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How Does Project Termination Impact Project Team Members? Rapid
Termination, “Creeping Death,” and Learning From Failure
Article in Journal of Management Studies · October 2013
DOI: 10.1111/joms.12068
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Journal of Management Studies 51:4 June 2014
doi: 10.1111/joms.12068
How Does Project Termination Impact Project Team
Members? Rapid Termination, ‘Creeping Death’, and
Learning from Failure
Dean A. Shepherd, Holger Patzelt, Trenton A. Williams
and Dennis Warnecke
Kelley School of Business, Indiana University; Technische Universität München; Kelley School of Business,
Indiana University; Technische Universität München
ABSTRACT Although extant studies have increased our understanding of the decision of when
to terminate a project and its organizational implications, they do not explore the contextual
mechanisms underlying the link between the speed at which a project is terminated and the
learning of those directly working on the project. This is surprising because perceptions of
project failure likely differ between those who own the option (i.e., the decision maker) and
those who are the option (i.e., project team members). In this multiple case study, we explored
research and development (R&D) subsidiaries within a large multinational parent organization
and generated several new insights: (1) rather than alleviate negative emotions, delayed
termination was perceived as creeping death, thwarting new career opportunities and
generating negative emotions; (2) rather than obstructing learning from project experience,
negative emotions motivated sensemaking efforts; and (3) rather than emphasizing learning
after project termination, in the context of rapid redeployment of team members after project
termination, delayed termination provided employees the time to reflect on, articulate, and
codify lessons learned. We discuss the implications of these findings.
Keywords: entrepreneurship, failure, innovation, learning, project, termination
INTRODUCTION
Central to an organization’s efforts to manage uncertainty is its ability to pursue multiple
projects, terminate poorly performing projects quickly, redeploy resources to those
projects that show promise, and learn from failure (McGrath, 1999). Failure refers to the
termination of an initiative to create value that has fallen short of its goals (Hoang and Rothaermel,
2005; McGrath, 1999; Shepherd et al., 2011; see Ucbasaran et al., 2013 for a review),
which can signal the need to revise one’s belief systems and motivates sensemaking efforts
Address for reprints: Dean A. Shepherd, Kelley School of Business, Indiana University, 1309 E. Tenth St.,
Bloomington, IN 47405, USA (shepherd@indiana.edu).
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
514
D. A. Shepherd et al.
(Chuang and Baum, 2003; Pangarkar, 2009). Although there is widespread acknowledgment of the importance of learning from failure, most organizational members find doing
so to be quite difficult (Cannon and Edmondson, 2005; Prahalad and Oosterveld, 1999).
Indeed, despite the opportunity to learn from failure, organizational members face a
number of obstacles to doing so, including individuals’ orientation towards learning
(Dweck and Leggett, 1988), cognitive biases (Kahneman et al., 1982), emotional interference (Shepherd et al., 2011) and past successes (Miller, 1994), a competitive orientation between an organization’s teams (Tjosvold et al., 2004), and an organizational
context that punishes failure (Cannon and Edmondson, 2001; Prahalad and Oosterveld,
1999).
From a cognitive perspective, the timing of a corporate entrepreneur’s decision to
terminate a project impacts organizational learning from failure: both terminating early
(based on the corporate entrepreneur’s ‘undisciplined’ termination script) and terminating late (based on the corporate entrepreneur’s innovation drift script) obstruct learning
from failure (Corbett et al., 2007). Project termination refers to the release of a project’s
resources and the reassignment of project team members to other duties (Pinto and Prescott, 1988,
1990) and is a complex ‘dynamic advocacy process that unfolds over time and is
influenced by performance judgments and performance thresholds [of the managers
involved]’ (Green et al., 2003, p. 419). Investigating termination speed’s impact on both
the generation of emotion and learning from failure addresses an important gap in the
literature because there is considerable variance in the timing of project termination.
While some projects are subject to rapid termination – namely, the decision to end the projects
was unequivocal and final, and there was little time from expecting termination to actual termination –
others appear to ‘fail’ over an extended period (Green et al., 2003). This delayed project
termination – namely, termination was anticipated and drawn out over an extended period of time –
has been found to negatively influence stockholder opinion of the project (until it is finally
terminated) (Statman and Sepe, 1989) and overall firm value (Clinebell and Clinebell,
1994).
Although these studies have increased our understanding of the cognitions underlining the timing of the decision to terminate a project and its learning implications
from the perspective of the corporate entrepreneur, we take the perspective of those
working on the project (i.e., the project team members). That is, what are the contextual mechanisms that link the speed of project termination to team members’ learning from the experience? This additional perspective is important because there are
likely important differences in reactions to project failure between those who ‘own
the option’ (i.e., those who make the decision to terminate) and those who ‘are
the option’ (i.e., those who work on the project being terminated) (McGrath et al.,
2004, p. 96). As prior research has explored real options reasoning from the perspective of top management (those who own the option) but not from the perspective of
project team members (those who are the option) and because project team members
are likely to react differently to project failure than those with the authority to make
the termination decision, we use a multiple case study approach in this article to
theorize on the topic. A multiple case study approach provides the opportunity to
generate new insights not available through deductive theorizing (Brown and
Eisenhardt, 1997).
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Creeping Death and Learning from Failure
515
The setting is research and development (R&D) subsidiaries within a large multinational parent organization. This is an attractive setting for investigating the link between
speed of project termination and learning because R&D projects are exploratory vehicles
for large established organizations that lead to highly variable outcomes, including
failure (McGrath, 1999). However, R&D projects, termination processes, and outcomes
are also typically shrouded in secrecy in this context. Work on these projects represents
intellectual property, and secrecy is a common method to protect that property. Due to
our personal network, we were granted uncommon access to information on substantial
R&D projects, including access to team members, project leaders, the top management
of the subsidiary organizations, the top management of the parent organization, and
(secret and personal) internal documents. R&D is considered a key component to the
parent organization’s overall operations, and the parent has a reputation for generating
both groundbreaking and important incremental innovations. Most R&D project team
members are engineers and scientists who view advancing knowledge and excellence in
finding engineering solutions (i.e., chemical, electrical, mechanical, or computer) as the
most significant element of their work. Despite these work values, team members need to
balance their fascination with the science of their work with the commercialization of its
output, especially when faced with project failure situations. Managers overseeing R&D
projects in this company frequently weigh decisions regarding potential and existing
project viability and must sometimes terminate projects despite sizable investments from
the parent company, customers, and public institutions. On average, in the current
setting, a project receives a US$40 million investment, involves 2000 full-time equivalent
employee months, and takes one to two years to achieve an outcome (including failed
projects).
Our study offers three primary contributions to the literature. First, research has
established that entrepreneurial endeavours (i.e., projects and businesses) are important
to those who pursue them (Shepherd, 2003; Shepherd et al., 2009b; see also Ucbasaran
et al., 2013 for a review). The failure of these entrepreneurial endeavours generates
negative emotional reactions (Cardon and McGrath, 1999; Cope, 2011; Shepherd,
2003), and negative emotions obstruct learning (Cope, 2011; Singh et al., 2007;
Ucbasaran et al., 2010). We extend these streams of research by acknowledging that
negative emotions are generated by the loss of something important (Archer, 1999).
However, for the project team members in the current study, it was not the project that
was highly important (i.e., project failure did not generate negative emotions); rather,
they found the engineering challenge of working on solving current problems critical to the
organization to be highly important. It was the loss of the opportunity to move on to the
next engineering challenge that generated negative emotions. Therefore, to understand
the generation of negative emotions from failure, we need to understand what of
importance is being lost from the team members’ perspective.
Second, rather than the failure event triggering members’ learning from their experiences (Chuang and Baum, 2003; McGrath, 2001; Prencipe and Tell, 2001; Sitkin, 1992),
we found that for these R&D engineers, the termination event ended members’ learning
from their project experiences. For the engineers in our study, the termination event led
to immediate redeployment to other projects with little to no opportunity or motivation
to allocate time and energy to reflect on the failed project. Under conditions of rapid
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
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D. A. Shepherd et al.
redeployment, it appears that the activities necessary to learn from the project experience
occur during the period of delayed termination (i.e., reflection, articulation, and codification; Zollo and Winter, 2002). Delayed termination provided a small window of time
that enabled (and negative emotions motivated) team members to reflect on, articulate,
and codify lessons learned – reflection-in-action. This finding complements studies
advocating for after action (post-failure) reviews (Cannon and Edmondson, 2005; Ellis
and Davidi, 2005; Prencipe and Tell, 2001) by highlighting that, in the context of rapid
redeployment of human resources after project termination, some termination delay
facilitates in-situ (pre-failure) learning activities. This finding also suggests that an organization can have two but not all three of the attributes advocated under real options
reasoning (Brown and Eisenhardt, 1997; McGrath, 1999; McGrath and Cardon, 1997),
that is, two (but not all) of (1) rapid termination of failing projects, (2) rapid redeployment
of human resources, and (3) learning from project failures.
Finally, from a cognitive perspective of the timing of the termination decision, Corbett
et al. (2007) found that delayed termination (‘innovation drift’) was associated with poor
learning outcomes, and from an emotion perspective, Shepherd et al. (2009b) proposed
that some (but not too much) delay in the termination decision would emotionally
prepare the decision maker for the loss such that when termination eventually occurs the
negative emotional reaction would not be as great. We complement both these studies by
finding that in the organizational context of rapid deployment of personnel following
project failure, a period of delay is necessary for project team members to learn from
their experience. Rather than acting as emotional preparation, this delay was a source of
negative emotions that motivated sensemaking. That is, to gain a deeper understanding
of the implications of a project’s termination we need to consider the ‘attractiveness’ and
the timing of the replacement project and do so from the perspectives of those whose
work is impacted by the decision. In the current article, we offer a counter-weight to the
extant research on the detrimental impact of negative emotions on learning: we find that
negative emotions generated from not being able to move on to the next engineering
challenge, coupled with having time to reflect on the project as the termination decision
approached, provided the motivation for sensemaking activities and the time to reflect on,
articulate, and codify the lessons learned. In contrast, when negative emotions are absent
(or low) because the project is terminated rapidly, team members do not have the
motivation or the time to learn from the failure experience.
Next, we offer a brief review of the literature on learning from failure and project
termination as the theoretical context for our study. We then detail our multiple case
study method and results as well as discuss the implications of our findings.
THEORETICAL CONTEXT
Research on learning from failure and research on the decision of when to terminate
failing projects has progressed along relatively independent tracks (for an exception from
the cognitive perspective of the decision maker, see Corbett et al., 2007), although both
are acknowledged as critical to understanding how innovative organizations successfully
manage uncertainty (McGrath, 1999; Meyer and Zucker, 1989; van Witteloostuijn,
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Creeping Death and Learning from Failure
517
1998). In the sub-sections that follow, we briefly review each literature to provide a
conceptual context for our study.
