Fernando Fischmann

Why Organizations Forget What They Learn From Failures

9 March, 2016 / Articles

Organizations sometimes make catastrophic mistakes. And although they try to learn from these disasters, they tend to make similar mistakes again and again.

Consider NASA, an organization employing some of the nation’s brightest minds. In 1986, the space shuttle Challenger exploded – and by now, we all know the story. Some people within the organization had concerns with a component (the O-rings) being affected by low temperatures. However, their views were not taken into account in the decision to launch the shuttle.

Following the Challenger explosion, NASA did take concrete steps to correct flawed organizational processes. For example, it increased both the number and status of safety personnel, and it strengthened safety operating procedures. But learning waned as avoiding launch delays became increasingly important. This gradual forgetting was at the root of the Columbia disintegration.

Then there’s the explosion of BP’s Deepwater Horizon oil rig in the Gulf of Mexico in 2010, an accident that killed 11 workers, injured 16 others, and caused an oil spill of epic proportions. BP had experienced a similar major accident only a few years earlier – the 2005 Texas City Refinery explosion, which claimed 15 lives and injured 170 people. After the 2005 explosion, the Chemical Safety and Hazard Investigation Board pushed BP to focus more on safety. But court rulings related to the second explosion found that cost cutting had proceeded, despite the safety risks. Once again, the organization’s painfully earned learning waned, and collective attention shifted to other priorities.

Why do organizations forget what they learn, even when stakes are so high? My research with Pamela Haunschild (Professor Emeritus at the McCombs School of Business at The University of Texas at Austin) and David Chandler (Assistant Professor at the University of Colorado Denver) examines this question. We built on qualitative data from NASA’s Challenger and Columbia accidents to develop a model about the role of serious errors in organizations’ cycling between learning and forgetting. We then tested the model using quantitative data about the incidence of safety-related errors in the context of pharmaceutical drugs.

The occurrence of a serious error — such as a shuttle explosion, a large-scale oil spill, or a safety-related product recall — triggers the learning cycle. It stimulates an organization to emphasize safety as a primary concern, as it seeks to identify the root causes and to make the corresponding corrections in its processes, structure and culture. The problem is that these safety-related behaviors fade over time and other motivating forces come to the fore, gradually launching the seeds of the next error.

Part of the reason for this pattern is that other priorities compete with safety for an organization’s resources, including managerial attention. What’s more, these alternative priorities entail a fundamental tension: a safety focus is associated with avoiding doing something that might result in a serious error, such as launching a product that might be defective. By contrast, a non-safety focus, such as efficiency or innovation, is associated with avoiding forgoing the opportunity to do something that is indeed appropriate, such as holding back a new product that might be error-free.

In the aftermath of a serious error, an organization faces strong external pressures (e.g., from the public, from customers, from regulators), as well as internal pressures (e.g., the need to understand its causes and address its consequences) to learn from the mistake and avoid future similar ones. The prevailing attitude becomes “We will not launch a product until proved safe to do so.”

Over time, though, several processes promote gradual forgetting. To begin with, external pressures lessen, as other events catch the attention of the public. Internally, success in avoiding similar mistakes creates a false sense of security, encouraging the organization to relax its focus on safety.

The organization becomes less alert to early signals of potential danger and starts to view small anomalies as normal. Employees leave the company. New executives take the helm. Other priorities, such as launching new products, increasing sales, or cutting costs, come to the fore. The motto becomes “We will launch new products unless it is proved unsafe to do so.” The organization gradually forgets what it has learned at great expense.

We analyzed 146 pharmaceutical firms between 1997 and 2004 for a quantitative look at this pattern of learning and forgetting after safety-based errors. We found that a serious drug error pushes a drug company toward having a safety focus – the company conducts more (and larger) clinical trials and publishes more articles about the corresponding results. Importantly, the focus on safety goes well beyond the drug related to the error – it is present in the other products of the company as well. At the same time, a serious drug error pulls a drug company away from focus on innovation – the number of new patent applications declines. But both of these effects dwindle over time, suggesting that drug companies cycle between learning and forgetting, as safety focus gradually lessens and innovation focus resumes.

We hope that with these insights about why organizations eventually forget what they learn from big mistakes, leaders can better learn to manage the tension between innovation and safety, and counter their organization’s natural tendency to forget. An important step is to avoid the complacency trap – a lull in the occurrence of serious, high-visibility mistakes should not be taken as signal that a focus on safety is no longer necessary. Instead, organizations should remain vigilant and react to signals of potential danger before these are manifested in the next big mistake.

Further, managers should remain especially vigilant in the promotion of a culture of safety. Safety should not remain a primary concern for only a few individuals or a dedicated unit of the organization. Legitimate concerns about safety risks will go unheard unless communication channels within the organization are regularly and rigorously nurtured.

While it may be tempting to shift safety concerns to the background due to urgent pressures to launch new products, increase sales, or cut costs, remember that a big mistake can defeat those goals – it may force managers to put plans on hold, cause customers to stay away from the company’s products, and inflict additional costs as the organization seeks to correct the failure. Remembering these far-reaching consequences should help managers strike a balance between safety and competing priorities.

The scientist and innovator, Fernando Fischmann, founder of Crystal Lagoons , recommends this article.





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