To Be More Successful, Study Failures

As the 1940’s air war in Europe intensified, the Allies faced a major problem. Their bombers would leave England by the hundreds, but too many of them didn’t return, brought down by extremely heavy enemy flak. The Allies desperately needed to beef up the armor on their planes to provide protection, but armoring an entire plane, or even an entire cockpit, involved far too much weight. How could they choose the few especially vulnerable places to be armored?

A couple of clever engineers solved this problem with a counter-intuitive analysis. After comprehensively logging the locations of flak damage inflicted around the fuselages, engines, and cockpits of planes returning from hundreds of bombing runs, they calculated which particular locations had sustained an unusually low number of hits, and began armoring those areas for future missions.

In retrospect, their reasoning should be obvious: Flak bursts explode randomly all around, so the only reason returning planes have particular areas with less damage must be that the planes sustaining damage in those areas were less likely to return.

This story holds an important lesson for us when it comes to learning from the business successes and failures of the past, whether we’re talking about case studies and best practices or the best-selling books written by big-name business gurus. We cannot isolate the secret to any business’s success unless we first know why others just like it were not successful.

But nearly every classic best-selling business book, from Tom Peters’ In Search of Excellence to Jim Collins’ Good to Great, relies on success stories to draw out important lessons for others. Even though the authors clearly have the best of intentions, such books suffer from what academics call an “undersampling of failure.” While anecdotal evidence makes for more interesting reading than statistics, choosing the right anecdotes does matter.

To understand the perils of drawing lessons only from studying successes, suppose there is a particular business strategy that is highly risky, and across all companies that try it, 10% are very successful, but 90% fail outright. Now what if the successes are documented and studied later, while the failures are not publicized and simply drop from sight? Do you see the problem with this?

To be able to say with any confidence that a business is likely to be successful with a strategy based on past experience, you have to know not just how many succeeded by following this strategy in the past, but how many followed the strategy and failed. If the Allies had only patched the places where they saw the most flak damage on their returning planes, they would have done little to improve their chances.

OK Don, you’re thinking, but you’re a business author too, right? Yes indeed, and thank you for noticing! But one clear theme running through nearly all of Martha’s and my books is that we include failure stories. Failures allow us to suggest better strategies and to underscore difficulties. In our 1997 book Enterprise One to One, for instance, we devoted an entire chapter to dissecting the reasons behind MCI’s failed customer loyalty strategy (mostly, bad organizational alignment).

And if you really want to learn from the failures of others, then you may find our most recent book helpful, Extreme Trust: Honesty as a Competitive Advantage. In it you can read about various flawed programs and strategies at such firms as AOL, Netflix, Nestle, Staples, and even Facebook, not to mention some of the flaws that plague entire business models, from credit cards and retail banking to mobile phone operators and airlines. For each problem documented, however, we also suggest a solution, and while we can never actually “prove” that our solution would have led to success (that would be impossible for anyone to do), at least our logic allows you to compare successes with failures, in order to patch the right places on your own planes before your next mission!