Learning from Failure
Before we set out on our study, we already knew from the management and entrepreneurship literature that learning from failure is an important task (McGrath, 1999;
Shepherd and Cardon, 2009; Sitkin, 1992). Failure signals a problem with one’s current
beliefs (Chuang and Baum, 2003; Sitkin, 1992) and motivates a search for solutions
(Ginsberg, 1988; McGrath, 2001; Morrison, 2002; Petroski, 1985). Indeed, because
failure events motivate and inform the acquisition of new knowledge and/or skills, it is
believed that individuals can learn more from their failures than their successes (Petroski,
1985; Popper, 1959). According to Sitkin (1992, p. 243), this learning from failure is most
likely to take place if the projects ‘(1) result from thoughtfully planned actions, (2) have
uncertain outcomes, (3) are of modest scale, (4) are executed and responded to with
alacrity, and (5) take place in domains that are familiar enough to permit effective
learning.’
However, despite acknowledging the importance of learning from failure, most
organizations and organizational members find it difficult to do so (Cannon and
Edmondson, 2005). That is, despite the importance of the information revealed by a
failure, individuals may not effectively process that information (Weick, 1990; Weick and
Sutcliffe, 2007). Although we are gaining a deeper understanding of organizational
obstacles to learning from failure (e.g., reward systems that punish (Sitkin, 1992) or even
stigmatize (Cannon and Edmondson, 2005) failure), there has been considerable
research on obstacles to learning from failure at the individual level. Prominent in this
stream of research is attribution theory, which highlights individuals’ tendency to attribute success to themselves (i.e., internal, personal) and attribute failure to others (i.e.,
external, environmental) (Wagner and Gooding, 1997). By attributing failure to external
causes, individuals are able to ‘protect’ their self-esteem, but these attributions obstruct
learning because the event is considered to be beyond their realm of influence (Reich,
1949). However, it appears that over time (i.e., since the failure), attributions can become
more internal (Frank and Gilovich, 1989), and taking more responsibility for failure
(Pronin and Ross, 2006) can remove a considerable obstacle to learning from failure.
Over and above the cognitive strategy of attributions representing an obstacle to
learning, there are often emotional obstacles to learning from failure. To the extent that
a project was important to an individual, its failure can create a negative emotional
reaction – grief (Shepherd and Cardon, 2009; Shepherd et al., 2009a, 2011). Although
these negative emotions can stimulate the search for information about the project’s
failure necessary for learning (Cyert and March, 1963; Kiesler and Sproull, 1982), they
interfere with the attention allocation and information processing necessary for an
entrepreneur to learn from his or her failure experiences (consistent with Bower, 1992;
Fredrickson, 2001). Indeed, previous research has explored the consequences negative
emotions have on R&D effectiveness. First, negative emotions ‘narrow individuals’
momentary thought-action repertoire by calling forth specific action tendencies (e.g.,
attack, flee) . . . [whereas] many positive emotions broaden individuals’ momentary
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
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D. A. Shepherd et al.
thought-action repertoires, prompting them to pursue a wider range of thoughts and
actions than is typical’ (Fredrickson and Branigan, 2005, p. 314). Therefore, R&D
groups seeking to generate novel innovations that lead to future products should seek to
limit the presence of negative emotions (Fredrickson, 1998). Second, negative emotions
have been found to adversely impact organizational members’ affective commitment,
which in turn influences members’ willingness to invest personal resources to achieving
organizational goals (Allen and Meyer, 1990; O’Reilly and Chatman, 1986; Shepherd
et al., 2011). Affective commitment to an organization can enhance organizational
performance (Gong et al., 2009) but is a principle that must be balanced with learning
from failure, which can also enhance organizational performance (McGrath, 1999).
Finally, and consistent with the previous points, negative emotions have been found to
‘narrow people’s attention, making them miss the forest for the trees’ (Fredrickson, 2001,
p. 222), interfere with creative or integrative thinking (Estrada et al., 1997; Fredrickson
and Branigan, 2005; Isen et al., 1987), and ultimately interfere with learning
(Fredrickson and Branigan, 2005; Masters et al., 1979). Over time (i.e., since project
failure), these negative emotions appear to subside (Shepherd et al., 2011), removing
obstacles to learning from failure. The key insight from the ‘learning from failure’
literature is that learning from failure is an important yet difficult task. Failure triggers
cognitive strategies and emotional reactions that obstruct individuals from learning from
their experiences. We suspected that grounding our theorizing in data on contextual
factors that actually influence project team members’ learning from failure would enable
us to generate additional insights.
Speed of Project Termination
Research on innovation management using a portfolio approach has found that developing an optimal project portfolio not only includes selecting the best projects to start
but, equally important, also includes selecting which existing projects to terminate
(Brown and Eisenhardt, 1997; Green et al., 2003; McGrath, 1999; Pinto and Prescott,
1990). During the project termination process, a key challenge for organizations is the
need to ‘bound’ failure. Existing literature, particularly from economics, has asserted that
the costs of failure are bounded by rapidly terminating poorly performing projects (i.e.,
rapid cessation of project activities) and rapidly redeploying resources to other projects
showing promise (i.e., reallocating resources, including people, to new projects or existing projects that show promise) (Ansic and Pugh, 1999; Ohlson, 1980). However, the task
of rapid termination is often difficult to accomplish because of the severity of the
consequences of termination (Staw and Ross, 1987), the increased personal responsibility
associated with the initiative (Staw et al., 1997), and the political or institutional influences that ‘force’ the project to continue (Guler, 2007). Delayed termination has been
attributed to a hope for future payout despite current low performance (including the
concept of sunk costs) (Arkes and Blumer, 1985; Dixit and Pindyck, 2008), escalation of
commitment (Brockner, 1992; Garland et al., 1990), and procrastination (Anderson,
2003; Van Eerde, 2000). For example, a study on the Long Island Lighting Company’s
development of the Shoreham Nuclear Power Plant illustrated how the company’s
management delayed the termination of the ‘failing’ project so long (more than 23 years)
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Creeping Death and Learning from Failure
519
that the costs rose from an initial estimate of $75 million to more than $5 billion (when
the project was abandoned) (Ross and Staw, 1993). The reasons for this delay included
reinforcement traps based on managers’ history of success, errors in information processing, managers’ external justification needs towards policy makers, and political
support and institutionalization of the project within the organization (Ross and Staw,
1993).
To assist in counteracting potentially costly delays in project termination, some
organizations have introduced measures that are supposed to achieve rapid terminations
more easily. For example, ongoing project performance monitoring based on milestones
and ad hoc reviews consistently evaluates projects’ commercial and technical progress
(Pinto and Prescott, 1988). These stage-gate idea-to-launch processes use various data
sources to determine project performance and judge whether a project, at its current
stage, falls below a critical performance threshold and should be terminated (Cooper,
2008). However, despite these assistance tools and measures, project termination decisions are made by managers who are subject to psychological, social, and contextual
influences that make them prone to delay termination more than objective performance
data would suggest they should (Green et al., 2003; Schmidt and Calantone, 1998).
To summarize, the project termination literature shows that there is considerable
variance in how rapidly failing projects are terminated and what are the determinants of
delayed termination. What this literature has not yet explored is the link between the
speed of the termination and the individuals involved, specifically in terms of their
learning from failure. Indeed, the data led to new insights that extended our knowledge
of the link between the speed of termination of and learning from the experience.
RESEARCH METHOD
Design
To generate new insights on the contextual factors that link the speed of project termination to team members’ learning from project failures, we use a multiple case study
approach as there is relatively little theoretical precedent for deductive study of this topic
(Eisenhardt, 1989; Yin, 2008). Using multiple cases allows for cross-case comparisons to
recognize and test emerging patterns of relationships among constructs that lead to
important theoretical insights (Eisenhardt and Graebner, 2007; Yin, 2008). Moreover,
case studies are particularly appropriate for investigating contextual questions like the
one guiding the research in this study (Yin, 2008). Our research setting is an R&Dintensive multinational corporation. The corporation operates in the energy technology
industry, manufacturing a wide range of cutting-edge products. It has sales of more than
US$20 billion and more than 50,000 employees, and it spends approximately US$1
billion on R&D. With a broad portfolio of research activities and development projects
ranging from basic research to customer-initiated developments, not all projects achieve
their targeted results (consistent with other R&D organizations); hence, several projects
have been terminated, offering an ideal base for our research.
We identified relevant cases for this study by having discussions with the chief technology officer (CTO) of the parent corporation, the technology and innovation managers
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
520
D. A. Shepherd et al.
of the parent corporation, and managers of the strategy department of the parent
corporation. These discussions revealed four subsidiary organizations that they believed
were excellent candidates for the study – these subsidiaries were actively engaged in
R&D and had experienced project failures. Specifically, the subsidiary organizations
were focused on (1) high-efficiency conventional electricity-generation products,
(2) high-efficiency conventional electricity systems, (3) fast-growing decentralized
electricity-generation products, and (4) leading technologies for electricity distribution.
(Our descriptions of the subsidiaries are deliberately broad so as not to disclose the exact
subsidiary organization.)
In the next step, we had discussions with the leaders and other members of projects
that had been terminated within the four subsidiary organizations. These discussions led
to the identification of eight failed projects, two of them nested within each subsidiary.
The CTO, subsidiary leads, and project team leaders of these failed projects then assisted
in identifying the project team members to interview based on those individuals’ role as
the ‘core team’ on the project and their extensive knowledge of the project (management,
financials, etc.), the product(s) involved, and other team members. Prior to conducting
interviews we held ‘pre-interview’ conversations with each participant to affirm their
credibility as data resource. We conducted interviews with team members and project
leaders from these failed projects as well as the head of each subsidiary to assess learning
from project failure within each subsidiary (see below). Each of these eight projects serves
as a unique case for the multiple case study approach, and data regarding these cases
were compared and contrasted to identify underlying constructs and explore similarities
and differences relevant to learning from failure. Although there were projects nested
within subsidiary organizations, there were differences in projects that could not be
simply attributed to subsidiary management practices or termination processes. In
Table I, we provide details about the selected subsidiaries and their projects as well as
about the parent corporation. Figure 1a describes how we conducted interviews at
multiple organizational levels.
Data Collection
Data for each case were collected through interviews, observations, and archival sources.
Consistent with many studies using the case study approach (e.g., Gilbert, 2006), our
primary source of data was semi-structured interviews. We assigned a hypothetical name
to each case (i.e., project) to preserve the anonymity of the organization and its R&D
activities. For each failed project, we interviewed four types of respondents at three levels
to provide a comprehensive and consistent picture of the subsidiaries across
organizational hierarchies. The first two types were team members of the failed project
– employees (i.e., lower-level team members) and the project leader. The next level included
a member of the top management of the subsidiary organization, and at the highest level, we
interviewed a top manager of the parent organization. Therefore, each case consisted of two
employee project members, the project leader, a top manager of the subsidiary organization, and a top manager of the parent firm (the one exception is project Bravo, which
had one – rather than two – employee team members). We interviewed informants at
multiple levels as this leads to more reliable emergent theory as well as richer data for
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Project type: Product enhancement
Time to terminate: ∼4–5 months
Budget: ∼US$10 million
Employees/man months: ∼15/∼500
Project type: Flagship replacement
Time to terminate: Rapid (∼1–2 days)
Reason for termination: Failure to achieve efficiency
targets
Reason for termination: Cost overrun
General: Highly efficient conventional electricity systems
Sales: >US$3 billion
Employees: >5,000
Project Charlie
General: Material redesign in new product to replace,
reduce cost of existing product
Budget: ∼US$1.25 million
Employees/man months: ∼6/∼100
Project Cobalt
General: Product redesign to improve the efficiency and
product life of an existing product.
