ADMS 4940 Technology Management

Week 11

Trial and error

Measuring failure/success?

Failure

Success

50%

75%

Competitor Average Historical Average (last year)

Any measure of aspirations: Return on Assets, Return on Innovation, Number of projects on time, etc.

What happens when a company fails / succeeds?

Failure: Problemistic search: search for solutions near the location of the problem Anomaly? Do nothing Adjust aspirations down Become risk-seeking
Success: Adjust aspirations up Slack search: search for new ways of operating Become conservatively more risk-seeking

Denrell
1 1 2 2 3 3 4 5 4 6 5 6

25% more each period

Always appears better; lapped

25%? Luck ie. genetics Risk-taking steroids at period 0 Noisy metrics Appearance of high performers: Attracts resources May slowly become less capable over time

Successful learning of the successful?

Failures and Successful: High risk If only surviving firms: conclude high risk success
Firms with bad strategy can do exceedingly well

Bad strategy, more risky

Good strategy, Less risky

Better performance

Success signals persistence of chance Incompetence (not knowing) Bad judgment (misguided) Little can learned

Deliberate mistakes

Why do we do avoid doing things we know are wrong?

Try something you know is wrong - Missing information - Failure is avoided, so greater returns to failure information - Understand environment

Try?

When? Potential gain > cost of the mistake Repeatedly decisions Environment changed Complex problem and solution Experience is limited How? Identify assumptions Select assumptions for testing Create strategies for making mistakes Execute the mistake Learn from the process

Failed technologies
+ =

Source: http://science.discovery.com/brink/top-ten/accidental-inventions/inventions-10.html

Wrap up Final exam on Dec 5th 2:30 - 5:30pm ROOM ACW 307