Past experience can offer highly valuable insight into future outcomes — but only when leveraged effectively. In this piece, the authors discuss three common traps that leaders fall into when attempting to learn from failures: They invest in strategies that don’t help, they overlook strategies that would help, and they don’t notice when seemingly good outcomes are driven by bad processes. To avoid these pitfalls, the authors suggest that decision-makers should analyze successes and failures in tandem, and work to identify the traits and processes that actually differentiate the two.
Whether you’re running a small startup or a Fortune 500 corporation, the ability and willingness to learn from failure is paramount for future success. And yet, focusing too much on understanding past failures can unexpectedly reinforce mistakes, creating the illusion of learning rather than enabling real improvement. So what does it take to glean accurate, actionable insight from a post-mortem?
Building on our prior work exploring the hurdles associated with learning from experience, we identified three common traps that leaders fall into when analyzing failures. Below, we explore these challenges, and offer strategies to help decision-makers steer clear of these pitfalls and move forward with confidence.
Trap 1: We invest in strategies that don’t help
When something goes wrong, it’s only natural to focus on analyzing the failure in an attempt to understand and address its root causes. However, if we only look for patterns among failures, we may identify traits that are common not only to failures, but also to successes, leading us to implement mitigation strategies that don’t actually help.
For example, imagine you’re a sales manager looking to improve the performance of your team. Most of your salespeople consistently hit their quotas, but 25% don’t. To explore why that 25% of your team is struggling, you do a deep dive into their workflows, and you notice that the majority of these employees don’t use the integrated note-taking tool in your contact management system. You conclude that failure to use this tool is a root cause of the performance issue, and so you invest in strategies such as technical training and monitoring procedures to encourage employees to use the system appropriately.
Sounds reasonable enough. But what if it turns out that the majority of the 75% of employees who have been successfully hitting their quotas also aren’t using the note-taking tool? Without analyzing the successes along with the failures, you might not realize that this is a trait that’s common to both — and if that’s the case, then the costly interventions would likely not solve the problem.
Trap 2: We overlook strategies that would help
Beyond giving the illusion of a data-driven understanding of a failure’s root causes, focusing exclusively on analyzing negative outcomes can also cause us to miss strategies that actually would help improve future performance. This can happen in two ways: In some cases, there may be traits common to successes that are absent in failures, while in other cases, traits present in just some failures may be absent in most successes. In both situations, only analyzing commonalities among failures would prevent managers from identifying important discrepancies between failures and successes, leading them to overlook improvements that might actually boost the chances of success.
Returning to our prior example, perhaps an analysis of the successful salespeople would reveal that they all began preparing for important sales calls a week in advance, while the unsuccessful salespeople left it to the last minute. Early preparation may not be a part of the standard sales process, and so an analysis of the under-performers alone likely wouldn’t identify their preparation routines as an important issue. But a comparison between the successful and unsuccessful cases would suggest that investment in time management tools or planning meetings may be impactful.
Similarly, it may be the case that some poor performers actively participate in monthly review meetings and some don’t, but that almost all high performers do. If such behavior isn’t required, this too might go unnoticed, especially since “lack of active participation” isn’t a trait that’s shared by most under-performers. But a comparative analysis of the ways in which the effective salespeople go the extra mile would identify that a dynamic exchange of information during review meetings tends to be associated with a higher rate of success, and so strategies that encourage active participation may help at least some improve their performance.
Trap 3: We don’t notice when seemingly good outcomes are driven by bad processes
Finally, arguably the most dangerous trap we can fall into when we learn predominantly from failures is that we won’t notice the ways in which our current, seemingly effective processes may in fact increase the risk of future failures. This is because good outcomes aren’t necessarily born from good processes: They may be predicated on excessive risks or unethical practices that produce short-term gains at a long-term cost. One need only look to well-publicized examples of apparent successes such as Enron or Theranos to see the damage that hidden problematic processes can wreak. If we focus only on reducing failures without understanding what’s really driving our successes, we’re likely to eventually discover that at least some of our achievements were actually disasters in disguise.
If we return once again to our sales team, it might be the case, for instance, that the salespeople who seem most successful are actually inflating their numbers or sabotaging their peers. An analysis of low performers alone would fail to discover these issues, and it could take a long time for the fallout from these deceptive, problematic practices to have enough of a negative impact on the business for anyone to notice. As such, management would benefit by taking a look not just at why the unsuccessful employees seem to be struggling, but also at why the successful ones seem to be succeeding — and taking steps to address the bad processes that underpin either outcome.
Effective decision-makers learn from both failures and successes
To be sure, the solution is certainly not to ignore failures. Attempting to learn from successes alone comes with similar pitfalls. Instead, to avoid investing in strategies that won’t really make a difference and to identify the traits and processes that actually differentiate good outcomes from bad ones, managers should analyze the factors driving both.
This starts with explicitly defining what failure and success mean in a given context, with respect to both visible outcomes and the sometimes-hidden processes that drive those outcomes. Then, based on these working definitions, managers can identify small yet representative samples of failures and successes, and look for differences between the two — not just patterns within one group or the other. Finally, this analysis can be repeated periodically to help decision-makers understand how these differences evolve over time and adapt their strategies accordingly.
Beyond its greater reliability, this approach has several additional benefits: From an investment standpoint, rather than testing a large number of strategies that target various traits shared by failures, it’s more efficient to test strategies that primarily target differences between successes and failures. In addition, an awareness of commonalities between success and failure can inform your level of confidence that a given intervention will be effective: The more traits they share, the less likely it is that a simple strategy will achieve the desired results. Moreover, if everyone knows that the factors driving both successes and failures are being periodically re-analyzed, decision-makers will be less likely to make risky or unethical choices for short-term gain, ultimately reducing the chances of future disaster.
Past experience can offer highly valuable insight into future outcomes — but only when leveraged effectively. In our book The Myth of Experience, we expand on the ideas above to explore various situations in which intuitive, widespread approaches to learning from experience unexpectedly reinforce biases, rather than aiding decision-making. Ultimately, the best teacher is neither failure nor success in isolation: Wisdom comes from the thoughtful consideration of both in tandem.
