How should a company learn from success stories?
Success stories can hide failed firms and differences in context. Compare the evidence, industry, size, timing and conditions before transferring a business practice.
How can a company use success stories without copying blindly?
Rather than simply copying the methods from other companies' success stories, it is safer to try out the conditions and then bring in only the underlying principles. First, write down how the industry, size, timing, and market environment are different from your company, and find out if there was a company that used the same method but failed to achieve results. Korea Research Institute of Business & Branding also explains these four differences when using examples from other companies.
Why might our judgment be wrong if we only collect success stories?
The companies we see are usually the ones that survive. Business books and media also mainly cover successful companies. Organizational learning research (Denrell, 2003) explains that when failures are left out of the sample, risky practices that are not actually related to performance may appear to be related to performance among surviving companies.
For example, the story of a company that devoted resources to one business and achieved great success is widely known, but the story of a company that invested resources in the same way and then closed down is not often remembered. Then the conclusion that “focus is the secret to success” seems stronger than it really is.
The same illusion occurs in managers' own experiences. Methods that worked once in the past remain in our memories for a long time, and cases where similar methods did not work are easily forgotten. Even when trying to rewrite the success story within the company, it is helpful to have the habit of writing down the conditions then and now separately.
Why is one striking example so compelling?
People take several shortcuts in making decisions in uncertain situations. Classic research on judgment and bias (Tversky, Kahneman, 1974) demonstrates that judgments that rely on representativeness, recall, and first-sight reference values are generally efficient but produce systematic errors.
It's easy to recall vivid success stories, and if there's something that seems similar to our company, it can easily lead to the judgment, "We could be like that, too." So, when reading a case, it is necessary to consider the power of the story and the power of the evidence separately.
When comparing cases and our company, what should we look for first?
If we turn the four differences that Korea Research Institute of Business & Branding explains when writing examples of other companies into confirmation questions, they are as follows.
Four questions to ask before reading the case
| condition | confirmation question | If conditions are different |
|---|---|---|
| Industry | Do case companies and we incur costs and customers in the same way? | The cost and effectiveness of the same strategy will vary |
| scale | Can we also use the manpower and funds used by case companies? | How quickly you execute and how much risk you take depends on your |
| point of view | Are the technology, interest rates, and consumption flows the same as they are now when the results of the case were achieved? | What worked then may be too late now. |
| market environment | Are the number of competitors, regulations, and distribution structures similar? | The cause of performance may have been environment rather than strategy |
It is rare to be able to answer “the same” to all four questions. It's more important to write down how the difference will affect the results, rather than the fact that there is a difference. You can refine your case by changing the conditions that have the most impact to suit your company and leaving the smaller conditions the same. For cases in different countries, please also consider distance between culture and system.
What should you take from your case and what should you leave behind?
A case is not a whole item, but rather selected materials.
What to bring and what to leave behind
| Category | yes | reason |
|---|---|---|
| What to bring | How the problem was defined and the criteria used for judgment | Even if conditions are different, the framework of thinking can be transferred. |
| Check the conditions and get it | Order of execution, division of organizational roles | It may not fit depending on the size and workforce composition. |
| What to leave behind | Target numbers, investment size, schedule | It is a value tied to the resources and timing of the case company. |
When choosing what to bring, also note what resources it relies on at the example company.
Where can I find cases with similar conditions to the failure cases?
Look for materials that deal with both success and failure. Korea Research Institute of Business & Branding's joint research on business conditions by industry or data that looks at multiple companies at once, such as Industry average financial ratio, reduce the illusion of only seeing surviving companies. There are good materials within the company as well. The track record of projects attempted and stalled in the past is often closer to our terms than the success stories of other companies.
Reading a case in depth is not without value. A paper addressing common misconceptions about case studies (Flyvbjerg, 2006) considers that a well-chosen case can refute common beliefs or demonstrate the conditions under which a principle holds. This is the same reason why Korea Research Institute of Business & Branding's published business case reviews write down both achievements and limitations. Usage by publication can be viewed at Management publications and reports.
How should we compare alternatives based on examples?
Put the idea from the case as one alternative and write it down side by side in the same format as the other alternatives. If you write down the conditions, costs, expected effects, risks, and execution order for each alternative, you can prevent yourself from skipping other options due to the attractiveness of the case. If you're not sure, try it on a small scale first. If you first try it at one branch or one product group and record the parts where the results differ from those of the case company, it will become the basis for your next judgment. This comparison method is followed in Management Research Methods, and the method of preventing the meeting from being attracted to the case is continued in Reduce judgment errors in meetings.
Use of business cases Frequently asked questions
Is it better not to benchmark?
Benchmarking is still a good starting point. However, the effect will be greater if you focus on learning what decisions the case company made under what conditions rather than copying the results.
Are there examples from much larger companies worth looking into?
You can refer to the way the problem is defined or the criteria for judgment. Since the investment scale and schedule are tied to the company's resources, please recalculate it under our company's conditions.
What else should I check when looking at overseas cases?
Regulations, distribution structures, and customer purchasing habits vary from country to country. First, write down how differences in market environment may have affected your performance.
How does Korea Research Institute of Business & Branding cover other corporate cases?
When using examples from other companies, Korea Research Institute of Business & Branding explains the differences in industry, size, timing, and market environment. The publication's business case review follows the strategy, organization, and implementation process and covers both achievements and limitations.
How should we read failure cases?
Discuss whether the cause of the failure was the strategy itself, the implementation process, or the external environment.
References
- Organization Science, 「Vicarious Learning, Undersampling of Failure, and the Myths of Management」(Denrell), 2003. https://doi.org/10.1287/orsc.14.3.227.15164
- Science, 「Judgment under Uncertainty: Heuristics and Biases」(Tversky, Kahneman), 1974. https://doi.org/10.1126/science.185.4157.1124
- Qualitative Inquiry, 「Five Misunderstandings About Case-Study Research」(Flyvbjerg), 2006. https://doi.org/10.1177/1077800405284363