledge-intensive work. Typically, project networks consist of a core set of team members who bring in noncore contributors (such as other company employees, suppliers, consultants or customers) from their personal networks to provide knowledge, information or feedback regarding the team's task. The project network thus takes advantage of both the project team as a whole and the personal networks of the members. The authors contrast finalist and nonfinalist project teams from the team recognition program at the food company. The empirical data the authors report indicate that, on average, there was no significant difference between the finalist and nonfinalist teams with respect to several project characteristics: resources, project membership or changes in the project. However, in one area there was a significant difference: The finalist project teams had more noncore contributors. After controlling for project characteristics, size of core project team and other factors related to participation, the number of noncore contributors was a positive and significant predictor of success, the researchers report. A project network can be helpful whenever any of the following conditions is present: The project scope is beyond the control and sphere of influence of the core team; the task is complex, and it is unclear whether or not there is an optimal solution; or some of the knowledge necessary to create a high-value outcome resides elsewhere. Managers can use a project's kickoff meeting to set norms and expectations that members of the project team have the option to look outside the team for possible solutions to complex problems.
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