Subsidiary C
General: Centralized conventional electricity-generation products and systems
Sales: >US$10 billion
Employees: >10,000
Project Alpha
General: Development of new product generation to
Reason for termination: External environment
enter new performance level
Budget: ∼US$30 million
Project type: Flagship project
Employees/man months: ∼70/∼1,500
Time to terminate: ∼8 months
Project Argon
General: Major upgrade of existing product generation,
Reason for termination: Cost overrun and external
corresponding to new development of major
environment
components
Budget: ∼US$140 million
Project type: Flagship replacement
Employees/man months: ∼200/∼4,000
Time to terminate: ∼6–8 months
Subsidiary A
General: A large multinational player in the energy technology industry
Sales: >US$20 billion
Employees: >50,000
R&D investment: ∼US$1.0 billion
Parent organization
Subsidiary D
Project type: Flagship, new market entry
Time to terminate: Rapid (∼1–7 days)
Reason for termination: External environment
Reason for termination: Cost overruns (due to foreign
supplier)
Project type: New product innovation
Time to terminate: Rapid (∼1 day)
General: Leading technologies for electricity distribution
Sales: >US$2 billion
Employees: >5,000
Project Delta
General: Development of new quality measurement
Reason for termination: Cost overrun/failure to define
product
scope of project
Budget: ∼US$3 million
Project type: New product innovation
Employees/man months: ∼15/∼150
Time to terminate: Rapid (∼1–7 days)
Project Dubnium
General: Developing and integrating a new,
Reason for termination: Cost overrun
replacement IT system for a foreign-located
customer
Budget: ∼US$40 million
Project type: Flagship project
Employees/man months: ∼150/∼4,500
Time to terminate: ∼6 months
Budget: ∼US$16 million
Employees/man months: ∼50/∼5,000
General: Decentralized, alternative energy products
Sales: >US$3 billion
Employees: >3,500
Project Bravo
General: Material innovation: introduction of new raw
material for serial production
Budget: ∼US$0.75 million
Employees/man months: ∼3/∼9
Project Boron
General: Development of new manufacturing location,
ramp up of local production
Subsidiary B
Table I. Details about the projects, subsidiary companies, and parent organization (while maintaining confidentiality)
Creeping Death and Learning from Failure
521
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
522
D. A. Shepherd et al.
a) Interview structure: Multi-level interviews (28 in total)
Corporate CTO
Subsidiary B Lead
Subsidiary A Lead
Subsidiary C Lead
Subsidiary D Lead
Alpha lead
Argon lead
Bravo lead
Boron lead
Charlie lead
Cobalt lead
Delta lead
Dubnium lead
Team member 1
Team member 1
Team member 1
Team member 1
Team member 1
Team member 1
Team member 1
Team member 1
Team member 2
Team member 2
Team member 2
Team member 2
Team member 2
Team member 2
Team member 2
b) Project periods and data sources
Project phase
Termination phase
• Interviews (INT)
• Corporate CTO, Subsidiary management,
Project manager and team members
• Field notes (FN)
• Participant questionnaires (PQ)
• Pre-calls with interviewees (PC)
• Follow-up discussions (FD)
• Internal documents (ID):
• Strategy documents (SD)
• Performance data (PD)
• Employee magazine (EM)
• Internal emails / memos (IE)
• Company reports / press releases (CR)
• Newspaper articles (NA)
Post-project phase
• Interviews (INT)
• Corporate CTO, Subsidiary
management, Project manager and
team members
• Field notes (FN)
• Internal emails / memos (IE)
• Interviews (INT)
• Corporate CTO, Subsidiary
management, Project manager and
team members
• Field notes (FN)
• (Technical) lessons learned (LL)
• Follow-up discussions (FD)
• Company reports / press releases (CR)
• Newspaper articles (NA)
c) Project timelines and data generation
Interview Period
Alpha
Argon
Bravo
Boron
Charlie
Cobalt
Delta
Dubnium
Start: 2003
2007
2006
2008
2011
2010
2009
2012
Real-time data
Retrospective data
ID:
SD
PD
CR
ID:
ID:
SD
EM
PD
CR
ID:
SD
PD
CR
IE LL IE
NA
ID:
SD
PD
CR
NA
ID:
SD
PD
CR
PC INT PQ
FD
FN
Signs of imminent project termination
Figure 1. Data collection
case comparison (Eisenhardt, 1989; Miller et al., 1997). At the employee and project
leader level, all informants were engineers, and consistent with Brown and Eisenhardt
(1997), top managers (of subsidiaries) included a mixture of vice presidents of technology
and marketing.
We conducted two phases of interviews, progressively narrowing the focus of the
interviews to the topics that eventually led to the emerging theory in this paper. Initial
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Creeping Death and Learning from Failure
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interviews with executives were more exploratory in nature, and we asked about
organizational background, the R&D process, team structures, and potential candidates
for study. From these semi-structured interviews, we developed initial themes to guide
later interview discussions. The second round of interviews entailed 28 in-depth interviews over a four-month period at the respective office locations. Exceptions include a
phone interview with one subsidiary manager (he could not be at the interview location
due to an unexpected business event) and a phone interview with one project employee
who had been reassigned to a different continent. We taped and then transcribed all
interviews. We conducted five interviews in the native language of the interviewees, and
the rest were conducted in English. Those in the native language were transcribed in that
language and then translated into English, and the translations were verified by the
second author, who is fluent in English and the native language of the interviewees.
Interviews typically lasted about 90 minutes, but some were as long as two hours. The
transcribed interviews resulted in 853 single-spaced pages of source material.
The project team members’ interviews were structured into five sections: (1) the nature
of the project (e.g., the technology, the target market, the size and composition of the
team, and the resources invested into the project); (2) the termination event (e.g., how it
was terminated, by whom, whether it was anticipated, and if they agreed with the
decision); (3) the emotional reaction (if any) to the termination; (4) organizational processes related to project terminations (e.g., processes or routines for regulating emotions
or for generating/capturing feedback about failed projects); and (5) learning from the
experience and redeployment (e.g., had they learned from the experience, how and when
were they redeployed). We used a similar structure (but slightly different questions) for
the top managers of both the subsidiary and parent organizations. In addition to conducting interviews, while onsite, we took notes on our impressions and other observations
as we engaged in factory tours, product demonstrations, coffee breaks, lunches, and other
informal discussions around the interviews. We immediately captured detailed notes
while onsite after each interaction (e.g., factory tour, interview, ad hoc conversation, etc.)
and held discussions as a group to discuss insights and impressions. These observations,
insights, and impressions were captured as ‘field notes’ that we later used to supplement
interview transcriptions as well as confirm emerging theoretical perspectives during
analysis.
Further, we supplemented data from interviews and on-site field observations (conducted post-project termination) with archival records (including meeting agendas and
internal emails providing real-time reports before, at, and after project termination) and
additional interviews with employees from the central technology office and strategy
department (after the project termination). A large part of this information was confidential and only available within the organization – for example, project-level and
subsidiary-level performance data, including internal strategy and reporting documents,
internal memos/emails, and employee magazines. Some of the internal documents had
such high levels of secrecy that they carried ‘internal shadow numbers’, which excluded
most of the organization’s employees from identifying the projects. Although we used this
material extensively as corroborating evidence for our analysis and found that it was
largely consistent with the interview data, we were unable to report direct quotes from
this ‘highly sensitive and secret’ information in this manuscript. Some archival records
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
524
D. A. Shepherd et al.
were publicly available, such as company reports, company press releases, newspaper
articles, trade magazines, and analyst reports. Again, although we used these data in the
analysis, before quoting from these sources, we altered the content in a way that
maintained anonymity for the project and the organization but still communicated the
spirit of the information.
In sum, this complementary data entailed about 450 pages of single-spaced field notes,
internal reports, internal memos, and emails as well as press releases and newspaper
articles that complemented and validated team member statements in the interviews (i.e.,
approximately 1303 pages of single-spaced data in total). Figure 1 provides an illustration
of the multiple sources we used for data collection in this study (Figure 1a and b), which
projects’ periods were covered by which data (Figure 1b), and the point in time when
data were generated (Figure 1c). Data triangulation from different sources, the use of
structured interview guides, and multiple site visits allowed us – to some extent – to
address weaknesses inherent in interview data, such as retrospective and informant biases
arising from the missing introspection of interviewees (Miles and Huberman, 1994).
Data Analysis
We approached the cases with an open mind (with knowledge of the literature but
without preconceived propositions) to allow the data to speak to us (Suddaby, 2006).
Following Yin (2008), we coded segments of each interview transcript that we identified
as possibly being relevant to addressing the questions of context consistent with the
purpose of the study – the contextual factors that link the speed of project termination
and team members’ learning from project failures. Specifically, we classified segments
and assigned them to nodes that emerged through the classification process. After
reading and rereading the transcripts many times, we coded and recoded the data,
identifying phrases and specific terminology until the classification system covered the
material. We continued coding the transcripts in this manner until we were confident
that the identified nodes (i.e., first-order categories) and sub-nodes (i.e., second-order
categories) fully addressed the information the members provided.
Although we began to notice similarities and differences across cases, we withheld
drawing any inferences until all the coding was complete. The data were then organized
into large tables such that the rows were the nodes, the columns were the cases, and the
cells contained the corresponding segments of text. From this ‘raw’ table, we constructed
a summary table. Again, the rows were the nodes and the columns were the cases, but
this time, the cells represented assessments of the level of the specific node variable (e.g.,
whether learning was high or low) for the corresponding case. The assessments were
conducted by one of the authors and an independent rater. The two raters had an initial
percentage of agreement of 91.6 per cent with differences occurring predominantly at
the ‘margins’ of the categories. The sources of disagreement were discussed until agreement was reached. We then used a cross-case comparison to allow differences across
groups (i.e., high learners versus low learners) to emerge (Eisenhardt, 1989; Miles and
Huberman, 1994). Specifically, we oscillated between the ‘raw’ table and the ‘summary’
table, which is consistent with moving our thinking between details and abstractions. As
a result, the key constructs and their relationships began to emerge.
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Creeping Death and Learning from Failure
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FINDINGS: TIMING OF PROJECT TERMINATION AND LEARNING
FROM FAILURE EXPERIENCES
Learning from Project Experiences
Details emerged from the data linking the timing of project termination to team
members’ learning from the failure experience. In particular, we asked team members to
reflect on how much they had learned. This approach is consistent with the sensemaking
perspective on the importance of developing a plausible story in order to inform future
actions (Weick et al., 2005). Although groups (i.e., organizations and teams) can learn
(Fiol and Lyles, 1985), we focused on the outcome of individual team members’ learning
from their experiences. Interestingly, we observed variance in learning levels both across
and within subsidiaries. In Table II, we illustrate our initial grouping of cases based on
learning levels for each case (project).
In projects Alpha and Argon (subsidiary A), Cobalt (subsidiary C), and Dubnium
(subsidiary D), the team members reported learning a great deal from their experiences.
