Organizational Oscillation Between Learning and Forgetting: The Dual Role of Serious Errors

We know that organizations change over time as a result of their ability to learn and their tendency to forget. What we know less about, however, is why they might change back, despite evidence suggesting that this occurs. In this paper, we develop and test a model of organizational oscillation that explains why firms cycle through periods of learning and periods of forgetting. In particular, we identify a dual role for serious errors, which push firms toward a focus on safety while also pulling them away from other foci, such as efficiency or innovation. Although existing learning research recognizes errors as disruptive, this dual effect has not been theorized. We also demonstrate that, over time, the effect of a serious error on safety weakens, allowing alternative activities to emerge that lead to subsequent errors. We draw on qualitative data from the National Aeronautics and Space Administration’s Challenger and Columbia accidents to build theory about why organizations oscillate between safety and other foci, and how serious errors trigger these shifts. We then test this theory using a data set of all pharmaceutical firms that introduced Food and Drug Administration-approved drugs in the United States from 1997 to 2004. Results confirm our theory, which contributes to our understanding of complex learning processes by identifying a mechanism by which organizations learn, then forget; then learn, then forget again.