1. Warm-up  Have you experienced failures in your life?

2. Warm-up  I have, I used to be a pilot in the air force..

3. Warm-up  How many of you have experienced failures in your life?

4. Warm-up  How many of you have experienced failures in your life?  What was it?  Was it significant ?  Why did it happen?

5. Learning from Failures: Why It May Not Happen by Philippe Baumard & William Starbuck Jonni Junkkari, Johanna Saarinen, Henri Ikonen 7th October 2014 Presentation for Strategic Management Accounting

6. Agenda 1. Theoretical framework – Johanna 2. Case and methodology – Johanna 3. Findings – Henri 4. Academic Critique – Henri 5. Practitioner Critique – Jonni 6. Conclusion – Jonni 7. Questions (anytime) – the Audience & Professor

7. Theoretical framework  Individual organizations’ learning (Cyert & March)  Changing goals and forecasts to reflect experience and perceptions, adapting to circumstances  analyzing situations and changing behavioral voluntarily  Learning from success  Overconfidence of future success  Often leads to failures in future  Learning from failures  Firms learn mainly from problems  Behavioral innovation  Large failures difficult to handle

8. Case and methodology  Case Eurocom (EC)  European telecommunications firm  Grown global  Data from over two decades  Executive’s interviews, archives  Author worked in EC  14 failed ventures analyzed  Not due inexperience  Hand-picked cases  7 small ventures  7 large ventures  e.g. attempted growth into new domain, product launch, over-estimated demand

9. Findings  Small ventures  Blamed:  Deviations from company policies and core beliefs  Experimental nature  Reinforced or changed rules and core beliefs  Large ventures  Blamed:  Exogenous factors  Managers’ weak control over the project  Happened over long time → failures are easy to hide  Further findings  Reporting lacked “out of the box” issues → criticizing ideologies a taboo  Early problems not taken seriously  “Failure externalization” → Blaming outside sources relieved manager responsibility

10. Academic Critique  Limited generalizability  Culture: The company is French, “political decision making”  Ventures: Chance plays a huge role → success and failure might be exogenous after all  Dotcom bubble/Telecom: Exceptional circumstances  Reliability  Personal bias: One of the authors is company manager  Reliability of data: No recording of interviews → personal interpretation

11. Practitioner Critique 1  Managers don't learn from success, small failures or big failures  What about:  confidence and morale vs humility to learn  possible and beneficial to assign fault? “One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision. ― Bertrand Russell “Success is stumbling from failure to failure with no loss of enthusiasm.” ― Winston Churchill

12. Practitioner Critique 2  Managers don't learn from success, small failures or big failures  So what?  Authors’ suggestions: 1. Link outcomes and reward. 2. Don’t label ventures as experiments 3. Be suspicious of unique situation or external reasons 4. Don’t forget people are selfish

13. Conclusion http://opinionator.blogs.nytimes.com/2010/06/20/the-anosognosics-dilemma-1/?_php=true&_type=blogs&_r=0 http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect It pays off to learn! “ Wheeler had walked into two Pittsburgh banks and attempted to rob them in broad daylight. What made the case peculiar is that he made no visible attempt at disguise. The surveillance tapes were key to his arrest. There he is with a gun, standing in front of a teller demanding money. Yet, when arrested, Wheeler was completely disbelieving. “But I wore the juice,” he said. Apparently, he was under the deeply misguided impression that rubbing one’s face with lemon juice rendered it invisible to video cameras”

14. Questions ??