Monday, February 28, 2011

Tim Berry: Trying to quit the wrong way

Tim Berry, president & founder of Palo Alto Software, shares this story of a mistake he made much earlier in his career. This story first appeared on Tim's blog Planning, Startups, Stories.

I've made a lot of mistakes. This one wasn't my worst, but it's perhaps one of the more memorable, and one that might help you avoid the same thing. There is a moral to this story. It was August of 1981, early morning, in the office of John Lutz, managing partner of McKinsey Management Consulting in Mexico City. I was three months out of Stanford with an MBA degree, working for McKinsey Management Consulting in Mexico City. The McKinsey offices sat in a very stylish high-profile office building overlooking a critical freeway junction over Chapultepec Park, linking the fancy Las Lomas residencial area with Polanco and the Paseo de Reforma main business district. The streets were wet from rain overnight, and the freeway was, as almost always, jammed. The sky was dense, a mixture of rainclouds and smog.

I needed to quit. It was so embarrassing. I didn't like to see myself as the archetypical fancy MBA blowing off the first job. I was 33 years old, married, and my wife was expecting our fourth child. I was way too mature for this stuff. But still ...I had arranged a job waiting for me with Creative Strategies International in San Jose. From where I was, returning back to the San Francisco peninsula, Silicon Valley, seemed like returning from exile back to paradise. I liked Creative Strategies, and liked living back in the states. I wanted out of McKinsey.

I really didn't like the job with McKinsey. It was stupid to have taken it. It was a job meant for a 26-year-old single person blinded by ambition untrammeled by relationships. Like most professional firms, success involved putting up with a corporate culture that spent 12 to 14 hours a day in the office, whether or not there was work to be done. The firm actively discouraged families by encouraging long-term business travel but without families, and by running 5-day strategy meetings at beach resorts and forbidding families coming along, even at the family's own expense. I was not supposed to disagree with partners on well, you get the idea.

I certainly didn't belong. I'd been entrepreneurial for 10 straight years, making my own way with freelance journalism and, later, my own consulting, and I wasn't up to faking awe for the partners. And as a family, we didn't belong in Mexico City. I had loved that place for nine years in the 70s, it had been good to me, but I was done. My wife is Mexican, she grew up in Mexico City, and had family there, but she was tired of it too. The city was too big, too hard to deal with. We had left in 1979 and shouldn't have gone back in 1981. I fell for the money and prestige, stupidly, because it wasn't enough to keep me.

So, back in the office with John Lutz, did I tell him why I was leaving? That I didn't like the job, had made a bad decision, didn't like Mexico, I'm sorry, it won't work.

No. I didn't. I told him I needed a lot more money.

This is one of the best arguments ever for telling the damn truth, even when it's embarrassing. I'm still embarrassed, but I'm older now, and, well, I think this is a good lesson to share.

So they gave me more money, and then how dumb did I look?

I still left, and I left looking really stupid. Why didn't I just tell the truth in the first place?

So there's the moral to the story. You'll be in a situation where you're tempted to slant away from the truth to make it easier, but remember before you do how bad you'll look if the other side answers the wrong issue, forcing you to admit it was never the real problem. So here there is. It bothered me for a long time but that was 25 years ago or so, and hey, I've made a lot of other mistakes since, the sting has worn off on this one. I hope you find the story useful.

Friday, February 25, 2011

Mistake mini-story: Wesabe

This story comes from a NY Times article, "How Six Companies Failed to Survive 2010" and concerns one of those companies, personal finance website Wesabe.

WHAT WENT WRONG Ten months after Wesabe’s introduction, a competitor, Mint.com, appeared. As [co-founder Mark] Hedlund acknowledges, Mint had a better name and better design and was easier to use. Within nine months, Mint had 300,000 users and $17 million in venture financing. In 2009, Mint was sold to Intuit for $170 million.

LOOKING BACK Mr. Hedlund wishes he had simplified the consumer’s experience. “We wanted to help people,” he said, “but it was too much work to get that help.”

[Hat tip Tim Berry]

"Public relations firm took too long to change to home-based business"

Reporter Marcia Pledger of The Cleveland Plain Dealer has been collecting and publishing great small-business mistake stories for a while. Here's a nice one from entrepreneur Jeanne Bluffston about the cost of worrying too much about what others' perceptions might be:

A manufacturing company told me that if I started a public relations firm, I had its business. My next move was to find a location. Relationships are one thing, but I needed credibility for prospects.

Starting a business from my home 22 years ago was not even a thought. Back then, home-based businesses were not considered "real" businesses, so I leased an office.

I was making a lot of cold calls and one of the first things people wanted to know was where I was located. Just saying Chagrin Boulevard in Beachwood seemed to help the conversation go smoother.

I've been promoting manufacturers and service companies in the business-to-business world for a long time. I'm in the service business so I gladly go to them when we need to meet. It's all about convenience for the client.

My biggest mistake was taking so long to move my business from an office to my home. I wasted a lot of time on the road, and a lot of money on rent and gas, because I needlessly worried about perceptions....

read the rest of the story at the Plain Dealer site here.

Thursday, February 24, 2011

Max Weinberg of the E Street Band: Not doing research in a real-estate transaction

From the April 11, 2008, issue of the Wall Street Journal.

In 1984, [Max Weinberg and his wife Becky] paid $300,000 for a five-acre farm that was part of a development, also in Monmouth County, and learned a lesson that Mr. Weinberg hasn't forgotten.

