Future’s Ramblings – Issue 22 – August 14, 2006
Alexander Pope said ‘A man should never be ashamed to own he has been wrong, which is but saying in other words that he is wiser today than he was yesterday’. I came across this quote at the same time that I saw the July 2006 AFR Boss Magazine on CEO Mistakes, which oddly coincided with the passing of Kenneth Lay the former CEO of Enron. (Did you know that if you type in hugs and a kiss on an e mail –XXOO- the spell checker comes back asking if you really mean Enron? Interesting don’t you think?)
My misguided belief about CEO’s is that they should know all of the answers and not be making any mistakes. After all, some of them earn an average salary which exceeds our company’s yearly earning. That doesn’t even include their bloody bonuses – I see in the AFR today that Sol Trujillo got a $2.6 million dollar bonus, Allan Moss from Macquarie Bank rakes in 21.2 million a year salary, and our client Wal King from Leighton Holdings earns the pittance of 12.8 million per year. Therefore my reaction to seeing a magazine about CEO mistakes is “what the”.
In researching the topic of mistake making in greater depth I discovered that making mistakes in business can have high payoffs, but only if the mistakes are smart. Great business ideas such as Fed Ex’s distribution system were the happy outcome of what many in that business considered to be a major blunder. Along the same lines, Thomas Edison pursued the ideal of the phonograph even though he considered the idea to have little commercial value. Organizations need to make mistakes in order to improve and to challenge themselves to discover new things.
Mistakes are a critical part of our learning which can help us avoid traps in our thinking and decision making. By intentionally taking the wrong road, high payoffs can be achieved. In his book “Celebrate Your Mistakes” author John W. Holt Jr. says “If you’re not making mistakes, you’re not taking risks, and that means you’re not going anywhere” “The key is to make errors faster than the competition, so you have more chances to learn and win”. It is through the process of making mistakes that great ideas are born. It is unfortunate that many business today create organizations where mistakes are rare; rather than creating cultures where it is understood that the process of trial and error is not only a necessary cost of doing business, but can also ensure you remain competitive.
It is not hard to understand why companies don’t like making mistakes, after all they are made of people, and people don’t want to make mistakes. Generally as humans our driver is fear, the fear of failing, of looking like a jerk, of being rejected, or not being liked, and of course the fear of making a mistake. On a human level the reason we don’t like to make mistakes has much more to do with our own psychology, but we see the same expressions in the culture and strategy of organizations. The main reasons we avoid mistakes are that we as individuals are:
1. Overconfident and often blind to our limitations.
2. We do not effectively challenge ourselves to get the best because we are risk adverse and are rewarded for good decisions and penalized for bad ones.
3. We look for confirming evidence to support our self serving perceptions; we favor data that supports our beliefs and don’t see alternatives.
4. We assume that the feedback we get is reliable (which it can’t be if we do number three, it is tantamount to determining how cute you are by only asking your mother, sister and grandma who will of course vote for the affirmative).
The experts say that to get the most out of them, your mistakes must be deliberate. It is a bit of a paradox in that a mistake committed on purpose is what many of us would call an experiment, but the experts don’t agree. The Harvard Business Review explains that conducting experiments to confirm your assumptions is quite different from making a mistake; the difference is that deliberate mistakes are expected to fail, because they are based on your current assumptions. When a deliberate mistake unexpectantly succeeds, your assumptions are turned on their side, and that is when break through innovation happens. A good example is the advertising pioneer David Ogilvy, who deliberately included ads that he thought, would not work in order to test and improve his rules for evaluating advertising. More often than not the ads were failures, but the few that succeeded led to innovative approaches in advertising.
The Sydney Morning Herald ran an article “Israel admits mistake in Qana attack” The article described the attack on a residential building in the southern Lebanese town of Qana, causing the collapse that killed dozens, mostly women and children. Clearly this was not a deliberate or good mistake to make. The expense of a failed mistake should not be too high in comparison with the reward; naturally companies need to limit their risks in their mistake making. A company like Qantas would be foolish to test their jet engines on airplanes full of people, but would be really smart to test them in a simulator or wind tunnel.
To analise the trade off between making mistakes and the potential risk of those mistakes, companies should consider the following:
- The potential gain outweighs the cost of the mistake.
- Decisions are made repeatedly – e.g. Geyer would be better off making a deliberate mistake in the selection of a chair, than of a new headquarters sight for a client. The chair decision will be repeated again, so if we were wrong we could learn and make adjustments. The building decision is something our client will live with for 15 to 20 years; you don’t get a second shot.
