My Accident or Yours? Failure Learning in the US Freight Rail Industry and the Importance of Third Parties When Learning From Others

We distinguish learning from infrequent failures from learning from frequent successes, and identify four pathways for organizational learning from failures: (1) internal analysis of an organization’s own accidents; (2) imitation of other organizations’ responses to their accidents; (3) adoption of recommendations resulting from analyses by third-party agencies of specific accident’s causes; and (4) regulatory interventions resulting from analyses by third-party agencies of system-wide accident patterns. Using data from the US freight railroad industry between 1975 and 2001 we find that railroads learn more from others’ accidents than from their own, from third-party recommendations than analyses, and that learning from others is mediated by third-party recommendations and regulatory interventions. We conclude that third-party repositories of experience are key enablers of learning from failure. Simply put, failures are too important to leave for organizations to learn from on their own.