The Weinbergs bought the property, part of a subdivision, from the developer, who initially planned to keep the farm for himself. The developer seemed impressive -- he wore fancy suits and drove a Cadillac -- but he was deeply in debt and needed to make a deal, Mr. Weinberg says. But Mr. Weinberg didn't know any of that -- and he didn't dig into the deed records that might have revealed it. (Mortgages usually are attached to deeds.)

After the deal was done, the seller pulled Mr. Weinberg aside. "You paid me too much for the house," he told him. "I was up to here in debt. I needed the money."

"Why didn't you tell me this 10 minutes ago?" Mr. Weinberg recalls asking.

"That's business," the man replied.

In the end, Mr. Weinberg made money on the deal -- he sold the house for $590,000 in 1997, records show. But he knows he could have had the house for less, and he says he resolved never again to be out-researched on a real-estate purchase. He credits that lesson with helping him in later deals, from his current land, which he bought in a complex transaction involving a land swap with the seller, to a house he's considering buying in Tuscany, Italy, for which he has studied up on wild boar, a local nuisance. (They can burrow, he has learned, but they can't jump.)

"My whole thing has been research," he says. "All the answers can be found in city hall."

The principals dissect the failed AOL-Time Warner merger, 10 years later

The most powerful lessons can be learned years after a mistake is made. This is especially true with a colossal failure. Only after much time has passed can the people involved shed their self-protective impulses and see clearly what happened.

There has been much written (for example here and here) about the 10th anniversary of the failed AOL-Time Warner merger (AOL again became an independent company in mid-December 2009). But nothing has been as compelling and rewarding to read as this New York Times article recounting the history of the merger from the viewpoints of the principal actors involved. Did you know that TW CEO Gerald Levin and AOL founder Steve Case first met at the 50th anniversary celebration of the People's Republic of China? I didn't either.

Once back in the States, Case began his pursuit:


MR. LEVIN We’re now back in the United States and I think Steve Case called me on the phone and in that conversation more than alluded to putting the companies together. I had my traditional script and quasi-legal background that when someone calls you on the phone, make sure they understand you’re not for sale, which we certainly weren’t, and decline any overture, which I did over the phone.


And the story goes on from there. It's riveting, candid, and revealing, and a must read for anyone who is eager to do a big merger. It might make them stop and think a bit.

Wednesday, February 23, 2011

Roughnecks learn to learn from mistakes

"Unmasking Manly Men" in the July-August 2008 Harvard Business Review has a grabby title and a thesis puncturing a resilient stereotype: one of the roughest, most macho, most dangerous industries in the world--offshore oil drilling--has developed a new work culture where workers support each other, where they are open and candid with their feelings, and...my favorite topic...where they admit mistakes and seek to learn from them.

The piece, written by professors Robin Ely of Harvard Business School and Debra Meyerson of Stanford University, states that the culture change was led from above, primarily as a way to improve safety and reduce accidents. And that worked--on-the-job accidents declined 84% over a fifteen-year period. Efficiency and productivity improved as well.

This culture of candor had at least on beneficial side effect--the company developed a new assessment of leadership potential based on ability to listen and learn rather than excellence as a roughneck. [A lesson to the many many professions out there that still select new leaders based on skill in the old job vs. capability for the new one.]

Developing a culture of destigmatizing mistakes, discussing them and learning from them makes the whole organization a lot more human, caring and fun. Oh, yeah, innovative, too.

Tuesday, February 22, 2011

The Red Cross owns up to a Twitter mistake


I'm sure Gail McGovern, the Red Cross CEO, was seeing red when this Tweet stream came out in mid-February. An honest mistake, by all accounts - a young staffer had gotten tripped up between a personal and business account using the Twitter application Hootsuite.

This faux pas provided a few seconds of laughter, but the response by the Red Cross will linger. They owned up to the mistake and showed a sense of humor. From the Red Cross' blog post after the tweet went viral:


We realized our honest mistake (the Tweeter was not drunk) and deleted the above Tweet. We all know that it’s impossible to really delete a tweet like this, so we acknowledged our mistake:
In the meantime we found so many of you to be sympathetic and understanding.  While we’re a 130 year old humanitarian organization, we’re also made of up human beings. Thanks for not only getting that but for turning our faux pas into something good.


Thanks to the Red Cross for showing that an embarrassing mistake can be handled with grace and humor!

(Hat tip Anne D. Gallaher)

Listrak's Ross Kramer on not investing in sales and marketing

This audio story comes from Ross Kramer, founder and CEO of Lititz-PA-based email marketing provider Listrak. When Ross Kramer started his first technology business, he focused on the technical side to the exclusion of sales and marketing. In retrospect, that was a mistake.

You can download the story here (3min 17sec).

Biography:
Ross Kramer started his first company, a web hosting firm named Vertex Internet, in his Penn State dorm room in 1997. He quickly noticed the struggles his customers were having in communicating with their customers efficiently and effectively, so he started Listrak to help with their email marketing needs. Under Ross’ direction, both companies have grown into technologically-advanced companies that are leaders in their industries.

Listrak services clients such as Daimler Chrysler, Motorola, L’Oreal and the Islands of the Bahamas from its Lititz, PA headquarters. Listrak is a two-time winner of the Central Penn Business Journal’s Top Fifty Fastest Growing Companies and the 2005 Growth Company of the Year by the Technology Council of Central PA.

Monday, February 21, 2011

Marissa Mayer on Google’s Biggest Mistakes

It's always refreshing to hear mistake stories from companies whose successes have given them mythical status. Consider Google. There have been so many stories written about their engineering prowess (here), their unique culture (here & here), etc., that it's easy to view them as mistakes (Though it's fair to say their public image has taken a bit of a beating recently.)