For example, the Dubnium project leader learned critical project management skills: ‘[In
the future,] I would lead this project by keeping the team on a much “shorter leash”. . . .
In such a project, I would bring people together as close as possible – in one place. . . .
Also, I [learned] that we need to exchange people between sites more often. It simply
doesn’t work if you know people only by having phone-contact – you must have a
personal relationship.’ Further, we heard from a conversation between the project
manager and team member 1 that as a result of terminated projects, the subsidiary
manager had established a ‘lessons learned’ database, and they discussed specific lessons
that had been entered into the database. In addition, internal emails and other field notes
demonstrated that team members from project Cobalt expressed hope that the important lessons from this project would be translated to others.
The high level of learning for each team member of projects Alpha, Argon, Cobalt,
and Dubnium is in contrast to the low level of learning of each team member within
projects Bravo and Boron, Charlie, and Delta. For example, all interviewees of projects
Bravo and Boron stated that they did not generate any specific learning about how to
manage R&D projects or how to improve the R&D process. Similarly, members of
project Charlie attributed little learning to having had a project fail but suggested that
learning occurred merely through generic work experience. They felt this experience had
been obtained as it would have in any other circumstance. Team member 2 of project
Charlie even went so far as to say, ‘This project was terminated due to a decision of the
top management, not due to our mistakes. We didn’t make any mistakes [to learn from];
we are not bad engineers. We should be thanked.’ Members from these projects were
also explicit in asserting that they would not be making changes following the failed
project experiences. The leader of project Boron explained, ‘I will do it [future projects]
in exactly the same way.’
The rest of this paper deals with our attempt to understand these differences in
learning from failure, which generates new insights about the relationship between speed
of project termination and learning from the experience. As the data led us to group the
R&D cases based on learning levels, we then compared and contrasted across groups to
help us understand why these groups experienced such different levels of learning. From
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D. A. Shepherd et al.
Table II. Team members’ reflection on and learning from the terminated project
Evidence of higher levels of learning
Evidence of lower levels of learning
Project/representative quotations
Level
Project/representative quotations
Level
Project Alpha
Project leader: ‘The most important thing [I learned]
about this open communication [about project
termination] is to be honest. If you do not know
something, it is best to say it right away than to
“build castles in the sky”.’
Team member 2: ‘It is not only important to understand
the headline but also the sub-items [details]. This
became very, very clear during this project. . . . You
can still find certain problems you have not thought
of before. It has been very important learning from
this.’
Project Argon
Project leader: ‘[From this experience I learned] the first
machine will always cost the most, and the more we
build, the cheaper it gets. But our cost calculations
were not able to consider this fact. This was one of
the “lessons learned” from the project – that we
have many weaknesses in the way we calculate
product costs.’
Team member 1: ‘I personally have learned a lot from
this. I’ve gained a lot of experience regarding the
technical content, as well as when to communicate
with the internal client and all involved.’
High
High
Project Bravo
Project leader: ‘I am not always that good at learning
from failure . . . I was fighting and fighting and
fighting, and [reflecting now I see that] I was blind
because I wanted the project to succeed. And that
was the failure in itself . . . I had blinders on.’
Team member 1: ‘I don’t think we should have a website
for sharing learning . . . I don’t think you should
make much of it, just discuss it with people and
move on [which is what we did].’
Low
Low
Project Cobalt
Project leader: ‘I [personally] documented lessons
learned . . . these included learning on how we do
things internally, how we deal with third party
designers and drafters . . . [it is important] to write
it down to help the team, so I can say “we did not
do this last time, so let us make sure we cover it this
time”.’
Team member 1: [Taking time to reflect] was important
and the reviews looking into issues needed to be
held. We needed to understand what the problems
were . . . We have learned a lesson . . . let us not do
that again.
Project Dubnium
Project leader: ‘I have really learned a lot [as a result of
this project] . . . I have learned that it is important
to make decisions, no matter whether it is good or
bad, because it is really important that the people
have a guiding principle during the whole project.
It is bad, when decisions are made only half-way or
one wobbles around.’
Team member 1: ‘To avoid the mistakes and to learn
from them, I started a burdensome task of
documenting errors [as the project wound down]. I
did this by creating an environment in which I
automated unit tests . . . That is, if there is an error,
you write a unit test, thus it ensures that this
functionality. I have laboriously built up this unit
test coverage here . . . This is a method by which I
learned from it [the project].’
Team member 2: ‘I personally always have points
[during and after projects] where I say, “I would
want to do them differently next time,” I think the
organization has learned something, which showed
in the next project.’
High
Low
High
High
Project Boron
Project leader: ‘[When the project was canceled] I didn’t
think that much about project Boron; I thought
about the new project . . . If I learned anything
from this project it is that the way I do things is
right.’
High
Low
High
Team member 2: ‘Concerning how I relate to our
company as an employee and how we do the
projects, I would say no [whether he changed the
way he worked on projects]. . . . So the recipe itself
for how I perform projects will not change a lot.’
Project Charlie
Team member 1: ‘From any project we gather
experience. Bad experiences are also experiences
. . . The most important thing is that we got
experience from the project. I mean technical
experience . . . For an experience, to get experience,
I can get it from any project [succeed or fail].’
Med
High
High
High
High
High
High
High
Team member 2: ‘To me, it was not a disaster. I gained
[generic] experience from this project and I
developed new models as well as new data now . . .
[to clarify], the learning was only the technical
documentation.’
Project Delta
Project leader: ‘I think, I have not learned that much . . .
I actually was surprised [taken off guard] in this
situation where the project was actually canceled.
[Now] I’ll try and be a bit more prepared (for
failure) . . . I am a bit unsure also [following the
failure].’
Team member 1: [When asked if there was a post
mortem or if he collected learnings he stated]:
‘Hmm, it is difficult for me to say. I can only tell
you about the formal side – that all work was
documented; a number of reports were prepared
. . . But these were only pure technical reports – the
results and the conclusion . . . [as a result of this
project] there was no change in our department
and I hope no change at headquarters as well.’
Team member 2: [Now] I am goal-oriented in
determining how much energy I should invest
[knowing it could lead to failure]. [Also], I would
force the project to come to defined milestones.
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Low
Low
Low
Low
Low
Low
Med
Creeping Death and Learning from Failure
527
this activity, we found that there was a clear difference in the speed with which projects
were terminated. Specifically (and as illustrated in Table III), we found that when a
project had an abrupt termination (i.e., rapid termination), members of that project team
appeared to learn less than when a project’s termination was drawn out over an extended
period of time (i.e., delayed termination). This recognition prompted us to further explore
the impact of project termination speed on team members – first in terms of emotional
impact and second (as it emerged from the data) in terms of engaging in learning
activities.
Creeping Death: Negative Emotions from a ‘Stalled Decision’, Not ‘Loss of
a Project’
In Table IV, we summarize our findings illustrating those team members’ negative
emotional reactions to, what they believed, was a delay in project termination. Members
from teams that had experienced delayed project termination appeared to experience
greater levels of negative emotion than those with rapid project termination. Team
member 1 from project Argon aptly described his experience with delayed termination
as ‘creeping death’: ‘I guess it was good that at some point there was a definitive decision.
To this day, it still causes people to shake their heads [in disbelief ] because it was such
a creeping death.’ Although not all members of projects that experienced delayed
termination used the term ‘creeping death’, they all expressed a sentiment consistent with
it. Creeping death refers to a project that is on the path to being terminated, and while this likely
outcome is known, the steps along the path to termination are small and slow, and the process is
emotionally painful. The following statements (and in Table IV) illustrate this
conceptualization of creeping death from the perspective of the people involved.
First, in creeping death, the eventual project termination was expected for quite some time. For
project Argon, team member 2 noted that the termination ‘was to be expected . . . , [and]
this discussion was in meetings for some time. . . . I had already resigned myself [to the
project’s termination].’ He noted that it was ‘perhaps two or three months from when I
saw signs the project would fall until the decision actually came.’ Project Cobalt team
member 2 further concurred, stating, ‘By the time the announcement was made, we
knew what was happening; there was no surprise there, which is probably why I do not
remember it [the actual announcement]. I do not remember the particular meeting
[where the final decision was given] simply because it was an inevitability.’ The leader
of project Alpha noted that the ‘shutdown was a kind of slow descent’. Dubnium
team member 2, exasperated by six months of creeping death, explained that ‘The
configuration itself would have likely taken weeks. Errors were still present, and it would
have been a miracle to convince any customer that it really could work!’
Second, this delayed termination generated negative emotions. The Dubnium project leader
expressed frustration with the lack of decision making and the ensuing uncertainty: ‘I
personally fell in a real motivation gap. . . . [The six-month delay in the termination
decision] hurt our development department very badly because we actually had finished
development in the spring, and we wanted to know the new direction. We knew that we
had the people here, and they could not be redeployed back to their home country
[office], which would have been a waste of time and money anyway. This was a very,
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
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D. A. Shepherd et al.
Table III. Speed of termination
Higher learning, delayed decision-making cases
Lower learning, rapid termination decision-making cases
Nature of termination decision representative quotes
Project Alpha
Project leader: ‘It was not surprising that people no longer
believed in the potential of the technology anymore. In
the end it was kind of a slow decent.’
Speed
Delayed
Delayed
Team member 1: ‘The termination was not an “event”
where we met one afternoon and then had a clear
picture of the world, but the termination was a process
[. . .] escalated at the end, when a decision had been
taken by the entire management hierarchy.’
Project Argon
Project leader example: ‘There was not a defined end, but
it was a gradual starvation . . . We had many
conversations over time [management and customers]
and then the CFO pulled the plug . . . We learned a lot
during this [time when project was dying] about
product cost management.’
Delayed
Team member 1: ‘I attended regular team meetings [for
updates], it was indicated several times the project
would stop as an R&D effort, but then we realized “oh,
it continues [as a customer development project] . . .
there was a lot of back and forth . . . as I said earlier, it’s
a creeping death . . . it [still] flames up.’
Project Cobalt
Team member 1: ‘[During testing] we realized that there
was something wrong with the performance in the
product . . . This was the first concern . . . Then there
was a whole series of reviews to talk about where the
performance was going. Was it a build issue? Were we
looking at leaks within the system? . . . This probably
went on for five months, four months within the
product for validation [before the project was
terminated].’
Team member 2: ‘[After initially finding out the product
didn’t work right] we had a period of trying to find out
what was wrong because . . . we had to acknowledge the
possibility that we aren’t always right. We spent quite a
time doing follow up work to trying get to the bottom of
it. But after some time the view was to [officially] stop
the work.’
Project Dubnium
Team member 1: ‘[Initially] we were told the project was
put on hold for three months, it was reworked and the
revised scope was discussed. At some point we asked
“what happens next.” All actions had stopped at the
time . . . At this point I personally did not know what
would come next [for the project or otherwise].’
Team member 2: ‘I think it was in August last year. At
that time, it was said the whole thing was to be put on
hold for three months . . . Later the customer said
“We’re going to take a break, we’ll stop for now, wait
three months and then we’ll decide whether we should
continue or not. During that nothing happened on our
side.’
