When IT Failure Creates Value: Recoverable Disruption in Continuous Feature Innovation

Digital platforms evolve through continuous feature releases into systems knowledge workers already depend on, making innovation and reliability inseparable. Reliability research treats resulting failures as costs offsetting innovation, but this view is incomplete. Using Real User Monitoring traces of 34 million actions from an InsurTech CRM serving insurance agencies, we estimate a causal mediation system in which feature use and IT failure are separately endogenous, each with its own shift-share instrument. Feature use raises conversion. It also raises IT failure. Failure in turn raises conversion, and this indirect pathway is 22% of the total effect. Decomposing failure across five categories of knowledge work shows why. Recoverable internal failures are followed by retry and fast resolution and contribute positively. Customer-facing failures are followed by abandonment and contribute negatively. Recoverability determines whether disruption creates or destroys value.

Recommended citation: Jaiswal, A. and Tanriverdi, H. "When IT Failure Creates Value: Recoverable Disruption in Continuous Feature Innovation."