Anyway, here's Google exec Marissa Mayer on some of Google's mistakes along the way (she also does a nice job of discussing the value of making mistakes in an innovative business):



(Hat tip The Next Web)

Editor Tina Brown learns from Talk Magazine mistakes

There's an important difference between the kind of mistake stories you find here at the Mistake Bank and those you may read elsewhere. Here we focus on first-person stories. "I made this mistake, and here is what I learned." In other places you'll read about others' mistakes; say, Lindsay Lohan's.

The Mistake Bank is about learning from experience. The other type of story is about schadenfreude. Making us feel better about ourselves by dwelling on the problems of another. The dubious pleasure of schadenfreude lasts a few moments. Learning from our mistakes and others' lasts a lifetime.

Tina Brown, former editor of Vanity Fair and the New Yorker, talked to the New York Times ("At Newsweek, a Humble and Frugal Tina Brown") about her planned relaunch of Newsweek magazine, and shared this brief mistake story:

Ms. Brown would not reveal anything about the contents of the redesigned magazine or its debut. “We’re only going to do it when we’re ready, let’s put it that way,” she said in the interview. Between answering questions, she clicked through her BlackBerry, scanning e-mail.

“I think that big, sort of theatrical relaunches tend to set you up for failure and hype,” she added. “And you know we — I — went through that at Talk magazine, and it was a mistake.”

This is remarkable to me for several reasons. First of all, Tina Brown is not the first person you think of for being reflective or, as the Times headlines states, "humble." Second, she makes a subtle but profound shift in her statement. She first says, "you know we..." then shifts to "I went through that at Talk magazine, and it was a mistake."

Tina took ownership for the theatrical launch contributing to hype and ultimately failure at Talk. As such, she put herself in the position to learn from it, and not repeat it, in her new assignment. I respect that a lot, and look forward to what Newsweek will unveil in March 2011.

Scott Berkun on Learning From Mistakes

A few years ago, I found this essay by Scott Berkun, author of books like "The Myths of Innovation." Upon reading it, I was struck by how well-articulated his arguments are and how closely his thinking relates to what we're trying to do with The Mistake Bank.

It starts off like this:

You can only learn from a mistake after you admit you’ve made it. As soon as you start blaming other people (or the universe itself) you distance yourself from any possible lesson. But if you courageously stand up and honestly say “This is my mistake and I am responsible” the possibilities for learning will move towards you. Admission of a mistake, even if only privately to yourself, makes learning possible by moving the focus away from blame assignment and towards understanding. Wise people admit their mistakes easily. They know progress accelerates when they do.

And there's lots more. The section entitled "How to Handle Complex Mistakes" is particularly relevant--as is his discussion on the importance of keeping a sense of humor about yourself. Please give Scott's essay a read.

Friday, February 18, 2011

The $250 taxi ride (in 2011 dollars, $530)

I was working for GTE in 1984 and I had my first business trip--to Santa Cruz, CA, to attend a training class. (Yeah, I know, nice trip.) The trip got terrifically screwed up. The first thing I remember was seeing a picket line in front of Boston Logan's Terminal E. The sign said, "Continental's experienced pilots are on strike." Then there was snow in Denver, hours of delay, and of course I missed my connection to San Jose. They sent me to San Francisco, where I tried to rent a car. But it was past 11pm, and due to the Democratic Party Convention then going on, there were no rental cars to be had. I had a fistful of cash that the company had advanced me. So I convinced a cabbie to drive me to Santa Cruz. It cost $250: everything I had. We drove down the Pacific Coast Highway, but I couldn't see the ocean due to the darkness and fog. The rest of the trip my boss had to buy my dinners and ferry me around. When I got home, the accounting department thought I had a typo on the expense report. "You have a decimal place wrong." Uh, no. I was worried that I was in trouble, but my boss told me I had done the right thing. I had gotten to the class in time. Then I got a call to meet with Mike, my boss's boss.

The next day I sat down with Mike in his office. I thought I would get chewed out - but instead he congratulated me. "I think you did the right thing. And you didn't have anyone to ask, did you? So you did the best you could, and I'm sure you learned something. Nothing good can happen unless we try things, and not everything works out," he said.

Then he turned to his bookcase, and reached to the bottom shelf, where there were a bunch of copies of the same book. He slid one out and handed it to me.

"Read this. You can't have great successes without your share of mistakes." I looked at the cover. "How to Lose $100,000,000 and Other Valuable Advice" was the title. I put it in my bookcase and didn't pull it out until, oh, more than 20 years later.

Thursday, February 17, 2011

Textron Founder Royal Little stumbles by overruling his management

Royal Little (1896-1989) is one of the inspirations for this site. He was most famous for founding the conglomerate Textron (still going strong in 2011), but his most meaningful contribution for me was his autobiography, "How to Lose $100,000,000 and Other Valuable Advice." It's out of print now - but perhaps if someone who owns the copyright (it may very well be Harvard Business Press - but when I checked with them a few years ago they didn't think they did) falls in love with this site they'll reprint it. (I offer to write the Foreword!)

Little's book is an autobiography in mistakes. It's a wonderful upending of expectations - an exceptionally successful leader writing about everything he did wrong. It's a terribly human book, funny and sympathetic in a way that no chest-puffing "CEO memoir" ever could be.

Here's one of the stories from the book:

Homelite Four-Cycle Engine

In those days the only other well-known outboard motor company was Champion. Allan Abbott [head of Homelite, a Textron subsidiary] spent some time with them and tested some of their motors but decided against buying the company which, incidentally, had a negative net worth at the time.

A lightweight four-cycle engine was originally developed for the small Crossley car, which was to have been made right after World War II. Somehow or other the engine got to Twin Coach where its development was carried on further by Lou Fageol. Finally Twin Coach decided they couldn't handle it, so Lou Fageol and a partner, Crofton, took it over and carried on the development.

