UCL School of Management is delighted to welcome Sen Chia, ESSEC, to host a seminar discussing ‘Negotiating the Meaning of Catastrophic Innovation Failure’

Abstract

We explore how firms in nascent industries and their stakeholders negotiate the meaning of a catastrophic innovation failure. These events constitute a double-edged sword: They may lead stakeholders to either endorse the firm and reassert their support or to doubt the firm’s ultimate
chances of success and diminish their support. Because it is difficult for stakeholders to determine whether the failure occurred due to the uncertainty inherent to innovation (experimental uncertainty; perhaps unavoidable) or due to managerial or organizational shortcomings (operational uncertainty; mostly avoidable), the meaning they ascribe to the catastrophic failure may be critical to the future of the firm’s innovation process and its survival. Through a longitudinal, inductive, qualitative study of Virgin Galactic’s 2014 test flight crash, we explore how firms in nascent
industries and their stakeholders negotiate the meaning of a catastrophic innovation failure and, in the process, co-create the firm’s organizational narrative moving forward. From our data, we identify a tension inherent in the crafting of pre-failure organizational narratives between promising success (which may attract stakeholders) and acknowledging the possibility of failure (which may deter them). Our findings indicate a need for firms to make an “optimal promise” in their narratives, balancing the projection of success with the possibility of failure.