Delayed
Delayed
Delayed
Nature of termination decision representative quotes
Project Bravo
Project leader: ‘[Bert] simply notified us by email . . . as it
turns out it would be not so fantastic concerning the
figures and at the same time we could see problems on
the horizon of automating . . . I shifted quickly onto the
project I’m working on now.’
Team member 1: ‘And [Bert] said “Well, we do not
believe in that [the project] because of these problems,
and we will terminate the project immediately . . . [I
quickly moved on as] I had already started a couple of
new things [projects].” ’
Project Boron
Project leader: ‘Our top guy . . . said: “this is our strategic
decision, we need [to stop the project]”. . . . I did not
see it [the failure] coming and it was the first time that
I’ve made a full stop. In my first email [prior to the
CEO’s decision] I wrote: we have a soft stop [delay].
Then two days later I wrote another email saying: we
have a hard stop. That was not good.’
Team member 1: ‘This was just a decision made high up
in the system . . . [Suddenly] we said “We will not put
any more money into this project [and it was all
over].” ’
Speed
Rapid
Rapid
Rapid
Rapid
Rapid
Rapid
Delayed
Delayed
Project Charlie
Project leader: ‘I had discussions with the office and with
my superior about it – if we cannot solve the technical
problem, we cannot continue with the project. So they
(quickly) decided to terminate the project.’
Rapid
Rapid
Delayed
Team member 1: ‘The project manager informed us
practically immediately [after management had come to
a decision] that the costs of the development and
product had been analyzed and that there is no reason
to continue this project [so we stopped working] . . .
additional money to complete documentation and
prepare everything for the formal closing was not even
allocated [as it just ended].’
Project Delta
Team member 1: ‘Effectively, we had programmed for
about six to nine months and had created specifications
drawings [for the product]. And then it was said from
one day to the other that the project is discontinued.
The feeling, as I said, was that this came as a great
surprise.’
Team member 2: ‘There was a day when it was suddenly
rumored: “What, the project is stopped?” Then,
perhaps an hour or two later, the project manager came
and said: “Yes, the project is stopped” . . . this was not
communicated in time, management should have told
us “listen, there are problems with time and budget” or
“we are going in the wrong direction.” Instead, top
management simply said “no, there is nothing.” ’
Rapid
Delayed
Delayed
Delayed
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Rapid
Rapid
Rapid
Creeping Death and Learning from Failure
529
Table IV. Decision to terminate the project and negative emotion
Higher learning, delayed decision-making cases
Lower learning, rapid termination decision-making cases
Project/representative quotes
NE
Project/representative quotes
NE
Project Alpha
Team member 1: ‘[After a lot of deliberation] we decided
to definitively ramp down [but not terminate] this
project . . . there were still open tests that needed to be
completed . . . so you could see that it wasn’t really shut
down . . . nevertheless, [the delay] was very hard.’
Team member 2: ‘The real point is that you suddenly
have the feeling that you would really like to press the
turn-off button and forget about the project . . . [but
instead] you have to pay attention and continue
working [on the failing project]. [This situation] was
extremely bad as I had the feeling motivation is not
only getting lost but is reversing completely.’
Project Argon
Project leader: ‘The longer it went on [the delay], the
more impossible the task was. . . . Certainly people were
frustrated . . . (when the final decision was rendered) but
emotionally I’d say it was like adding a scratch to an
already battered car.’
Team member 1: ‘Ultimately, if the decision is that a
project is not flying, then I can accept that. But I need a
clear explanation, which was lacking and the late timing
[of termination] was frustrating.’
High
High
Project Bravo
Project leader: ‘[It cost me] One night’s sleep, I think [to
get rid of any negative emotions]. That is because I
think there were no implications to my working
situation.’
Low
Low
High
Team member 1: ‘It [the negative emotion] was just a
small scratch – one or two or something like that [on a
scale from 1–10]. . . . But it was not a deep frustration.
. . . I had no problems.’
Low
High
High
Project Boron
Team member 1: ‘It was a three or four [on a scale from
1 to 10 for negative emotion] because it is just bad
when something like this happens. But then quickly, the
day after, I said: “Ok, now my task has changed, this is
what I am doing from now on.’
Team member 2: ‘We talked a lot about it the day that we
got the news [of termination], and when I left the office,
I just actually left it behind. . . . When I coped with this
– which in this case, I could do relatively quickly – I
looked ahead.’
Project Charlie
Project leader: ‘I’d rate the emotional impact [of the
project termination] maybe a three [out of ten] . . .
I mean if a project is not fulfilling the KPIs and
objectives, we need to discuss how we should continue
the project. And if the business case is so bad, it is not
good for the business to continue with the project as we
have to focus on other, better projects to start.’
Low
Low
Team member 2: ‘I was informed [of the project
termination] by my line manager . . . It was not very
difficult to explain [to me] because to me it was
absolutely clear . . . All of us had been assigned to new
projects with new tasks. There was no time to think a
lot – we did not have “free time” because we had other
tasks.’
Project Delta
Team member 1: ‘It was said from one day to the other
that the project was discontinued. [The announcement],
as I said, came as a surprise . . . It is of course a pity
that our organization lost so much money . . . but
regarded purely objectively, the issue was checked off
for me . . . It doesn’t haunt me today’ (Interviewee
laughs).
Low
Team member 2: (Interviewee laughs) ‘I remember the
[day of termination] very well. First I was not even
shocked but wondering. My reaction was: “Aha, I get to
go home now” . . . I said: “Okay, I have to think about
it,” and then I went home. [I reacted this way] because
I did not expect this news to be so abrupt. Suddenly
there was nothing. It was said it is stopped, that’s all . . .
[I was] in disbelief . . . [However there was some relief]
as I definitely felt earlier that the project was actually
too much work.’
Med
Project Cobalt
Project leader: ‘We were all worried about telling
headquarters we had slipped a little bit. After some time
our business decided to move the machinery around
in the factory-every machine was moved. This
compounded our problems . . . and meant I could not
get my project going until the machines were moved. At
this point, the penny finally dropped [in my mind] . . .
I was disappointed that they did not come up earlier
and explain “We are moving all machines, by the way
you are in big trouble!” ’
Team member 2: ‘I felt sick. Yes, I felt absolutely awful.
Yes, you know, it was just like a continuous stage fright
type of situation [during the delayed termination] . . .
Trying to put on a brave face for the family activity the
next day sort of thing but really not feeling good at all
. . . We were just down in that emotional pit
[anticipating failure during the delay].’
Project Dubnium
Project leader : ‘[While waiting for a decision] we lost half
a year, in the sense that no one knew the direction the
unit was heading . . . We had requirements, but no one
knew which ones we should implement. As a result . . .
we messed around for half a year . . . it really didn’t feel
good.’
Team member 1: ‘[The project delay] was rather
frustrating . . . of course this was frustrating in itself.’
Team member 2: ‘The project was pulled in October, but
you had to ask constantly [about the status] . . . In
October, we always thought “When will something
happen?” Details were very sparse . . . There was a
general lack of understanding, also irritation, why the
decision and direction was not really communicated,
and what the reasons were for the decision.’
High
High
High
High
High
High
High
High
Low
Low
Low
M-L
Low
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530
D. A. Shepherd et al.
very bad situation.’ Team member 2 of project Argon commented that he felt ‘frustrated’
with the speed of termination and felt ‘relief ’ when it was finally over: ‘we had an
incredibly long time with no definitive decisions, and at least this was a decision.’
Similarly, Argon team member 1 stated, ‘Ultimately, if the decision is that a project is not
flying, then I can accept that. But I need a clear explanation, which was lacking and the
late timing [of the termination] was frustrating.’ Project Dubnium team member 2
explained his frustration with what he viewed as wasted human and material resources
during the creeping death: ‘My frustration, if you will, is that the project members are
really good. A lot of people do really a very, very good job, and they are very committed.
The fact that we don’t use them sufficiently and effectively and that we waste time with
projects that drag on and ultimately we don’t pursue [is very frustrating].’
Indeed, the creeping death caused worry, not worry about the life of the project but
worry about being held back from doing other projects or activities; there was a frustration that key human resources (themselves and others) were unnecessarily ‘tied up’.
Project Alpha team member 2 explained, ‘As you can imagine, if you keep 20 of the best
engineers you have and an extended team of 70 people occupied with such a project,
they are not available for other problems and opportunities elsewhere in the organization.’ Our field notes corroborated the evidence mentioned above. For example, in
several side conversations with interviewees (after the termination of the project), they
repeatedly expressed the negative emotional impact of the delayed termination. In
addition, internal emails between individuals (from when the projects were still in
operation) confirmed both that the projects were delayed and that the delay was a
primary cause of frustration and worry.
Therefore, although we found that the final termination event (i.e., team members’
redeployment to other tasks) did not generate negative emotional responses, delayed
termination did. Specifically, what is important to team members is not so much the
project itself but the engineering challenge – the specific technical aspect of a project or job that the team
member performs and that often relates to a team member’s fascination with the science behind potential
products. For example, the project leader of Argon commented, ‘It was also satisfying
when you design a machine and everything fits. So if the top was put on the machine, our
machines are very large, several meters long and several meters in diameter, and you
have gaps that are tolerated in tenths of millimeters . . . and everything fits. This is a great
feeling. Therefore, this project was really satisfying for me.’ This demonstrates that what
was important to him was solving engineering problems; whether the overall project
survived or not was far less important. Another example of this phenomenon is noticeable in the description team member 1 of project Argon provided of the terminated
project: ‘Ultimately, I believe that we have had a very good project here from a technical
perspective: we have set a benchmark in the timeline we needed, we have gone through
the product development process appropriately, we have involved all necessary parties.’
Finally, project Charlie team member 2 was indifferent to the failure of the project he
was working on but expressed excitement with the engineering challenge: ‘[In my new
project,] I get to focus on mathematics and developing algorithms. . . . This is a huge
positive as I will be in my element.’ As Green et al. (2003, p. 423) noted, ‘innovators like
to innovate; being on the leading edge of a technology can be both scientifically satisfying
and ego gratifying.’
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Consistent with this notion of the importance of the engineering challenge over the
importance of the project outcome, we found that it was only when the ‘opportunity’
to work on important problems was denied that team members generated negative
emotions. When a project was terminated, team members were quickly deployed to
work on other tasks. For instance, many team members noted that their transition to
another project was ‘immediate’. However, when the decision to terminate was
delayed, the team members perceived this creeping death as being ‘stuck with’ working
on an unimportant engineering question/problem. It appears that the engineers in our
sample did not have a negative emotional reaction to project failure because they were
still able to do what they love to do – offer technical solutions to the most challenging
and current engineering problems (rather than the dead-end the failed project had
become).
