Why Movie Production Teams Do Not Learn From Failure

We love those wonderful stories about how people learn from failure. We champion the practices in certain industries (such as healthcare, the military, and commercial aviation) in which organizations improve based on systematic reflection. Yet, in a new study, Suresh Muthulingam and Kumar Rajaram find that Hollywood production teams do not seem to learn from failure effectively.  Perhaps we should not be surprised, as we have all witnessed highly publicized films, with top actors, flop spectacularly at the box office. 

Why is learning from failure difficult in the movie business?  The UCLA Anderson Review summarizes these scholars' findings: 

So why does failure appear to stick rather than teach? The researchers point to three structural barriers. First, fluid teams disband before the financial verdict arrives, so there is no collective moment of reckoning. Second, individuals tend to blame losses on external factors or other team members rather than examining their own contributions. Third, movie production lacks the kind of systematic post-failure review that exists in aviation or medicine.

The implications stretch beyond Hollywood. Any industry that relies on project-based teams assembled for a single engagement — teams that are dissolved afterward — may face similar dynamics. The research suggests that managers assembling such teams should pay close attention to the collective financial track record of members, particularly those in coordinating roles like producers who bring the group together.

These three points are right on point and consistent with my work and the research of other scholars about learning from failure.  First, stable teams have an opportunity to iterate, to reflect and learn.  Harvard's Richard Hackman once demonstrated the importance of stability, and the perils of instability, in his research on airplane cockpit crews.   Second, the fundamental attribution error is very real.  People tend to blame the person when others fail, but they blame external circumstances when failing themselves.  Finally, you learn effectively if you have a systematic process for evaluating, reflecting, and putting new techniques into practice.  The After Action Review used by the U.S. military is one such successful systematic practice, now employed by many companies, such as Royal Dutch Shell, as well as by many healthcare organizations.   

Why Might a Leader Fail in One Situation, But Succeed in Another?

Several months ago, I wrote about how many professional sports coaches do not win a championship in their first gig as a head coach.  Instead, they win in their second tenure, or even later.  I suggested that we don't see many CEOs in business get a second chance if they fail during their first tenure as a chief executive.  Today, however, I read about one leader who is thriving during her second opportunity to serve as a CEO.  Fortune's Phil Wahba wrote about Michelle Gass.  She served as CEO of Kohl's, which struggled during her time there.  Now, she's serving as chief executive at Levi's, and the company has been growing profitably with strong shareholder returns so far during her tenure.  

Why might Gass be succeeding after stumbling at Kohl's? Wahba offers two key reasons. First, he writes that the Levi's role "plays to all the strengths she's developed over her long career." In short, we have a better match between Gass' skillset and the demands of the job at Levi's than at Kohl's. Gass' background at Starbucks gave her a set of brand management skills that match well with the Levi's brand positioning work that needed to be done. Second, some chief executives may be more suited to growth scenarios than turnaround situations. The skillsets required in each situation are quite different. I certainly agree with both points, and I would add that the Kohl's situation was a tough one for any leader. Brick-and-mortar retailers of that type simply face a tough road with any leader at the helm; the economic and strategic headwinds are strong. I would also add that some leaders may learn from experience very effectively. Gass may have reflected on her first tenure and made key changes that helped her thrive in her second role.

Wahba makes one other key point though. He writes, "some might be in the right place at the right time and get too much credit for success, or, conversely, get blamed for being unable to fix an unfixable company." I think he hits the nail on the head. We often have a severe case of attribution error when it comes to chief executives. We typically give them too much credit when their companies succeed, and too much blame when their companies fail. The same goes for head coaches in sports. We need to consider all the factors that contribute to the performance of a company: the management team surrounding the CEO, the efficacy of corporate governance, the attractiveness of the industry structure, the macroeconomic conditions, and frankly, the good or bad fortune they may encounter during their tenure (to name just a few key factors).

The Downfall of Allbirds

Remember when Allbirds became the "cool" shoe that offered comfort and plenty of virtue signaling about sustainability.  People such as Larry Page and Barack Obama wore the sneakers.  The company went public in 2021, reaching a valuation at one point of more than $4 billion. Now, the Wall Street Journal reports that the company sold its intellectual property and other assets and liabilities to American Exchange Group for $39 million.   What happened to this once-popular brand, and what can we learn from its downfall?

1.  Allbirds expanded too aggressively and did not define their target market clearly as they grew.  After its initial success, the company moved into a variety of other product categories.  They developed other types of sneakers, as well as leggings, jackets, underwear, and golf shoes.  The company seemed to be trying to both offer performance shoes and comfort shoes, without the technological capabilities and advantages required to sell to more serious athletes.  Moreover, it invested heavily in retail stores, building out brick-and-mortar locations around the country.  Through it all, it became unclear who Allbirds' target market was.  Were they selling to athletes, "tech bros", or wealthy people who cared deeply about the planet?  Were they selling to millennials, or a much broader audience?  Trying to be all things to all people turned out to be a key factor in their downfall.  

2.  Allbirds' value proposition did not have sufficient breadth and depth.  The company positioned its distinctive wool sneakers as highly sustainable footwear.  The question becomes: Is sustainability sufficient enough to drive very high willingness to pay on the part of consumers?  In most successful cases, companies pair a sustainability dimension of their value proposition with other key features. For example, On running shoes offer high performance for athletes and comfort for walkers, not just eco-friendly materials and the opportunity to recycle used sneakers.  Tesla offers speed, luxury, and status, not just the opportunity to drive a car that does not use fossil fuels.  Patagonia offers very high quality, durable, and stylish outdoor wear alongside its eco-friendly credentials.  Allbirds trumpeted the shoes as comfortable, but many companies were innovating to offer incredible comfort.  I bought a pair of Allbirds; while I liked the shoes, they were not durable, and other shoes offered superior comfort.  In short, Allbirds failed to optimize other aspects of its value proposition, relying too heavily on sustainability alone to drive willingness to pay. The Wall Street Journal's Suzanne Kapner writes,

The premise that consumers would pay a premium for sustainably made products turned out to be flawed. “Sustainability comes way down the batting order behind factors like style, price and comfort,” said Neil Saunders, a managing director of research firm GlobalData. “Allbirds could have leaned in to any of these things alongside its green credentials but largely chose not to do so.”

3. Quality and durability concerns undermined the company's brand image.  The shoes didn't last long enough for many customers, or they became damaged too easily.   In the end, people were not willing to sacrifice quality for the sake of sustainability.  

4.  Finally, competitors offered a more compelling value proposition.  Let's take On, for example.  They began by offering a distinctive, high performance running shoe.  They layered on eco-friendly components to their value proposition. Then, they expanded their target market by attracting customers who found the shoes very comfortable for walking.  Elderly individuals loved them too for this reason.  They almost didn't need to market to this broader audience.  Word-of-mouth spread, and the distinctive look of the shoe attracted attention.   Yet, On didn't lose sight of the athlete.  They continue to innovate with the serious runner in mind.  In many ways, starting with the athlete and then selling to the masses is an easier transition than the one that Allbirds tried to execute (i.e., going from a casual shoe to trying to compete with performance sneakers).