Why Leaders Don’t Learn from Success

I was once fascinated by an article in the Harvard Business Review entitled ‘Why Leaders Don’t Learn from Success’.  To illustrate its point the article focussed on the case of the Bologna-based Ducati Grand Prix motorcycle team that entered the MotoGP for the first time in 2003.

Being a newcomer, it approached 2003 as ‘a learning year’ – a time to acquire knowledge that would help to develop a better motorbike for future seasons. To that end the team fitted its’ bikes with sensors to capture data on the bike’s performance and riders were asked to provide feedback at the end of each race.

Then something unexpected happened. The team finished among the top three in nine races and with each success the team focused more on winning and less on learning spending very little time analysing the data it collected.

In 2004 they decided to radically redesign the team’s bikes for 2004 rather than incrementally improve the 2003 model. At the end of 2004 they ended third overall which was considered a failure due to the team’s high expectations. Only then did the team examine the team’s approach to developing bikes.

Further research in entertainment, pharmaceutical and software industries saw the same phenomenon. There were three impediments to learning:

1. Making dangerous attribution errors – any number of factors may lead to success. In racing it could be the rider’s talents and decisions, luck, weather, bad riding by competitors. It is all too common for executives to attribute success to their own insights and managerial skills and downplay random events or external factors outside their control.
2. Falling prey to the overconfidence bias – Confidence is critical in business but success can make us believe that we are better decision makers than we are. Overconfidence can infect entire organisations causing them to ignore warning signs such as dips in customer satisfaction or increases in quality issues. Overconfidence amongst bank lenders has contributed to our current downturn.
3. Failing to ask why - success is commonly interpreted as evidence not only that your existing strategy and practices work, but that you have all the knowledge and information you need. When you’re confronted with failure it’s natural to ask why disaster struck – unfortunately success does not prompt such soul searching. Toyota’s drive in pursuing higher and higher sales blinded them to the fact that quality was being compromised. This was only revealed when it was forced to recall a number of its vehicles.

Success can breed failure by hindering learning at both the individual and the organisational level. Learning from success is a great challenge and, because it’s counterintuitive, maybe an even greater challenge to learning from failure.