Lon Casler somehow heard of Lou Fageol and got enthused about their engine. In addition to the four-cycle outboard, Lou apparently had a design for an inboard-outboard motor and may have had a patent; and, of course, Homelite made a deal that involved a purchase and some royalties. This was done at my insistence with Allan Abbott objecting and predicting failure - but I was determined to get into outboards.... Incidentally, Lon Casler was Textron's acquisition vice-president and a tower of strength to me.

The lightweight four-cycle outboard engine had many advantages: it was much quieter than two-cycle engines, it eliminated the regular outboard's exhaust problem (it wasn't a "stink pot"), and the engine could be run efficiently at any speed. The owners loved them but it cost so much more than the two-cycle engine that the market was very limited.

The deal was made in 1957, but after about three months, Homelite concluded the project should be killed. But I decided that Homelite should continue - at least for another year - which was against their better judgment. Among our reasons for asking Homelite to continue was the fact that the engine had been featured on the cover of Textron's annual report. How's that for an excuse to continue a loser?

When we all agreed to let Homelite abandon the outboard business, Dick Fisher, who was the founder and principal owner of the Boston Whaler Company, was reluctant to see the engine go out of production, so he formed a new company, which bought it for some cash and some notes.

So the Homelite four-cycle engine was a hell of a development which lost a lot of money for a lot of people. Allan Abbott tells me it cost Textron at least $5 million.

Advice: Don't force a division president to take on a product that he's not sold on. He will undoubtedly know more of its potential than you ever will.

pp. 183-184

(c) 1979 Royal Little and the Harvard University Graduate School of Business Administration

Wednesday, February 16, 2011

Thanks, Tim

I'd like to welcome everyone here who stopped by based on Tim Berry's blog post today. Tim has been a supporter of the Mistake Bank work from the very beginning; in fact, there is a trove of stories from Tim, both from his blog and from an interview we did last year, that will be making their way over to this site over the next few weeks. Stay tuned. (If you can't wait that long, you can listen to the entire Mistake Bank interview here.)

Also, it was a recent post of Tim's ("5 Vital Truths About Business Mistakes") that gave me the kick I needed to get my collection of various and sundry mistake-related materials organized and presented in this forum. To quote Tim's post:

What worries me most about how much we all make mistakes is the whole mystique about excellence that leads to denial and distortions. I think of the song by Shaggy, ‘It Wasn’t Me.’ Reflect on your own work: do you make mistakes? If you don’t answer that with an immediate ‘Yes,’ then you’re in danger of being one of those delusional managers who blames others.

Accept that you make mistakes; reflect on them; learn from them; don't beat yourself up about them. That's our motto here. Hope to see you around more. (Use the subscribe link at the right to make sure you never miss a story!)

Tuesday, February 15, 2011

Not raising prices - a mistake

From The Mistake Bank:

Here are a couple of stories, one from my mother-in-law and a related one from my experience, that discuss how something as well-meaning as holding off on price increases until there's no other option often backfires.

Click here to listen to the story (2 min 45 sec).

Friday, February 11, 2011

Sales Consultant Jill Konrath - How not to get to high-level decisionmakers

A sales mistake story from "Selling to Big Companies" author Jill Konrath.

One of the prospects I uncovered while cold-calling was Trussbilt, a company directly across Como Avenue from Quality Products....

Back then, I was working with Tinsey, a very articulate woman who told me she was in charge of the copier decision. Shortly after our first meeting, I read a book that said salespeople should only work with the top dogs - not their underlings.

Since my contact was an administrative assistant, I realized I needed to rectify the situation immediately. I called Mr. Big directly and set up a time to meet. Then I prepared like crazy to ensure I did a great job.

Unfortunately, I never had a chance to capitalize on this opportunity. Tinsey came to the lobby to escort her boss's visitor to his office. When saw me, she demanded to know why I was there.

"I'm here to see Mr. Big," I replied, suddenly not so sure if the tactic I'd taken was appropriate. I was right. She proceeded to yell at me like I've never been yelled at before.

I was appalled. Mortified. And suddenly very light-headed and shaky. I fainted dead away right there in the middle of the lobby.

As you can imagine, I never did business with Tinsey or Trussbilt. But I sure did learn that once you're working with someone it's never appropriate to go around them without their knowledge. They'll get mad. Furious. It's a normal human reaction.

Today, to ensure my ability to work with whomever I want in an account, I always tell prospects, "Usually when I'm working with clients, I need to talk with the VP of Sales, Regional Sales Directors and sometimes even Marketing." Doing it this way prevents the people problems that can derail your sales efforts.

Thursday, February 10, 2011

Learning from a bad acquisition leads to success at Best Buy

There's a great mistake story at Strategy & Innovation told by Brad Anderson, former CEO at Best Buy. He discusses how they messed up a significant acquisition of mall record store Musicland, but applied those lessons to its subsequent market segmentation strategies, which helped the company emerge from the financial crisis as the leader in electronics retailing:

