Business Success Stories can be Misleading

Business success stories heard by word-of-mouth or through articles and presentations usually focus on successes instead of failures. Plus, these stories point out extreme successes and failures, as opposed to the majority of firms that perform well enough to survive (or don't) but not to the extreme that they gain special attention. Since you cannot observe the ongoing operations of a failed company, you cannot test theories about a failure yourself. And the techniques highlighted in the stories may not have had anything to do with the success or failure. In fact, "successful" techniques may have been highly risky and have failed in most cases. The researcher points out three popular management concepts that could be myths created by this bias:

• A company with a strong mission and values will succeed.
• Well-coordinated companies are more successful.
• Rapid, intuitive responses to the market ensure success.

Note: See "About Business Stories" on the TeamTrainers Web site for questions to ask yourself when you hear or read these stories.

Source: Denrell, J. (03), "Vicarious Learning, Undersampling of Failure, and the Myths of Management," Organization Science 14(3):227.