Researchers reported on Mar. 20 that teams in the U.S. motion picture industry do not often learn from failure because production crews disband after each project, preventing collective learning. The study, published in Management Science by UCLA Anderson’s Kumar Rajaram and Penn State’s Suresh Muthulingam, analyzed data from over 2,000 movies released between 1999 and 2018.
This research is significant because it challenges the common belief that failure leads to improvement in business settings. Unlike industries such as aviation or healthcare where stable teams can analyze mistakes and implement changes, Hollywood’s temporary team structure means failures tend to repeat rather than teach.
The researchers found that teams with members who had a history of box-office success produced more profitable movies, while those with a record of flops tended to see lower profits. They noted, “The fluidity in team members coupled with the time lag from disbanding to observing box-office performance most likely stymies the learning from failure.” Their analysis showed that every additional $1 million of cumulative success among team members increased profits by about $126,000 for the next movie. In contrast, each $1 million in cumulative failure led to approximately $448,000 less profit.
Another key finding was that having at least four out of five key roles—executive producer, producer, director, screenwriter and lead actor—filled by individuals with profitable track records boosted movie profits significantly. However, when all roles were filled by people with histories of losses, estimated profits dropped sharply. The study also found that experience diversity did not significantly improve profitability and that producers’ track records were more predictive of financial outcomes than those of lead actors or directors.
Rajaram and Muthulingam identified three main reasons why learning from failure does not occur: teams dissolve before financial results are known; individuals often blame external factors for losses; and there is no systematic review process after a film’s release. These findings may apply beyond Hollywood to any industry relying on short-term project-based teams.
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