By 2000, Best Buy was reaching the limits of a growth strategy it had pioneered in 1989 with great success: selling consumer electronics -- computers, TVs, stereo equipment, and the like -- through noncommissioned sales staff in brightly lit, low-cost, free-standing “grab-and-go” stores. It was a simple idea, borrowed from the big-box general retailers, enabling Best Buy to radically undercut the leading competitors like Circuit City, which were operating according to the industry-standard business model: advertise loss leaders to get people into the stores and then use the talents of commissioned sales people to upsell to something far more profitable. 
Looking for avenues of growth, Best Buy could see potential in malls. Musicland, which sold CDs in malls, looked like a smart entry point. “We sold CDs; Musicland sold CDs,” Anderson explained. “We knew CDs were going to disappear; we weren’t that stupid. But we also knew an awful lot of product was being sold in malls.” 
The strategy wasn’t nearly that simple, of course. In 2000, Musicland was a $1.7 billion company generating about $100 million in cash. Since everyone knew CD technology was terminal, Best Buy was able to buy the mall retailer for a bargain price of $600 million. At the time, Musicland, like all the other music retailers, turned over its inventory twice a year. But Best Buy had learned to double that rate in its own stores, and sales had gone up. “So we thought, ‘Wow, how much cash could we create if we go buy the guy that sells it in the malls and move his turns, which were two, to four?’ ” If Best Buy could apply its merchandizing skills to Musicland to double its turnover, the theory went, revenue gains would pay back the investment quickly, and as CD demand declined, Best Buy could bring in its other products, which it could sell for far less than they were currently being sold in other mall stores. It looked like a no-brainer. 
But, as Anderson put it bluntly: “We misread totally what was going on.” Best Buy had increased turnover by decreasing selection, something its customers were apparently tolerating but Musicland customers would not. When the selection declined in the Musicland stores, sales dropped. What’s more, Best Buy initially maintained Musicland’s CD prices, which were $5 higher than at Best Buy stores. Customers assumed that if they were paying mall prices for CDs, they were overpaying for all the other merchandize Best Buy brought in, even though in reality the company was selling its other goods for the exact same low prices it was offering in its stores outside the mall. Dropping Musicland’s CD prices way down to Best Buy levels didn’t shake that impression, nor did rebranding stores under the Best Buy name.
Eventually Best Buy realized that it didn't understand deeply who its current customers were, and who its non-customers were. When they studied that issue, they learned that women, who shopped in mall stores, recoiled from Best Buy's selling proposition. With that knowledge in hand, the company retooled, and focused on female shoppers as a key buying segment. It was too late to save Musicland, which was shut down in 2002, but soon enough to re-energize Best Buy, the success of which drove its nearest competitor, Circuit City, into bankruptcy in 2008.

(Hat tip Rita Gunther McGrath)

Wednesday, February 9, 2011

Are positive recognition & confronting mistakes in conflict?

I learned a lot from reading Edward Hallowell's new book, "Shine: Using Brain Science to Get the Best from Your People," but I have significant disagreements with this section:

Recognition is so powerful because it answers a fundamental human need, the need to feel valued for what we do. Managers are in a unique position to offer—or withhold—such recognition, and with it, the feeling of being valued.... 
Yet many organizations spend more time focusing on errors and shortcomings than on giving recognition. They dissect failures and give “constructive” feedback that actually is often destructive. Steeped in many organizations’ collective consciousness is the idea that exposing mistakes leads to improved performance. The need to learn from mistakes is one of our most time-honored principles, drummed into us from early in our lives, through our educational years, and into our careers. But new research is showing otherwise, as does most people’s daily experience. Think about it. Do you usually learn from your mistakes? Or do you just feel embarrassed or upset and try to forget or cover up what happened? Do performance reviews that detail your shortcomings really help you? Or do they bring you down? Does being criticized in public improve your performance, or not? People do vary on these issues. Some people actually do improve after a public humiliation or a scorching performance review. But I challenge the absolute sanctity of the learn-from-your-mistakes credo. Certainly, when a person errs, and a manager notices it, there is a chance to learn. But there is also an excellent chance for emotions of shame and fear to short-circuit whatever higher learning process might otherwise develop in the brain. (pp 163-164)

It's hard to argue with Hallowell's precise language here. Who wouldn't rather receive a pat on the back than a dressing down? And most companies are ham-handed with how they confront errors--as witch hunts to assign blame rather than exercises to expose flawed assumptions or systematic weaknesses.

But his underlying premise is wrong, in my view. Confronting and learning from mistakes is not the opposite of positive recognition. And they are not mutually exclusive. In fact, a highly positive culture is required to give employees safety to reveal and correct mistakes quickly, rather than hide them. The research of Amy Edmondson asserts this very fact. She was perplexed by the findings that nurses in "safe" cultures committed more mistakes than nurses in less safe environments, until she discovered that psychological safety allowed the nurses to be more candid in revealing and discussing mistakes rather than hiding them.

Beyond that, isn't it clear that not confronting mistakes, not probing weaknesses in the business, etc., is delusional and dangerous? So we shouldn't be discussing whether to learn from mistakes, but how to do so effectively and without shaming our employees.

Perhaps Hallowell could reconsider his point that recognition is incompatible with learning from mistakes, and in fact come around to the idea that positive recognition, allowing employees to "Shine," and the ability and culture to root out, learn from, and address errors and mistakes throughout the organization are all components of high-performing leadership.

Great innovation requires great teams, candor, and acceptance of mistakes

Some research by Harvard Business School professor Amy Edmondson on team learning is important to our discussions of sharing and learning from mistakes. The research centered on explaining a paradox--why in her studies did excellent teams make more errors than poor teams?

The answer, as you might expect, was greater candor and its corollary, greater confidence and openness to learning. Good teams simply communicated better, and, in a learning environment, that meant surfacing and talking about mistakes.

In a discussion about the topic with HBS Working Knowledge, professor Edmondson summarized her findings thusly:

In well-led teams, a climate of openness could make it easier to report and discuss errors—compared to teams with poor relationships or with punitive leaders. The good teams, according to this interpretation, don't make more mistakes, they report more. When I suggested this to physicians involved in the study, they were skeptical. Their response was understandable: With a research grant for the purpose of identifying the error rate, this idea was decidedly unwelcome. My interpretation of the data suggested that we might not be finding the definitive error rate—and further errors might be systematically underreported in certain units but not others. Their skepticism forced me to work hard to develop ways to support my proposition, which ultimately they came to see as reasonable, if not obvious in retrospect.

