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The Limits To Learning From Experience

There are some things for which the past isn’t any kind of guide.

The Limits To Learning From Experience
[Photo: Flickr user Quinn Dombrowski]

Chances are, most leaders and entrepreneurs will attribute their success, at least in part, to learning from their experiences. After all, that belief is one of the reasons we’re still so obsessed with understanding and analyzing failure. But there’s reason to believe that experience alone isn’t necessarily the basis for real learning.

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Researchers at Ohio State University’s Fisher College of Business analyzed over 150 aircraft firms and found that companies don’t learn from past experiences as often as we’d like to think. And while it’s by no means certain that the aircraft industry is representative of businesses at large, the findings suggest it’s still worth considering how often companies stick with what they know–and how much they can actually learn by doing so.

The Benefits Of Repetition

The study, published in the Strategic Management Journal, analyzed all jet aircraft projects undertaken from 1944 to 2000 at 159 North American, South American, Asian, and European aircraft companies. Researchers discovered that many of them simply repeated strategies they already knew to be successful, rather than setting out to test new approaches.

As a result, the kinds of new experiences those companies tended to have were more similar to their prior experiences, and the outcomes were therefore easier to predict. There can be definite upsides to this approach. In the study, companies that repeated past successes performed better more consistently.

But what did they learn? According to the researchers, not all experiences offer equal learning opportunities. If you don’t try any new strategy or test a new approach, you can’t learn your way to success so much as replicate previous successes you’ve already achieved.

And that’s fine. After all, it’s an effective scaling strategy for many businesses, and it tends to conserve resources. Considering that since 2014, the rate of new entrepreneurs in the U.S. has increased 10%, the value of proven tactics might even be growing. Rather than trying to develop innovative approaches all the time, working on perfecting the things your company already does well could be a strategic move.

What Experience Won’t Tell You

But there are plenty of cases where trying to learn from past experiences may not get you anywhere.

For many companies, large corporate development strategies like international expansions, new product introductions, and acquisitions are infrequent and often vary with each specific undertaking. This makes it very hard to determine what particular aspects of a project lead to its success or failure, which makes actively learning from such projects nearly impossible.

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As a result, the Ohio State researchers suggest, it’s important for leaders to understand their teams’ tendency to overgeneralize from past experience. Just because one product launch went well doesn’t mean the same approach will work equally well for the next one.

To some extent, then, we need to recognize the Gambler’s Fallacy, a cognitive bias that causes people to place undue trust in prior events when forecasting future outcomes. In the simplest illustration, if you flip a coin and it lands heads up four times in a row, you might suppose the fifth flip would result in a tail. However, the previous results are irrelevant. The probability that you’ll get both heads and tails is always 50% each, no matter how many times you flip the coin.

Needless to say, figuring out the probability of your new product launch’s success is far more complicated than calculating the probability of a coin toss, but that’s precisely the risk. It’s sometimes easier to give into the Gambler’s Fallacy when faced with complex variables, leading you to search past experiences–sometimes erroneously–for clues.

The Plateau Of Past Experience

Most companies recognize they can only get so far by replicating previous wins. If you want to truly learn from your experience, you need to innovate.

The richer and broader the experiences you have, the greater the likelihood they’ll teach you something different each time. Chances are you’ll also be less liable to place too much weight on them when considering your next moves.

Being on the lookout continuously for innovative ways of doing things opens you up to learning. That’s how you’ll find the strategies in the first place that you’ll end up wanting to replicate in the future.

William Craig is the founder and president of WebpageFX. He writes about company culture and entrepreneurship for Forbes and Fortune.

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