In contrast, projects Bravo, Boron, Charlie, and Delta were terminated rather quickly
– the decision to end the projects was unequivocal and final, and there was little time
from expecting termination to actual termination. One team member explained project
Boron’s termination by saying, ‘It was suddenly a reality.’ Project Charlie team member
1 believed that ‘the information [decision to terminate] was delivered abruptly to the
team members – practically immediately. It was clear there was a decision to stop the
project, so it meant that we should immediately stop spending money.’ When asked if he
had anticipated a project shutdown, project Delta team member 2 responded, ‘Quite
honestly, not directly. . . . I don’t remember any signs or timeline [red flags] indicating
a possible termination. . . . I did not expect the decision to be so abrupt; suddenly there
was nothing, and it was said “the project is stopped”, and that was it. . . . As a team, we
were all surprised by the decision.’ Similarly, when asked about anticipating project
Bravo’s termination, a team member replied, ‘No, not until I had this meeting. . . . And
then I thought “Ok, then we have to terminate because we have no chance to get the
material”. So we could not continue.’
As another point of contrast and as illustrated in Table IV, the team members of
projects Bravo, Boron, Charlie, and Delta did not generate many negative emotions or
worry even when we directly asked about it. For example, when asked about the duration
of his emotional reaction to the termination, the project leader of Bravo reported that it
cost him ‘One night’s sleep, I think. That is because I think there were no implications
to my working situation.’ The project leader of Boron noted, ‘I am not that hurt by it. I
now have another really big project.’ Project Charlie team leader said, ‘It was not
necessarily fun to terminate the project, but we had to do it, and it was “business as
usual” (laughs). . . . Really it was no problem.’ The Delta project leader explained, ‘I was
also relieved’, a sentiment shared by Delta team member 2 as the stress of the project
(e.g., meeting deadlines, etc.) was substantial.[1]
Our field notes on site visit observations (after the termination of all projects), internal
emails (prior and post project termination), and meeting minutes (prior to termination)
substantiated our general finding that a majority of team members in projects Bravo,
Boron, Charlie, and Delta experienced lower levels of negative emotions than team
members on projects Alpha, Argon, Cobalt, and Dubnium. In these field notes, we
recorded team members’ retrospective accounts of the absence of strong and lasting
negative emotions both before and after the termination of projects Bravo, Boron,
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D. A. Shepherd et al.
Charlie, and Delta (with one exception in which an individual was assigned to a project
he viewed as less interesting). For example, in side conversations after the interviews,
team members from these projects said (in reflecting on the terminated project) that they
had no or little negative psychological or physical reactions to the terminations. That is,
it was ‘no big deal’, and they simply focused on the new task at hand as opposed to
reflecting on the recently failed project.
Learning ‘Before’ rather than ‘After’ the Termination Event
In this study we found that negative emotions stimulated rather than constrained learning
from the failure experience. The source of the negative emotions was that the engineering challenge of the current project was diminished (given expectations of its ultimate
demise) and these negative emotions stimulated the search for a new challenge – learning
why the current project had failed – while they waited for the termination decision.
Motivated to find a challenge, despite the creeping death of their current situation, team
members dedicated time and effort to learning from failing projects before the termination event.
For example, project Argon team member 2 explained that while enduring the
negative emotions associated with the delayed termination, he took on a ‘neutral position, a position of an observer’ where he could think about what happened. Argon team
member 2 further explained, ‘I’ve been thinking a lot about the project . . . I asked myself
again and again how could it happen? . . . So I did learn [from this delayed termination].’
Similarly, Cobalt project team member 2 expressed his desire to enact some meaningful
outcome from the delayed termination in spite of the negative emotions caused by the
delay, specifically in identifying real, engineering, and hence business value from the
experience. He explained ‘I think you feel very isolated [due to the failure] . . . [but] we
have to learn from this, capitalize on it, get value from it . . . as long as people sweep it
[project failure] under the carpet . . . we lose the opportunity to convert that bad
experience into financial value, real business value . . . [normally] we are not good at
closing projects out.’ Cobalt team member 2 similarly emphasized that this learning had
to take place during the delay (or at least the life of the project) because ‘once the job
stops, the reviews stop’. As a final example, Alpha team member 1 described the creeping
death as ‘endless misery’ and would have preferred a ‘miserable end’ so he could ‘be
staffed immediately, anywhere!’ to resume an engineering challenge. However, to compensate for being ‘trapped’ in a failing project this team member spent a lot of time
making sense of and learning about what went wrong and how these learnings could be
applied in the future. He explained that he ‘absorbed the termination’ by ‘documenting
all our results . . . in an ordered manner so it all wasn’t just thrown away’. As a result, he
learned that the decision to terminate was ‘dead right’. He explained that ‘if we really
went, with the limited knowledge at that time, directly into a commercial project, then
this would have cost our company, I think, a tremendous amount of money in the
end.’
We found that the negative emotions generated by delayed project termination (i.e.,
creeping death) produced a positive outcome: it motivated the allocation of time and
effort to learning from experiences with the failing project. This motivation to learn from
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the failing project becomes all the more important when there is a lack of time for team
members to reflect on the project after the decision to terminate the project. The primary
reasons for this lack of time to reflect appear to be threefold: (1) In nearly every case,
project team members were rapidly redeployed after the official termination, forcing
them to redirect their attention to starting new assignments, addressing new problems,
and ramping up with new team members as opposed to reflecting on what went wrong
with the previous project. For example, several team members were redeployed on other
projects within several hours (e.g., project Boron team leader, project Charlie employee
2, project Cobalt team leader) while all others were redeployed within one to ten days
with the exception of the project Delta team leader who waited about one month. (2) The
project team members were motivated to move onto what was next to minimize role
uncertainty, and they were anxious to use their competences to solve the next engineering challenge (given that the current failing project no longer represented an engineering
challenge). For example, project Charlie employee 2 explained that the most important
thing for him following a project failure is ‘to get a new task’. When asked how soon, he
said without hesitation, ‘Immediately!’ (3) The combination of a desire to move on and
the demand for work appeared to limit project team members’ ability to take the time
after project termination to effectively process project failure and thus learn from it.
Given this rapid redeployment after project termination for all team members of every
project, the period provided by delayed termination took on increasing importance in
terms of processing learning opportunities from the failing project.
In Table V, we summarize evidence linking termination timing and learning from
failure through the activation of key learning mechanisms (i.e., reflect, articulate, and
codify; Prencipe and Tell, 2001; Zollo and Winter, 2002). First, members of projects with
delayed termination (Alpha, Argon, Cobalt, and Dubnium) had time to reflect on their
experience, which enabled learning. The leader of project Argon explained, ‘I personally
learned a lot on the project . . . during the [six to eight months of the failing project]. . . .
I was almost in the position of an observer, watching what we were doing and [reflecting]
on “what exactly did we do here?” ’ Similarly, through his ‘introspective reflection’, team
member 1 of project Alpha identified specific lessons he would apply to future projects.
He explained, ‘[During this period of delayed termination,] everyone evaluated his
experiences and drew conclusions, for example what he would do next time in the same
way or what he would do differently. I personally learned that I would deal with the
customer differently next time.’
Second, delayed termination provided the opportunity for team members to articulate
learning experiences with fellow team members. Setting up forums for team members (in
many cases from around the world) could be a challenging and expensive task, especially
when a project concluded and there is no longer a profit-driven rationale for the team to
stay together. However, given an environment in which termination was inevitable yet
delayed, team members took the opportunity to hold meetings that allowed them to
articulate their learning experiences. Cobalt team member 1 explained that his team
held many intensive ‘reviews’ during the delayed termination, attempting to identify the
‘root cause’ of why the product was not working. He explained, ‘We held a whole series
of reviews to talk about where the performance was going. Was it a build issue? Were we
looking at leaks within the system? . . . This probably went on for four to five months.’
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Table V. Termination speed and learning
Higher learning, delayed decision-making cases
Lower learning, rapid termination decision-making cases
Learning in relation to termination speed representative quotes
Learning
Learning in relation to termination speed representative quotes
Learning
Alpha
Team member 1: ‘We decided to at least document
all our results. But I must admit, in the end it
would have been great to have even more time to
document things the way we wanted to do it . . .
[During the delay] I learned that it would have
been better to invest more in exploratory research
at the beginning.’
High
High: During delay
Low
Low
Team member 2: ‘[We captured learning during the
delay] otherwise there is the risk that you throw
away what you have laboriously attained. A project
can become worthless if you do not pay attention
. . . I not only requested [the time to prepare the
documentation] but I also got it . . . So damage [in
losing learnings] did not occur.’
Argon
Project leader: ‘The project was between life and
death. It was not yet dead, but it was also not
properly alive . . . I personally learned a lot on the
project . . . during the [6-8 months of “failing”] . . .
I was almost in the position of an observer,
watching what we were doing and [reflecting] on:
“what exactly did we do here?” ’
High: During delay
Bravo
Project leader: ‘[After the announcement that the
project was terminated] I moved onto a new
project . . . it was business as usual more or less, we
are used to Bert’s sharp decisions, “digital
decisions” as we call them . . . We just have to
move on from the failure, and then we work and
work and work and work and there is nothing but
work to do. So we do not ask so many questions, if
there was a failure we simply say – “Ok, up on the
horse again.” ’
Team member 1: ‘[When Bert announced the
decision regarding the project failure] I had
already started a couple of new things . . . this was
very interesting to me and my colleagues here [to
immediately work on new assignments] . . . I would
not say I had key learnings.’
Team member 1: ‘By this slow death one would have
lost a lot of time if you would want to continue the
project . . . [However, due to the slow death] I had
enough time for this [documenting the lessons
learned] because I was appointed to . . . initiate
process improvements . . . this took a few months
during which we regularly discussed what we could
do better.’
Cobalt
Project leader: ‘Lessons learned? I got those together
[myself] . . . Because it is not a formal process, I
am trying help myself learn and help the next team
I was assigned to with learnings from this current
project . . . [during the delay] I documented
learning related to internal decision processes and
how to work with third party design houses and
drafters.’
Team member 2: ‘[This project] was an enormous
learning experience, certainly . . . [During the
delay] we improved the knowledge of our product,
I would say. So you know, we now got a clearer
idea of what the beast [complex product] is, that
we are trying to work with and what we can do
rather than what we should avoid . . . But [after
the termination] the formal documentation
everything stopped . . . after that I was not involved
in anything.’
Dubnium
Project leader: ‘We have processes in the
development. We make a post-mortem meeting for
each development project where the input of the
team is collected. We ask “What was good? What
was less good? What would you recommend other
projects as an outlook?” This happened for us as
well, at least immediately after the date in
February, it was, I believe, in March and April
2010 [months before the final decision to terminate
in November].’
Team member 2: ‘[A big thing I learned during the
delay] is that we lacked appropriate contact with
the customer . . . If we do this though we will have
more information on what they need and they will
have more information on what we do [to help
avoid a failure like this one].’
High
High: During delay
High: During delay
High
High: During delay
Boron
Project leader: ‘[Eight days after the termination] I
am focusing more on my new assignment. I knew
it would be a short time between projects and (the
new project) came up very fast . . . My boss called
me and said “hey, we have tons of work for you to
do. Just jump out of that project and then you can
focus on this [your new assignment]. This was very
helpful.” ’
Team member 2: ‘We got a note from business that
this project was stopped. The end . . . I
re-motivated myself by looking ahead, telling
myself that in this case there was simply nothing I
could do about the project failure . . . as for me I
was already reassigned before this project officially
ended [so I am focused on that] . . . this was the
case for all people on my team.’