Once again, we see that learning in adults means supressing instincts for self-protection, defying organizational incentives to conform and be "team players," and ignoring ingrained concepts like division of labor and roles/responsibilities.


This is from a 2006 working paper on the subject, "When Learning and Performance Are At Odds" from Professor Edmondson and her collaborator, Sara Singer:

...Effectively conducting an analysis of a failure requires a spirit of inquiry and openness, patience, and a tolerance for ambiguity. Such an inquiry orientation is characterized by the perception among group members that multiple alternatives exist, frequent dissent, deepening understanding of issues and development of new possibilities, filling gaps in knowledge through combining information sources, and awareness of each others’ reasoning and its implications(Argyris et al., 1978). Such an orientation can counteract common group process failures. Learning about the perspectives, ideas, experiences, and concerns of others when facing uncertainty and high stakes decisions, is critical to making appropriate choices.


Looking at this through the prism of innovation, you can see how using the whole disorderly team, how arguing and soliciting dissenting views is essential. Innovation means confronting the unknown, the complex, the ill-defined. Mistakes are to be expected, not avoided. Confronting, embracing failure, then gathering the entire teams's viewpoints on what didn't work and how to fix it, then stepping back and trying a different tack, is essential. Locating dead ends and understanding failure quickly and changing course leads to faster innovation development, lower cost and higher probability of eventual success.

Monday, February 7, 2011

NOMO Concert - a plan where everything went wrong















(click on comic to enlarge)

See the original on Bitstrips here.

Fran Ten of West Indian Girl - not using the "setup we know works" on a radio performance

This story is from Fran Ten, who is the bassist for the LA band West Indian Girl. Fran shared a story about a radio appearance, involving a suggestion his West Indian Girl bandmate, Rob James, had about using a new instrument.

There was one time, we had a radio gig, and Rob thought that someone should play a harmonium, you know, that Indian instrument? On his acoustic set. And it sounded like shit. Right? It sounded horrible.

I said, “You know, Rob, that was a mistake. We are never bringing a harmonium again to an acoustic radio show. You’re just going with your guitar, or this setup we know that works.”

But we tried it. At least we tried it. Business-wise, you have to keep making mistakes. Isn’t that how you grow?

Friday, February 4, 2011

Thursday, February 3, 2011

The idea of a "failure resume"

In the Silicon Angle blog in August 2009, Tina Seelig wrote ("You Can't Spell Failure (or Success) Without 'U'") that she requires her students to write a "failure resume"--a document in which they document their failures and what they learned as a result. Seelig writes this:


[The students] realize that viewing their experiences through the lens of failure forced them to come to terms with the mistakes they have made along the way and to extract important lessons from them. In fact, as the years go by, many former students continue to keep their failure résumé up-to-date, in parallel with their traditional résumé of successes.
A failure resume is a quick way to demonstrate that failure is an important part of our learning process, especially when you’re stretching your abilities, doing things the first time, or taking risks. We hire people who have experience not just because of their successes but also because of their failures. Failures increase the chance that you won’t make the same mistake again.
Failures are also a sign that you have taken on challenges that expand your skills. In fact, many successful people believe that if you aren’t failing sometimes then you aren’t taking enough risks. Additionally, it is pretty clear that the ratio of our successes and failure is pretty constant. So, if you want more successes, you are going to have to tolerate more failure along the way. 
I'd agree wholeheartedly. What would you put on your failure resume?


(Hat Tip to Tony Joyce)

Lessons from Multiplayer online games- embrace of failure and iterative learning

In the May 2008 HBR article "Leadership's Online Labs," the authors discuss the results of a study of high-performing users of Massively Multiplayer Online Role-Playing Games (MMORPGs), like World of Warcraft. In these games, participants worldwide take on roles and participate in quests and adventures--requiring the players to act in concert to achieve their objectives, planning together and using their varied capabilities to, for example, storm and take control of a castle against determined adversaries.

The article focuses on how the lessons learned by the MMORPG standouts could be applied to business. One passage in the article was very relevant to the Mistake Bank concept:


Trial and error play a big role in accomplishing game tasks. Failure, instead of being viewed as a career killer, is accepted as a frequent and necessary antecedent to success.


In one incident that we recorded from EverQuest, seven guild members prepared for a brand-new quest that required them to get their team across a large lake protected by a gruesome and hostile creature. Although they had formulated a strategy based on information gathered in advance, everyone seemed comfortable with the high likelihood of failure, at least initially. After a first attempt, in which the whole team nearly drowned and was forced to retreat, members quickly began plotting a new strategy in the spirit of a fundamental gamer maxim (one not heard very often in business): “Let’s try that again.”...


Frequent risk taking allows players to practice the art of weighing odds calmly in uncertain environments. Confronting risk routinely and with a level head will be an important leadership skill as the real-world business environment becomes more uncertain and as success comes to depend more on innovation than on execution. Organizations can help prepare leaders by fostering a culture in which failure is tolerated. They can expose leaders to risk by mimicking the structure of games, breaking down big challenges into small projects. Failure, after all, is clearly more palatable for the individual and more affordable for the organization when it happens at the project level rather than on a larger scale.

