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Visiting Scholar to Business Leaders: Consider "Learning from Near
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Research
Visiting Scholar to Business Leaders:
Consider "Learning from Near Misses"
Organizations learn from experience, but sometimes experience is a bad teacher. Visiting Scholar Claus Rerup of Denmark examines lessons from ferry disasters and habitual entrepreneurs. The results may make you rethink how you approach learning in your own organization.
From 1960 to 1987, the Northern European ferry industry had an unblemished record of 27 years of shuttling millions of passengers annually across the Baltic and Scandinavian countries and England. This unbroken string of successes suddenly came to an end with two catastrophic failures in 1987 and 1994, when 1,040 people lost their lives in two major ferry accidents. As Claus Rerup, a Visiting Scholar and Research Fellow at Wharton Entrepreneurial Programs, began to examine the wreckage of these disasters, he found that the warning signs might have been seen in a number of near-disasters that preceded the major accidents. Why didn’t anyone pay attention the fatal accidents of the Herald of Free Enterprise in 1987 and the capsizing of the Estonia in the Baltic Sea that killed 852 people in 1994?
Examining thousands of pages of source data and personal interviews, Rerup explored how the ferry companies and regulators responded to a series of ten events — two successful journeys, six near-failures and the two major disasters. He found that the major failures trigger intense organizational learning as industry leaders and regulators sought to understand the problems that caused the accidents and remedy them. But the near-failures are often ignored.
Before the two major accidents, there had been a series of similar problems — related to the bow-doors of the roll on-roll off ferries. In these "ro-ro" ferries, cars roll on the ferry from one end and drive through to roll off the other side. This is a very quick and efficient way to load and unload passengers, but in the catastrophic failures the bow-doors failed and water flooded the car deck (which extends from the bow to stern of the ships). In five of the six near-failures Rerup studied, there were failures of the bow-door locking devices.
The ferry lines did not appear to learn from these near misses. For example, the near failure of the bow door on a sister ship of the Estonia in January 1993 was dismissed as irrelevant after an internal investigation by the ferry line. The report noted that it "was not considered a serious incident." The industry’s many years of success made it difficult for it to recognize the near-failures as warning signs and the industry also had no system for collecting and sharing information about these near-failures. Rerup notes that "a near-failure will only have an alerting effect if it is interpreted, judged and enacted as a warning sign."
Learning from the Gray Areas
Rerup cautions that business leaders, as well as researchers, tend to classify incidents as "successes" or "failures." They learn from the failures (often overlearning and overreacting), but they underlearn from their successes (which generally only to increase their confidence in their current methods). What is rare, however, is for organizations to focus on the gray area of near-failures. These "events that didn’t happen," usually dismissed as irrelevant, can offer great opportunities for learning that are not capitalized on.
How can managers learn from these small incidents without being overwhelmed by minutia? Rerup says to focus on the critical factors. "You can’t pay attention to everything, so you have to see what are the ‘bow-doors’ of your company," he said. "What are the few things that you should pay attention to?"
Rerup is working on a new study focusing on the learning patterns of habitual entrepreneurs. His hypothesis is that entrepreneurs may actually be less successful in their second ventures because they tend to repeat what they have done in the past. "There is a propensity for entrepreneurs to replicate what they did the first time, but it may not be relevant to what they are doing the next time around," he said.
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