- The environment has dramatically changed – there is a new competitive landscape and the current approach may no longer work
- The problem is complex and the solutions are numerous, the more complex the problem the less likely you will be to understand it completely. Your chances of getting it wrong are increased.
- Your organizations experience with a problem is limited – if you are unfamiliar you should be open minded in your approach again your chances of getting it wrong are high.
Microsoft’s Bill Gates noted that “every company needs people who have made mistakes – and then made the most of them”. This is really the key to mistakes isn’t it? We must learn from them and hopefully be smarter the next time round. Executive coaches, customer service gurus and people on the front lines of business offer the following six steps to help you learn from mistakes
- The surest way to diffuse a mistake is to fess up early. However they advise against using highly charged phrases like “I screwed up” or it is “all my fault” because people will remember such phrases and may well come back to haunt you. Apparently some companies prefer to call these “teachable moments” or “opportunities for improvement” but being from the ‘call a spade a spade camp’ I am the sort that needs to hit over the head pretty hard to get it. If someone told me I had just experienced a ‘teachable moment’ I would worry they were trying to get me to join the Church of Scientology or something.
- If it is your team, it is your mistake – If you lead a team or business unit and a mistake happens it is yours whether or not you had a direct role in creating it. Guess that points to the end of Ji Wei being my scapegoat.
- Follow – up and follow through – Mistakes don’t always have simple causes, they can be the result of a systemic problem that will happen again if not corrected. Since mistakes often involve more than one person it is worthwhile to conduct a thorough evaluation, which may well reveal something about you, or your colleagues work process.
- Isolate the ‘moment of truth’ these are the rare times when people can gather to learn from their mistakes. To do this you must act quickly and gather people for a play – by – play analysis of what went wrong to avert similar errors in the future. It is recommended that if you embed learning in your process you will not make the same mistake twice.
- The smartest mistakes you make are the ones you make yourself. However, avid supporters of doing things for yourself must acknowledge that there is danger in doing this too often. You must pick your lessons and learn from them, you can’t have 15,000 lessons.
- The best fix is a quick fix. For most of us who are struggling with keeping up with the pace of work it is difficult to find time for post mortems or learning plans. According to Bill Rosenzweig a partner at the San Francisco based Venture Strategy Group which consults with emerging companies on brand marketing and organizational development we at Geyer should pay particular attention to this. Rosenzweig says that “in companies that value passion and creativity over discipline and focus, people often claim they don’t have the time to evaluate their mistakes. I would argue that you don’t not have the time”
It is the people who most need to make mistakes that are the ones least likely to admit they have made one. Over confident individuals, and businesses, are generally not interested in subjecting themselves to being proven wrong. Such views are shortsighted, and can often impact the ability to succeed in the long run. Around the turn of the century Thomas Edison created a place where people could tinker, test their ideas and in some cases blow things up and try again. It is in this kind of environment that a tolerance for failure can be developed, and in turn real progress can be made. If a company wants its people to come up with ideas quickly, they need to cut some slack and tolerate failure.
I will leave you with a quote from the American baseball player Babe Ruth “Never let the fear of striking out get in your way”.
Speaking of baseball, I will be heading back to the United States this Thursday to watch my son participate in the Babe Ruth Junior World Series. Unlike the real World Series this tournament includes other countries such as Australia. My next Rambling will be from the road and may be less about workplace and business and more about airport security, perhaps supporting Peter Ruehl’s suggestion in this weekend’s AFR that the only solution to the airport security issues is “that people board planes in only their underwear. This should speed things up, make the trip more interesting and boost Mile High Club membership”
The Wisdom of Deliberate Mistakes
By Paul J. H. Schoemaker and Robert E. Gunther
The Harvard Business Review June, 2006
By Mike Hanley
Financial Review BOSS Magazine July, 2006
When NOT to Trust Your Gut
By Max H. Bazerman and Deepak Malhotra
HarvardBusinessSchool Working Knowledge
July 31, 2006
Undies Only, the Safest Way to Fly
By Peter Ruehl
The Weekend Australian Financial Review
August 12 -13 2006
Big Rewards Can Stick in the Craw, Howard Admits
By Fleur Anderson
The Weekend Australian Financial Review
August 12 -13 2006
It’s OK to Make a Mistake
By Robyn Henderson
Israel Admits Mistake in Qana Attack
By AP Digital – breaking news
The Sydney Morning Herald
August 3, 2006
My Smartest Mistakes
By Pamela Krueger
Fast Company October, 1997
Make Smarter Mistakes
By Pamela Krueger
Fast Company October, 1997
Why Can’t We Get Anything Done?
By Alan M. Webber
Fast Company May, 2000