How Organizations Can Learn from Failure Essay

Even though there is a no precise definition for failure in organizations, there is a general agreement to what failure means and could lead to. Failure is broadly defined as a condition of not meeting the intended objective or end. Failure could result in the depletion of finance, shrinking market, exit from the market, loss of market share, project failure and loss of legitimacy. We can assume that failure has negative consequences even though the final outcome may be positive, with firms learning from failure. Understanding the need for learning from failure is unquestionable; however it is tough for organizations to put this into practice. It is crucial that organizations understand failure and think about it in the right way before they can go about implementing procedures to prevent such failures from happening in the future. Learning from failure involves understanding that failure is not always bad and that learning from failure is no straightforward task. An organization cannot simply reflect on what they did wrong and expect to not make the same mistakes again. Organizations have to understand about the different degrees of failure which occur on a scale ranging from blameworthy to praiseworthy. They fall into three broad categories which are 1, failures which occur in predictable operations which could be prevented. 2, unavoidable failures which occur in complex organizations which can be managed to prevent snowballing. 3, unwanted outcomes†¦. To learn from failure, we require different strategies for each setting. It is key to detect them early, analyze failures with depth, develop hypothesis, experiments and projects to product them. In order to minimize failure employees first have to feel safe to report these failures. In the article titled strategies for learning from failure the author Amy C. Edmondson talks about http://hbr. org/2011/04/strategies-for-learning-from-failure/ar/1 First the organization has to go about understanding failure in the right way as well as all the possible side†¦ Important for managers to think about failure in the right way. Failure is not always bad. It is sometimes bad and sometimes inevitable and sometimes good. Learning from failure is not a straightforward task. The attitudes and activities required to effectively detect and analyze failures are in short supply in most companies and the need for context-specific learning strategies is underappreciated.? Organizations need new and better ways to go beyond lessons which are superficial( procedures which weren’t followed) or self serving ( The market just wasn’t ready for our great new product) That means jettisoning old cultural beliefs and stereotypical notions. The blame game? A spectrum of reasons for failure? http://www. uk. sagepub. com/upm-data/10989_Chapter_9. pdf Failing to learn from failure reasons? -Simply experiencing a negative event is not sufficient for learning. – Learning can be a complicated process, the acquisition of knowledge and the shifts in behavior must occur at all levels of a highly complex system. â€Å"Bazerman and Watkins (2004) contend that, when organizations fail to learn failures, they become susceptible to predictable surprises. What is the difference between predictable and unpredictable surprises? Predictable surprises occur when an organization leadership ignores or fails to understand clear evidence that a potentially devastating problem to occur. There are different sort of failures and not all failures are created equally. Bazerman and Watkins( 2004) identify four ways in which organizations fail to learn from failures that occur around them: Scanning Failures: failure to pay close attention to potential problems both inside and outside the organization; this failure could be due to arrogance, a lack of resources, or simple inattentions? Intergration failures: failure to understand how pieces of potentially complicated information fit together to provide lessons of how to avoid crises. 3. Incentive Failures: failure to provide sufficient rewards to people who report problems and take actions to avoid possible crises 4. Learning Failures: failure to draw important lessons from crises and preserve their memory in the organization Organizations who face these failures potentially could damage their organizational integrity. Eg Mitroff and Anagnos 2001, Managing Crises before they happen: what every manager needs to know about crisis management. 1982, Johnson and Johnson could respond to an external crisis with their product being linked to cyanide poisoning and thus the company responded quickly by pulling their stock of capsules from the shelves and having great PR work. J and J knew how to handle their PR well and their product managed to get back to the top seller. J and J however became a victim of its previous succ ess and had not done well with ‘Predictable surprises’ where crises occurred within the company. J and J had failed to do proper product scanning and had been a different sort of failure. failure of a different type? Failure of Success. Problem 1 and 4. Learning from failure: Sitkin 1996- Mittelstaedt (2005) – Failure is an essential part of learning for many organizations. Failures, should not be hidden or avoided. Making mistakes is essential to success, a company which appears to