Learning from initial failure

Freek Vermeulen

Professor of Strategy and Entrepreneurship at London Business School

Looking past short term gains and understanding the long term consequences.

Clinics that treat only easy patients may initially have higher success rates, yet they improve very little over time. On the other hand, clinics that treat quite a few poor prognosis patients start out with lower success rates, but they improve their performance quite substantially over time. That is because they learn a lot from these difficult patients. After a few years, the clinics that deprived themselves of such learning opportunities by refusing to treat difficult patients ended up with significantly lower success rates than their more inclusive peers. Put differently: they thought they were being clever but, in the long run, shot themselves in the foot.

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