Charlie
Project leader: ‘It is very hard to [learn from failed
projects] . . . there are good intentions but it
doesn’t work . . . employees have so many other
things to do . . . we had no problem reallocating
our people and remaining budget to interesting
projects [which became the primary focus].’
Low
Low
Low
Low
Low
Low
High: During delay
Team member 2: [Interviewer – Do you document
anything to learn – e.g., lessons learned for future
projects?] ‘No, we only create the technical
documentation . . . [in fact] I think a new task is
the best action moving forward . . . It is best to
[quickly] assign people to a new job . . . we were
all assigned to new projects with new tasks. There
was no time to think- we did not have “free time”
because we had other tasks [new projects].’
Low
High
High: During delay
Delta
Project leader: ‘[A project write up] is normally at the
end of a project, where we write up a little
something, these are one to two pages on the
reason the project has been canceled. But it was
really just a compilation of the results actually . . .
but as soon as we saw a new task on the horizon
[which was quite rapidly] it is important to
immediately throw yourself into it.’
Low
Low
High: During delay
Team member 1: ‘No one asks about [the failure]
actually, no one would know about it anyway and I
don’t think that one somehow goes peddling the
learnings from the failed project . . . the most
important thing that happened . . . was that we
were allocated to other projects within a few days.’
Low
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Finally, delayed termination provided the opportunity for team members to codify key
learning experiences via lessons learned documents, Excel spreadsheets, database
uploads, or other media of choice. As a specific difference to documentation undertaken
by some of the projects with low learning, members from projects with high learning
documented information focusing on explanations of project outcomes (i.e., why and how
the project did not work out) as opposed to descriptions (i.e., what happened, as in money
and time spent, etc.). The Argon project leader explained the value these documents
provided his team: ‘We found that in essence, it [the time taken to capture lessons
learned] is about facts that can be written down for why something did not work. To
document that we have used a specific design for the product, why it didn’t work, and
what we should have considered in our design. Thus, in the next design phase, colleagues
can benefit from the learning and do not have to have the same experience themselves.’
In contrast, for project teams Bravo, Boron, Charlie, and Delta, there was little time
for reflection on, articulation of, and codification of learning due to the rapid project
termination and subsequent redeployment to new projects. For example, team members
from these projects expressed a lack of time to reflect on their experience as explained by
one of our interviewees during a joint business lunch: ‘[I did not have] sufficient time to
process and document the lessons learned from the terminated project because [after the
rapid termination of the project,] I was immediately transitioned to a new project due to
the large pipeline of development projects in the firm.’ Rather than having time to reflect
on what went wrong, it appeared that when a project was terminated with little warning,
team members needed all their cognitive capacity to prepare for and cope with the
demands of the new project. Team member 1 of project Boron noted that the transition
happened rapidly: ‘the day after [the termination], I just said, “Ok, now my task has
changed. I need to do this for that [new project], and this is what I am focusing on now”.’
Members from projects that were rapidly terminated also expressed a lack of opportunity to articulate potential learning experiences from the failed project. The Boron
project team leader explained, ‘I would say here at our location, we did not share [lessons
learned].’ This lack of opportunity to articulate learning and lack of evidence of learning
from the project experience in general was evidenced by several interviewees (i.e.,
Charlie employee 1, Delta employee 2, Boron employee 1) expressing gratitude for
having the chance to sit down and discuss the project and potential lessons learned with
the interviewer, explaining that this really was the first time they had been able to reflect
on the project failure and its implications. When asked if he would have appreciated
doing this earlier with his team, Charlie employee 2 said, ‘Yes, absolutely!’
Furthermore, members from projects Bravo, Boron, Charlie, and Delta did not have
the opportunity to effectively codify lessons learned. While several team members
mentioned documenting the ‘basics’ – a description (as opposed to an explanation) of the
project for record-keeping purposes (e.g., Delta project leader, Charlie team member 1
and team leader), they were explicit that this was simply to track the ‘technical’ aspects
of the project, including ‘how much money was spent’ (Charlie project leader) and
‘mathematical results’ (Delta team members 1 and 2). In other cases, however, team
members explicitly cite the lack of any documentation. Project Boron team member 1
explained, ‘I haven’t really met anybody who said “Well, make sure if something goes
wrong that we document it, that we learn from it, and that we somehow inform others”.
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Learning before failure
Creeping death
Speed of termination
Delayed
Learning from
project failure
Negative emotions
Rapid
Cognitively moving away
Emotionally moving away
Figure 2. A double-edged sword of delayed project termination
I have not seen that. . . . There is this saying that I have heard: “If only our company
knew what our company knows”.’
The literature acknowledges that individuals can learn from their failures – perhaps
even more than from their successes (Sitkin, 1992) – because a failure indicates that
current knowledge structures were inadequate, which can motivate sensemaking activities (Ginsberg, 1988; Morrison, 2002). That is, after the termination event, the individual can reflect on and cognitively process his or her experiences and work to construct a
plausible account for the failure and thereby learn (Shepherd et al., 2011; Weick et al.,
2005). Rather than time after project failure being critical for learning from project
experiences, our findings suggest that the time provided by the delayed termination is
important in explaining who learns from project experiences and who does not (or who
learns less). This is because under conditions of rapid redeployment after project termination, delayed project termination provides the time (and motivation) for team
members to learn from a failing project by facilitating (a) reflection on the experience, (b)
articulation of lessons learned, and (c) codification of lessons learned, that they would not
have otherwise.
DISCUSSION
We found that delayed termination was like a double-edged sword (as illustrated in
Figure 2). On one side of the sword, delayed termination was perceived as creeping death
that generated negative emotions among individuals who were (for the most part) more
emotionally invested in the engineering process than in the specific project. On the other
side of the sword, delayed termination provided time for reflection, articulation, and
codification for learning from the project experience. In contrast, for those whose
projects were rapidly terminated there was little negative emotional reaction to the
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Creeping Death and Learning from Failure
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project failure and little learning from the experience because team members emotionally and cognitively moved away from the previous project towards their new engineering challenge.
In this study, we contribute to the scholarly conversation on learning from failure and
on the implications of the timing of project termination by exploring the contextual
factors that help explain the link between speed of termination (i.e., delayed or rapid) and
learning from the failure experience. Research has identified the cognition underlying
the timing of the decision to terminate poorly performing projects (Ross and Staw, 1993;
Staw and Ross, 1987) and its organizational learning implications (Corbett et al., 2007).
Although these studies have deepened our understanding of those who decide on project
termination (i.e., who ‘own the option’), they do not explore (because it is not their
purpose) the contextual mechanisms that link timing of termination to the reactions of
those working on the project (i.e., those who ‘are the option’; McGrath et al., 2004). Our
analysis, findings, and theorizing offer an initial step in this direction. In doing so,
we make contributions to the literature on both learning from failure and project
termination.
Learning from Failure: Negative Emotions and the Timing of
Project Termination
In this study, we provide insight into the link between the timing of project termination
and learning from failure from the perspective of those working on the project (i.e.,
project team workers), which has implications for managing entrepreneurially acting
firms. First, team members reduce the negative emotions over project failure through an
engineering mindset. The engineering mindset focuses more attention on the criticality
of the engineering challenge for the organization than on any one project. With this
engineering mindset guiding attention, project failures generate little negative emotion,
and there are few obstacles to the rapid redeployment of resources (including human) to
the next project. However, if that transition is delayed (from the project team members’
perspective), team members generate negative emotions. Interestingly, such team
members generate negative emotions when a (poorly performing) project is not terminated rather than when it is terminated. Overall, an engineering mindset is not only a
cognitive script for creatively solving problems, but it also emphasizes the importance of
the engineering process of undertaking challenging tasks of significance to the organization over and above commitment to a specific project that is no longer of high importance to the organization.
Second, delayed termination provides time for team members to reflect on personal
mistakes (i.e., missteps in a particular process, miscalculations, etc.), organizational issues
(i.e., management decisions that led to failure, inter-department coordination problems,
etc.), technical issues (i.e., technical problems from an engineering perspective), and
market- or industry-related issues (i.e., institutional or governmental influence in product
development, customer participation, etc.). Such reflections provide a basis for lessons
learned that could be articulated and codified with sufficient time, two steps necessary for
organizational learning (see Zollo and Winter, 2002). In contrast, team members who
face rapid project termination have little time to learn from their experiences with project
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D. A. Shepherd et al.
failure. This is particularly problematic in an organizational context of rapid redeployment because after project termination, there is no time to reflect on, articulate, and
codify lessons learned from the failure experience. Indeed, even if project team members
find some time to reflect on the project failure, they do not have time to share those
reflections with others – which obstructs team-level learning – nor do they have the time
to codify any lessons learned – which obstructs organization-level learning. Thus, the
interesting insight is that in the context of rapid redeployment, individual team members,
teams, and organizations largely do not learn from their failure experiences after the
failure event but before it.
Finally, team members use negative emotions from creeping death to motivate learning from failure. This use of negative emotions is effective for learning because it signals
to team members that something is wrong, that the organization no longer values the
project, and that redeployment to a more important engineering problem is being
delayed. Team members are able to direct these negative emotions from the thwarted
need for an important engineering challenge to a new challenge while they wait – the
challenge of learning from failure. By shifting attention from the delay (and thwarted
need), they are able to learn from the experience. Therefore, the negative emotions of
creeping death facilitate rather than obstruct learning from failure.
In sum, our team members’ perspective highlights individuals’ reactions to the timing
of project termination for learning from project failure. Namely, in the context of
creeping death, team members are able to (1) reduce negative emotions over project
failure by emphasizing the importance of the engineering challenge vis-à-vis any one
project; (2) provide time for team members to reflect on, articulate, and codify lessons
learned (in the context of rapid deployment, this time comes before termination); and (3)
redirect negative emotions from creeping death to the challenge of learning from the
failure experience.
Rethinking Portfolio Management and Corporate Entrepreneurship
Theories of portfolio management and corporate entrepreneurship are central to extant
efforts to link project termination (and the timing thereof) to learning from failure. The
insights generated from this study provide the opportunity to contribute to both these
streams of research. First, the findings provide a deeper understanding of the interrelationship between the main components of portfolio management. We reaffirm the
importance of managing uncertainty by creating projects as options (McGrath, 1999) or
probes (Brown and Eisenhardt, 1997) that explore the unknown. Under these conditions,
exploration efforts can help improve overall performance when poorly performing
projects are rapidly terminated and resources are rapidly redeployed to projects that
show promise and/or to new projects (Brown and Eisenhardt, 1997; McGrath, 1999).
However, the insights from this study suggest that rather than learning from a project
that has failed, team members learned from their experiences with a poorly performing
project before it is terminated. Specifically, although failures are expected to capture
project members’ attention and motivate them to make sense of the experience (Chuang
and Baum, 2003; Sitkin, 1992), we did not find evidence supporting this conventional
wisdom. Our findings suggest that because all team members were rapidly redeployed
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after project failure, they were not motivated and did not have the time and cognitive
capacity to reflect on what went wrong and how things could have been done differently.
