The Effects of Failure and Success

Academy of Management Journal
2010, Vol. 53, No. 3, 451–476.

FAILING TO LEARN? THE EFFECTS OF FAILURE AND
SUCCESS ON ORGANIZATIONAL LEARNING IN THE GLOBAL
ORBITAL LAUNCH VEHICLE INDUSTRY
PETER M. MADSEN
Brigham Young University
VINIT DESAI
University of Colorado, Denver
It is unclear whether the common finding of improved organizational performance with increasing organizational experience is driven by learning from success, learning from failure, or some combination of the two. We disaggregate these types of experience and address their relative (and interactive) effects on organizational performance in the orbital launch vehicle industry. We find that organizations learn more effectively from failures than successes, that knowledge from failure depreciates more slowly than knowledge from success, and that prior stocks of experience and the magnitude of failure influence how effectively organizations can learn from various forms of experience.

On the morning of January 16, 2003, the Columbia lifted off from John F. Kennedy Space Center in the National Aeronautics and Space Administration’s (NASA’s) 113th space shuttle launch. Eightytwo seconds into the launch, a piece of foam insulation broke free from the left bipod ramp area of the shuttle’s external fuel tank and struck the leading edge of Columbia’s left wing. As the orbiter reentered earth’s atmosphere at the conclusion of its 16-day mission, damage sustained from the foam’s impact compromised the orbiter’s thermal protection system, leading to the failure of the left wing and to the eventual disintegration of the orbiter. None of Columbia’s crew of seven survived.
Within minutes of the break-up, the NASA Mishap Investigation Team was activated; within two hours, the Columbia Accident Investigation Board
(CAIB) was established to “discover the conditions that produced this tragic outcome and to share those lessons in such a way that this nation’s space program will emerge

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