In Hollywood, teams don’t stick together long enough to learn from failure: Research

Hollywood loves a comeback story: a director who flopped and then returned with a masterpiece or the producer who went bust and bounced back with a winner. It's a narrative rooted in the business belief that failure is a great teacher.

But what if, for certain teams, failure teaches nothing at all?

In research published in Management Science, UCLA Anderson's Kumar Rajaram and Penn State's Suresh Muthulingam examined how track records of key team members on temporary projects shaped the financial performance of the project. Analyzing data from the U.S. motion picture industry, they found that teams whose members had a history of projects with box-office success tended to produce more profitable movies (calculated as revenue minus production budget), while teams with members who had a history of flops tended to produce less profitable ones.

Movie production crews scatter to different projects the moment filming wraps. Data suggested that in these fluid teams, failure doesn't lead to improvement. Instead, it compounds. "The fluidity in team members coupled with the time lag from disbanding to observing box-office performance most likely stymies the learning from failure," the researchers note.

Rajaram and Muthulingam's findings are a counterpoint to decades of research documenting that businesses learn from their mistakes. Airlines get safer after incidents, and hospitals reduce surgical errors after complications. In those settings, failure triggers root-cause analysis, procedural changes and institutional memory. But those organizations share something that fluid teams are missing - stability. The research also challenges the notion that actors are the most important members in determining a movie's financial success and uncovers a surprising insight about team experience diversity.

Rajaram and Muthulingam drew on data from Nash Information Services covering 2,091 movies widely released in U.S. theaters between 1999 and 2018. Approximately 41% of these movies lost money. The authors tracked more than 25,000 individuals across five key roles: executive producer, producer, director, screenwriter and lead actor. Using the data, the researchers built a financial scorecard for each person. The cumulative profit, or loss, from every past movie they worked on became part of that individual's tally, and a team's collective score was the average across its members.

Failure counts way more than success

This approach differs from most prior studies of learning from success and failure. Most rely on simple counts of wins and losses for a binary measure, like calculating a sports team's win/loss record without considering the margin of each victory. The researchers' dollar-based measure captured whether someone has been part of a winner and the size of the win.

The analysis found that each additional $1 million of cumulative success in a team's history boosts profits by roughly $126,000 for the next movie. Each additional $1 million in cumulative failure, however, led to approximately $448,000 in lower profits. Failure's drag, the results suggest, is about 3.5 times stronger than success's lift.

The team's makeup mattered even more. Movies realized a boost in profits when at least four of the five key roles were filled by individuals with profitable track records. Likewise, when most roles in the project had a history of failure, the movies realized lower profits.

When all roles had a history of success, estimated profits were roughly $13 million higher than for teams without such a concentration of success. But when all roles were filled by members with a history of losses, profits were an estimated $23 million lower. While experience diversity in members is thought to improve teams, the researchers found that including team members with varying levels of success did not significantly improve a movie's profitability.

The data also point to a counterintuitive finding about who matters most. "Interestingly, the results suggest that the history of lead actors and directors does not have a significant effect on a movie's profits," the researchers wrote. Instead, the success histories of producers and executive producers appear to be reliable indicators of profitability.

Not my fault

Rajaram and Muthulingam tested the robustness of their findings to account for the possibility that successful people simply get assigned to more promising projects or that other factors impact outcomes. Their results held across these checks and across alternative definitions of financial success.

So why does failure appear to stick rather than teach? The researchers point to three structural barriers. First, fluid teams disband before the financial verdict arrives, so there is no collective moment of reckoning. Second, individuals tend to blame losses on external factors or other team members rather than examining their own contributions. Third, movie production lacks the kind of systematic post-failure review that exists in aviation or medicine.

The implications stretch beyond Hollywood. Any industry that relies on project-based teams assembled for a single engagement - teams that are dissolved afterward - may face similar dynamics. The research suggests that managers assembling such teams should pay close attention to the collective financial track record of members, particularly those in coordinating roles like producers who bring the group together.