"Failure is a frequent and necessary antecedent to success." These few words illustrate one of the major systemic failings of companies today: instead of encouraging and learning from failures and mistakes at the project and small-group level, and adjusting course or changing behavior as necessary, they repress failure, refuse to acknowledge it, and don't learn. Resulting, of course, in a larger-scale catastrophic failure that everyone could see coming yet no one could acknowledge or do anything about.

An almost hiring mistake from Mike Southon, founder of Instruction Set

[This story is from Mike Southon, Chairman of Beermat, an online resource for entrepreneurs, and founder of Instruction Set Ltd., a UK computer-services firm sold to Cap Gemini in 1989.]

I remember one story when Instruction Set got to about twenty-five people, and I was running sales. I hadn't really done sales before. I thought, "I'd better hire a grown-up." So I went to a recruitment agency and these CVs arrived--people with fantastic credentials. There was this one particular gentleman, and his motto was "Give me the bullets, and I'll fire them," because he said he'd doubled revenue everywhere he'd been. So I thought he was a good guy. He came in, extended a big handshake, made eye contact, and said, "Yes, give me the bullets; I'll fire them. Michael, I'll double your revenue. That's what I do."

So I asked him to meet everybody. His body language with different people was fun. With all the ladies, he was staring at the cleavage. With other directors, it was the big handshake and "Give me the bullets; I'll fire them." I thought that must be what salesmen are like. Then I took him to lunch, and the waitress made some error--I can't remember what it was--and he tore off a strip of her in front of me, to show how tough he was. I thought, "What an idiot."

I went back to the office and thought, that's what you have to do; you hire people like that. And I decided that no, I was not hiring him; the man's an idiot. People were knocking on my door, asking what I thought of the guy. And I said, "Sorry, I should hire him because he's brilliant and he'd double our revenue, but I didn't like him, so I'm not hiring him." They said, "Thank God for that. We all thought he was an idiot as well."

So instincts were right. I sent him an email saying that I was really sorry, that we were a bit strange at the Instruction Set, that we didn't behave like normal companies, and that he'd probably be brilliant elsewhere, but here he wouldn't be perfect, but best of luck. I got a week of abusive emails from him.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Starting a Business. Copyright (c) 2008 Fifty Lessons Limited; All Rights Reserved.

A mistake story from Interface CEO Ray Anderson: Be careful using other people's money to make acquisitions


[This story is from Ray Anderson, Founder and Chairman of Interface, Inc., a manufacturer of carpeting and fabrics.]

When we began [Interface], I made the initial investment personally. And then friends came in, then a much larger partner joined in, and we eventually financed the company. And, by the way, the day we had our finance all in hand is the day we count as the birthday of Interface. Up to then, everything is conception and gestation, beginning with the gleam in my eye, perhaps the idea; but it’s only when you have your money in hand that you can truly call yourself a company. And that’s the birthday.

Interface, after getting through that treacherous startup, in the teeth of the worst recession since 1929, really hit a home run year after year, 70 percent compound growth. And then ten years later we went public, and for the first time had access to other people’s money. Investors who bought shares in the stock, our expanded capital base of Interface, enabled us to begin to make acquisitions, and we made acquisitions in Canada, in Northern Ireland, and eventually in the United Kingdom and in Holland. And then in 1998, when the company was fifteen years old, we were a global company. Then we made other acquisitions, made subsequent stock offerings to the public, and had people subscribe to the stock and further expand the capital base, which enabled us to do more. We leveraged other people’s money time and again over the years, so much so that it got to be a little too easy to access it.

And then we made a concentrated series of acquisitions to create a downstream distribution system. We made twenty-nine acquisitions, over a very short period of time, of contract dealers, the people who install and maintain their products. We wanted a captive, owned distribution system, and we invested $150 million of other people’s money, basically by selling stock and doing bond offerings. And it was too easy.

If we’d been spending our own money, we would have thought very hard about those acquisitions. In the long run, they turned out to be a mistake, and six, seven years later we began to dismantle this distribution system and liquidate it, selling the businesses back to the owners or back to the employees. And we might not ever have undertaken that unfortunate series of investments if we’d been investing our own money. We would have questioned it.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Starting a Business. Copyright (c) 2008 Fifty Lessons Limited; All Rights Reserved.

Advice from Spectra Energy CEO Paul Anderson: "Bosses, choose your words carefully"

From The Mistake Bank.

[The Mistake Bank has received permission to publish excerpts from the Harvard Business School Press/50Lessons series "Lessons Learned: Straight Talk from the World's Top Business Leaders," The books are full of great stories, including some very useful mistake stories. This one is from Paul Anderson, Chairman of Spectra Energy]


As I progressed in my career and got into increasingly more responsible or powerful roles, …it was almost like my words took on the power of the position, and things that were casual before were no longer casual. I had my first example of this when I was a manager. It was fairly early in my career, and a woman named Sarah had come in. I was running a planning organization, and Sarah came in to me and said, “Look, I don’t have any background in planning—I’m from the IT group—but I would love to join your organization. I’ll work hard to learn what I need to learn to do a good job. I will strive to do anything you need done. Just give me a chance.”

I said, “Well, that sounds fair to me. Why don’t you join the organization? I’ll give you a year. At the end of the year you will either be a planner and contributing; or, if it’s not working out, you can go back to the IT group, and we’ll assume that it was a nice try but it didn’t work out.”

So she joined the organization and she was outstanding; she was the best new employee we had that year. She took on everything; she learned. She became the “go-to” person—everybody came to her with their issues. She was a star, there was just no question; she was doing an outstanding job.

