Presentation on theme: "Warm-up Have you experienced failures in your life?"— Presentation transcript:
Warm-up Have you experienced failures in your life?
Warm-up I have, I used to be a pilot in the air force..
Warm-up How many of you have experienced failures in your life?
Warm-up How many of you have experienced failures in your life? What was it? Was it significant ? Why did it happen?
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
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
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
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
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
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
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
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
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”