Business-School Research: Failure to Launch

From The Economist

It can be surprisingly hard to tell when an organisation has failed. Businesses have products that never quite got off the ground, investments with ugly returns and once-promising managers languishing ineffectively for years. But when outside observers, including well-intentioned researchers, come calling, companies are not in a hurry to talk about it.

Peter Madsen, of Brigham Young University in Utah, and Vinit Desai, of the University of Colorado at Denver, ran into this problem while trying to investigate how organisations learn from both successful and failed ventures, and how that knowledge is retained over time. Their solution was to examine firms, private and public, that launch rockets designed to place satellites into orbit around the Earth. As the authors explain in a recently-published paper in the Academy of Management Journal, when a satellite fails it is easily identifiable (either the rocket makes into space, or it doesn’t); costly; and “often very loud”.

Moreover, the pair were able to take a large sample: all orbital launch attempts between October 1957 (the deployment of the first Sputnik) and March 2004. They wanted to see how, for any given company, its successes or failures, and those of its rivals, influenced its ability to get subsequent rockets into space. The authors also wanted to measure whether success depended on how long had passed since the previous launch. This, they hoped, would measure of whether the company was retaining the lessons that needed to be learned.

To Read More…