This relationship between speed of termination and learning from failure has implications for the portfolio and real options reasoning perspectives for managing innovation
projects. An implicit mechanism of managing uncertainty using R&D projects as options
or probes is that they reveal information that contributes to new knowledge, including
learning from project failure (McGrath, 1999). Indeed, real options reasoning advocates
for (1) rapid termination of failing projects, (2) rapid redeployment of human resources,
and (3) learning from project failures (Brown and Eisenhardt, 1997; McGrath, 1999;
McGrath and Cardon, 1997). Based on our findings reported above, we propose that an
organization can have two but not all three of these attributes. That is, an organization
can rapidly terminate a failing project and rapidly redeploy human resources, but
learning from failure will be limited. Alternatively, team members can learn from the
project failure experience when termination is delayed. Specifically and consistent with
real options reasoning (McGrath, 1999), in the R&D organization of this study, delay in
project termination was considered costly by the parent firm’s management, the subsidiaries’ management, and especially those directly involved in the projects’ operations.
Similarly, delay in resource (particularly human resource) redeployment was resoundingly deplored by those involved in the projects. However, the novelty of our findings is
they show that in a context in which team members are quickly reallocated to new tasks
once a project team is finally dissolved, some termination delay does come with benefits
as it provides time (and motivates) reflection on, articulation of, and codification of
lessons learned from project experiences. Although our data do not have variation in the
speed of human resource redeployment (i.e., it was rapid in all cases), we suspect – and
hope future research investigates – the possibility that rapid termination and learning are
possible when human resource redeployment is delayed. Given that learning is crucial to
R&D-intensive organizations (Hoang and Rothaermel, 2005; McGrath, 1999), our
findings underline the importance of complementing the current focus on the immediate
financial impact of delayed project termination with a more long-term learning perspective to better capture the effects of project termination on organizational outcomes.
Second, our findings contribute to theories of corporate entrepreneurship, specifically
complementing those related to cognition. Although we reaffirm the importance of the
timing of the project termination decision for learning from the experience, we take the
perspective of those who work directly on the project. In prior research, the decision
makers’ perspective is of primary concern and the implications for those individuals or
their organizations are investigated (McGrath, 1999; Royer, 2003; Sitkin, 1992). For
example, in investigating how corporate entrepreneurs approach project failure through
various cognitive scripts (linked to organizational-level rules and procedures), Corbett
et al. (2007) found that when decision makers terminate projects without a developed
understanding of critical market and organizational factors (i.e., ‘undisciplined termination’) or when project leaders keep a project in the system too long with little to no tie to
strategic outcomes (i.e., ‘innovation drift’), learning is stunted. In contrast, they found
that those who terminated projects in accordance with market and strategic goals (i.e.,
‘strategic termination’) were more able to learn about the organizational and market
factors needed to drive future success (Corbett et al., 2007, p. 838). This approach has
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
540
D. A. Shepherd et al.
enhanced our understanding of the cognitions and ‘termination scripts’ of those who
make decisions on whether and when to terminate projects, particularly in terms of how
learning from failure can benefit firms’ capabilities in other areas (Corbett et al., 2007).
Similarly, in the terminology of a real options reasoning approach to entrepreneurship
(e.g., McGrath, 1999; McGrath et al., 2004), previous research has focused on the
‘owner of the option’, yet those who ‘are the option’ are likely to have different reactions
to the timing of project termination. By taking the perspective of the project team
members – those who are not the project termination decision makers – we gain an
appreciation of the frustration (and other negative emotions) team members feel over
what they believe is a delayed decision to terminate the project. That is, we contribute to
the implications of decision makers’ termination scripts (Corbett et al., 2007) on the
interpretation and emotional reactions of non-decision makers involved in the project.
This analysis suggests that decision makers and project team members differ on the
‘appropriateness’ of the timing of project termination and that these differences impact
the extent to which team members learn from the experience. The key take away is that
if team members perceive a subsidiary manager is taking too long to terminate a project,
they have a negative emotional reaction and also take this opportunity to learn from their
experience.
Finally, the literature on loss suggests that most people will have negative emotional
reactions to the loss of something important (Archer, 1999), such as the losses associated with divorce (Kitson et al., 1989), death of a loved one (Archer, 1999), and bankruptcy (Shepherd, 2003). Similarly, Shepherd et al. (2011) recently found that research
projects are important to research scientists and that they have negative emotional
reactions to these projects’ failure. Despite expectations based on the literature that
R&D projects are important to team members and that their termination would generate negative emotions, this was not the case in the current study: all team members
for all projects had minimal negative emotional reactions to the loss of the project specifically. A possible explanation for this lack of negative emotional reaction to the
termination event is that the team members had become desensitized to failure (either
through experiencing many failures or operating in an organization that normalizes
failure; Ashforth and Kreiner, 2002; Shepherd et al., 2011), but our data suggest something different. Although failure was not considered normal for the engineers in our
sample, transitions from one project to the next were. When transitions are considered
normal, a delayed transition can be considered non-normal and is likely to generate a
negative emotional reaction. Indeed, this is what we found in the current study: project
team members were prepared for transition but had a negative emotional reaction
when this transition was delayed. So, rather than attributing the lack of negative emotions from project failure to normalization, this lack of negative emotions could be
attributed to an ‘engineering’ mindset of moving from one project to the next. The
advantage of this engineering mindset is that project team members are unlikely to
advocate for the persistence of (or escalation of commitment to) a poorly performing
project, and negative emotions are unlikely to obstruct their ability to learn from
failure experiences. However, consistent with criticisms that small wins may not be
large enough to capture sufficient attention (Sitkin, 1992), this mindset towards project
failure is unlikely to result in sufficient attention being allocated to learning from
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Creeping Death and Learning from Failure
541
project failure after the actual termination is over. More research is required to investigate the role of individuals’ mindsets (with a focus on projects or process) in understanding the extent of the negative emotional reactions to a lack of (or delay in)
change, such as feelings of creeping death. For example, empirical research can investigate whether engineers (self-selected and trained engineers as in the current study)
focus more on process whereas scientists (self-selected and trained as in Shepherd
et al., 2011) focus more on specific projects.
Boundary Conditions and Future Research
As with most case study research, we selected cases that facilitated theory building but
also provided some boundary conditions for our model. First, we focused on R&D
project termination. It is unclear whether the model will extend to other projects, such as
joint venture projects, service-related projects, or projects focused on the implementation
of a new product launch.
Second, our cases involved engineers within subsidiaries within a parent organization
that had an ‘engineering’ mindset. There is some doubt that our model will extend to all
individuals with different (i.e., non-engineering) backgrounds or organizational cultures.
For example, would a team of lawyers working on a death penalty case have such little
emotional reaction to project failure and an eagerness to move on to the next death
penalty case? Do biochemists, management consultants, architects, and academics have
similar emphases as these engineers? Subsequent research designs could incorporate
additional contexts and settings like these (including those mentioned in the first point)
and could draw upon our theorizing and qualitative foundation when developing questionnaires or other means for obtaining cross-sectional or longitudinal data for analysis.
Third, the individuals in the current study had alternate attractive opportunities to
‘move on to’ after their projects were terminated. Perhaps their reactions to delayed
termination and project failure would be different if alternate projects were unattractive
or non-existent.
Fourth, we investigated eight project failures within four subsidiaries of one multinational corporation. It is unclear how the comparison between the four organizations (i.e.,
subsidiaries) would be different without the parent umbrella. Perhaps, for example,
differences in the contextual factors between organizations would be greater than
between the subsidiaries studied here.
Fifth, we relied primarily on self-reports of learning as evidence of learning during
delayed termination (consistent with the sensemaking perspective’s emphasis on individuals constructing plausible stories of events). Our theorizing does not necessarily extend
to learning that results in increased accuracy or improved performance. Certainly future
research could address these issues.
Sixth, we took a relatively coarse-grained perspective of emotions. Future research can
extend this boundary condition with a finer-grained exploration of the antecedents and
consequences of specific emotions, such as frustration over delayed failure and relief
when it is eventually terminated.
Seventh, we investigated the consequences of delayed termination, not its antecedents.
Future research can move beyond the notion of the escalation of commitment to explain
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542
D. A. Shepherd et al.
heterogeneity in termination delay including the organizational context; the attitudes,
cognitions and decisions to top management, and the organizational processes, systems,
and norms that increase termination delay.
Finally, our analysis and theorizing focused on individual team members. The individual level of analysis provides insights into the early stage of organizational learning,
namely intuiting – the ‘recognition and/or possibilities inherent in a personal stream
of experience’ – and interpreting – ‘the explaining through words and/or actions of an
insight to one’s self and to others’ (Crossan et al., 1999, p. 525). To gain a deeper
understanding of the link between project failure (and its timing) and organizational
learning from failure, future research can explore the mechanisms underlying integrating – ‘developing shared understanding among individuals and taking coordinated
action through mutual adjustment’ – and institutionalizing – ‘the process of ensuring
that routinized actions occur’ (Crossan et al., 1999, p. 525), which is likely facilitated
by (and contribute to) absorptive capacity (Cohen and Levinthal, 1990). Our findings
that team members engage in articulating and codifying lessons learned from their
experience (see Zollo and Winter, 2002) provide some evidence that research at the
group and organizational level (and across levels) will make further contributions to the
literature.
CONCLUSION
This paper explored learning from projects that had been terminated in the context of
R&D-intensive subsidiaries of a multinational organization. Although scholars have
acknowledged the link between the decision of when to terminate a project and
organizational outcomes, including learning from failure, these studies have focused on
decision makers’ cognitions. In this paper, we take a different perspective – that of the
project team members impacted by the decision – which provides a number of
counterintuitive insights. Rather than a desire to persist with a poorly performing
project, team members perceive delayed termination as creeping death; rather than
having negative emotions over project failure, team members experience negative emotions over delayed termination that thwarts their ability to move on to the next engineering challenge; and rather than negative emotions obstructing learning, the negative
emotions of creeping death motivate learning from experience before a termination
event. Based on the above, project team members’ reactions (cognitive and emotional) to
the timing of the decision to terminate their project are likely to play a greater role in
future research on learning from failure.
NOTE
[1] While a majority of the team members in the rapidly terminated projects expressed a lack of negative
emotions relating to the event, three individuals did express some negative emotion, although it appears
this was due to those team members’ unique circumstances. Team member 1 of Boron, for example,
explained that his emotional reaction had more to do with his reassignment, which required that he and
his family relocate to a different continent. It was moving his family that caused anguish, not the
terminated project per se. Similarly, the Delta project leader was frustrated for reasons other than the
project termination. First, he was upset that his next project was in ‘basic research’ whereas he was more
© 2013 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Creeping Death and Learning from Failure
543
interested in new product development, and second, he saw that the company restarted this project in
another division only a year later (which also failed) and was ‘annoyed’ the company had not learned.
Finally, project Delta team member 2 experienced some negative emotions but was explicit in providing
a ‘historical context’ for those emotions. He explained, ‘perhaps I need to more deeply explain my past
professional life [to explain why I reacted how I did]’, whereupon he described being part of two failed
entrepreneurial firms before moving to Subsidiary D in the hope of finding more stability. His negative
reaction appeared to be primarily due to this unique series of events, not the specifics of project Delta’s
termination.
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