be free from disruption may be operating unrealistically and from a uniformed perspective. â€Å"learning to identify mistakes analytically and timely is the difference between failure and success. † Too often employees and managers are unwilling to admit small failures for fear of reprisal. The unwillingness to recognize and embrace failure is also a failure to recognize and respond to potential crises. The longer these small crises build up the higher likelihood it could escalate into a major crisis. In successful organizations, failure creates recognition of risk and a motivation for change that would not exist otherwise. Describes this recognition as a â€Å"learning readiness† without failure, very difficult to produce in most organizations. Sitkin cautions that not all failures are equally effective in fostering good risk management. Organizations learn best from intelligent failures, which have these characteristics, result from planned actions, uncertain outcomes, modest in scale, and take place in domains that are familiar enough to permit effective learning. Organizations need to recognize risks by accepting and acting on failures. Learn the best when failure results from competent actions, not major crises. Still within the comfort zone and employees are eager and experienced enough to respond. These opportunities arise: Vicarious Learning – learning that occurs as a function of observing, retaining and replicating behavior observed in others. Organizations need not fail as an entity in order to learn. Successful organizations engage in vicarious learning in order to recognize risk, organizational leaders observe the failures or crises experienced by similar organizations and take action to avoid making the same mistakes. Examples of Vicarious Learning- Give!!! Organizational memory: Without learning from their own and other’s mistakes organizations stagnate and fail to respond to potential threats in an ever-changing world. Learning has no use if the knowledge is not retained. An example of failure in organizational memory is the Union carbide plant in Bhopal, India in 1984. Early in December morning, the plant leaked a deadly cloud of gas that settled over part of the sleeping city of a million residents. Within two hours 2000 of them were dead with thousands left injured? Part of the reason for the disaster was a loss in organizational memory. The plant had been slated for closure and many experienced staff had been transferred out, leaving minimal crew with little work experience, with the training for remaining crew at a minimum. The crisis was traced to staff reductions and oversight failures. Much of the blame for the tragedy rests with a rapid reduction in experienced staff that took with them a large share of organizational memory. Organizational memory comprises of, a) Acquiring knowledge, done by recognizing failures within the organization and by observing failures of similar organizations. b) Distributing knowledge is the key to organizational memory. Highly experienced employees will leave the organization and these people should be given an opportunity to share their knowledge around or those departing personnel will go along with their experience. ) Acting upon knowledge, is important for organizational memory to serve an organization. New employees need to learn from those departing ones.! New employees cannot do things their own way or else it will lead to repeat failures†¦.!!!! Employees have many opportunities to discard the hard-earned knowledge. Because organizational memory depends on exchanging information from one person to another perception change , mistreatment and stubbornness to learn can disrupt preserving organizational memory. Organizations need to learn and build from previous experiences. Unlearning: Effective organizational learning depends on an organizations ability to unlearn practices and policies that have become outdated by environmental changes. Example of Unlearning 1. Expanding Options: When organizations are unwilling to forego routine procedures during crisis or potential crisis situations, they lose the capacity to react to unique circumstances. Unlearning enables the organization to expand its options. 2. Contracting Options: In some cases, organizations may respond to a crisis with a strategy that has worked well in the past. In the current situation, however, the strategy from the past may actually make matters worse. In such cases, organizations must be willing to reject some strategies in favor of others. 3. Grafting: In the previous section, we discussed the need for organizations to hand down existing knowledge to new employees. If the socialization of new employees is so intense that they cannot bring new knowledge to the organization, however, the organization is doing itself a disservice. Although organizational memory is essential, some degree of unlearning Opportunity 1: Organizations should treat failure as an opportunity to recognize a potential crisis or to prevent a similar crisis in the future. Opportunity 2: Organizations can avoid crises by learning from the failures and crises of other organizations. Opportunity 3: Organizational training and planning should emphasize the preservation of previous learning in order to make organizational memory a priority. Opportunity 4: Organizations must be willing to unlearn outdated or ineffective procedures if they are to learn better crisis management strategies Bazerman, M. H. & Watkins, M. D. (2004). Predictable surprises: The disasters you should have seen coming and how to prevent them. Boston: Harvard Business School Press. Huber, G. P. (1996). Organizational learning: The contributing processes and the literatures. In M. D. Cohen & L. S. Sproull (Eds. ), Organizational learning (pp. 124-162). Thousand Oaks, CA: Sage. Mitroff, I. I. , & Anagnos, G. (2001). Managing crises before they happen: What every executive and manager needs to know about crisis management. New York: AMACOM. Mittelstaedt, R. E. (2005). Will your next mistake be fatal? Avoiding the chain of mistakes that can destroy. Upper Saddle River, NJ: Wharton. Sitkin, S. B. (1996). Learning through failure: The strategy of small losses. In M. D. Cohen & L. S. Sproull (Eds. ), Organizational learning (pp. 541-578). Thousand Oaks, CA: Sage. Tompkins, P. K. (2005). Apollo, Challenger, Columbia: The decline of the space program. Los Angeles: Roxbury. Organizations who face these failures potentially could damage their organizational integrity. It is important for an organization to identify these failures and act on them while the company is still in operation. Having a crisis management team to prepare, respond and recover from a crisis is paramount in ensuring that the organization recovers and continues. Preparation must happen before a crisis occurs. In times of crisis, organizations need to systematically analyze its errors, acknowledge the errors and limits of the organization as well as address the issue with a level of sophistication. When an organization continually fails to differentiate and neglect crisis and failures it could lead to detrimental problems for the organization. Failure/ Crisis Management Case Study 1 A hypothetical example would be the Deepwater Horizon oil spill (BP oil spill) that occurred in the Gulf of Mexico from 20 April 2010 to 15 July 2010. The estimated 185 million barrels of oil first made landfall in Louisiana. By June 2010, the tar balls and oil mousse had reached the shores of Mississippi, Alabama and Florida. By August, it had smeared tourist beaches, washed onto the shorelines of sleepy coastal communities, oozed into the marshy bays that fishermen have worked for generations as well as killed millions of wildlife in the process. Instead of dealing with the failure in a professional way, BP inadvertently created a PR situation synonymous with herding cats. It’s had to fight to clear up two quagmires – its oil mess and its tarnished image. (Please Refer to Appendix- New York Times, Gulf of Mexico Oil Spill) In times of crisis or failure, it is important for an organization to understand the need for a comprehensive risk analysis. Should the failure be environmentally or socially threatening, impressions demonstrations of empathy and competence are vital. BP was not prepared to successfully deal with such a catastrophe. To minimize the damage, BP should have immediately accomplished five tasks: 1. Issue regular, frequent progress reports 2. Control the pictures (even some on the Web site appeared to be canned or generic) 3. Transparency 4. Display empathy as a concerned corporate entity comprised of authentic people diligently making a good-faith effort to solve the problem Failure/ Crisis Management Case Study 2 Failure, if properly attended to and rectified is a great plus. It gives the much needed confidence to the public, client or stakeholders in the product and organization. Furthermore, with proper management, the organization will be able to assess its capacity to deal with the systemic and circumstantial deficiencies leading to failures and work out a way forward. A great example would be the Johnson and Johnson Tylenol poisoning crisis in 1982. When the Tylenol scare occurred, Johnson and Johnson responded immediately and positively, taking the analgesic off the shelves, keeping the public apprised of the investigation, and their instituting new tamper-proof seals to make their product more secure. An organization needs to be upfront and out front with their communication about the situation and what they are doing to correct it and protect the public. The organization has to keep the public’s best interests at heart when communicating the issue effectively, clearly, accurately, and promptly upon discovering the problem. Having a crisis management plan in place before a crisis occurs puts an organization in a solid position to handle it more effectively and responsibly. Detecting failure, analyising failure, promoting experiementation? Deviance Inattention Lack of Ability Process Inadequacy Task Challenge Process Complexity Uncertainty Hypothesis Testing Exploratory Testing Blameworthy Praiseworthy Violating a prescribed practice or process by choice Straying away from specifications Does not possess the necessary qualifications or skills for the task Adhering to a prescribed but faulty or incomplete task Task too difficult to be executed reliably each time Process comprises of element breaks when encountering interactions Lack of clarity causes actions which seem reasonable but produces undesired results An experiment to prove and idea, fails Experiment to increase knowledge and understand possibilities leads to an unwanted result