And I thought, “Well, this has to be one of the best moves that I’ve ever participated in,” and I was quite comfortable that things were working out nicely. But at the end of a year, she came into my office, and she was in tears. I said, “Sarah, what’s wrong?” And she said, “Well, I don’t understand why it’s not working out. At the end of a year, you said you’d tell me if it was working out and you haven’t told me that, so I must assume that it’s not working out and I’m going to have to go back to IT.” I was flabbergasted, and of course I told her, “Hey, you’re doing a great job!”

But it struck me that I’d made a casual comment: “…in a year we’ll know.” She had gone back to her office and marked her calendar, and, by God, at the end of a year she expected me to walk into her office with a decision. That casual comment was very powerful to her, and so insignificant to me, that it really struck me that I had to be very careful in making comments as I went along.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Managing Your Career. Copyright (c) 2007 Fifty Lessons Limited; All Rights Reserved.

Wednesday, February 2, 2011

Choreographer Twyla Tharp on the usefulness of failure

In the April 2008 Harvard Business Review, editor Diane Coutu interviews choreographer Twyla Tharp, creator of avant-garde dances as well as the Broadway show "Movin' Out." Tharp mentions some important thoughts on failure.


If you do only what you know and do it very, very well, chances are you won't fail. You'll just stagnate, and your work will get less and less interesting, and that's failure by erosion. True failure is a mark of accomplishment in the sense that something new & different was tried. Ideally, the best way to fail is in private.... I have also sometimes failed in public, and that's very painful. But failing, even in this way, is not useless. It can force you to get yourself together and to produce something new.

Tuesday, February 1, 2011

Mistake Bank Video Podcast - Misusing an Assistant

When I got overloaded at one job and was allowed to hire an assistant, I thought my troubles were over. But I had just pushed them onto my new hire, and they came back to me pretty soon.

James McCann of 1-800-Flowers on recovering from poor due diligence

From the New York Times, Sunday March 16, 2008, an interview with 1-800-Flowers.com CEO James McCann:


In 1986 I bought the assets of a failed floral company in Texas called 800-Flowers and took that name. I thought I was smarter than everyone else and neglected to hire lawyers and bankers to do due diligence. I unknowingly signed for all liabilities, which I later learned was a debt of $7 million.

People advised me to file for bankruptcy. Then my grandmother took me aside and said: “This bankruptcy thing? We don’t do that. Find another way.” I worked like an animal to get out of that hole....

If you look at highly successful people, they make the same number of mistakes as others, but they recover quickly. They don’t sit around moaning about what they’ve done wrong.

A more complete retelling of this same mistake can be found in this article in Inc Magazine.

The Mistake Bank Manifesto

I've been reading the new book "Senior Leadership Teams: How to Make Them Great," by Ruth Wageman, Debra Nunes, James Burruss and Richard Hackman. Very close to the end of the book I found a passage that is a better explanation of what's behind the Mistake Bank than anything I could write myself. While it's focused on senior leaders, I think the ideas work for anyone who has a job or owns a business. [I'll do a full review of the book next week. Sneak preview: it's very good.]

To learn continuously... requires that senior leaders move beyond well-practiced leadership habits and well-learned personal models of what makes for a great leadership team. What's needed is active experimentation with new and unfamiliar leadership strategies, and whenever there is experimentation expect that there will also be failure.. More often than not, trying out a new grip or swing in golf or tennis results in worsened performance for a while. But these experiments also generate learnings that cannot be had otherwise. The same is true for experimentation with leadership strategies and skills.

In fact, error and failure always provide more opportunities for learning than do success and achievement, because failures generate data that you can mine for insight into how you might improve your assumptions or your mental model of team leadership. Indeed, the bigger the failure, the greater the learning opportunity. To learn from failure requires that you ask questions that arouse anxiety (for example, about the validity of your deeply-held assumptions or about personal flaws in your diagnosis or execution abilities). Learning from failure also requires that you gather data that can help answer those questions and then adapt your mental models and your behavior. These activities are not natural or comfortable acts, and they are especially unnatural for successful people who have limited experience in learning how to learn from error and failure. (p. 204)

Copyright 2008 Harvard Business Press

More learning from mistakes

Here's a recent article from LiveScience that discusses research on what part of the brain is used when we learn from mistakes. According to research at the University of Exeter, in the UK, test subjects' lower temporal brain exhibited heightened activity--within 0.1 seconds--when the subjects saw information that contradicted a choice they had made.

And here is a December 2005 interview from ExpressIndia with Ela Gandhi (click here for an audio interview), one of the descendents of Mahatma Gandhi, wherein she paints a fascinating picture of him becoming the Mahatma by stumbling, then seeking to learn:

Though trying to follow in the footsteps of her grandfather, she sometimes falters. ‘‘I try my level best to be like Mahatma Gandhi. But, everytime I don’t succeed in following the Gandhian principles.’’

Then, she contemplates what went wrong and makes changes accordingly. ‘‘And that’s how I regain the Gandhian pathway. After all, making postive changes in yourself is one of the Gandhian principles.’’ Even the Mahatma was ‘born’ in a similar way. ‘‘You must know my grandfather was not born a ‘Mahatma’. Like us, he also committed mistakes. But he transformed himself, by learning from his mistakes. A practice not followed by many.’’


So, reflect on your mistakes, improve on them, and get a little bit closer to greatness.

(Photo: "Gandhi Ji" by vinish via stock.xchng)

Great innovation requires great teams, candor, and acceptance of mistakes

While preparing yesterday's post on the business value of dissent, I stumbled upon some research by Harvard Business School professor Amy Edmondson on team learning. The research centered on explaining a paradox--why in her studies did excellent teams make more errors than poor teams?

The answer, as you might expect, was greater candor and its corollary, greater confidence and openness to learning. Better teams simply communicated better, and, in a learning environment, that meant surfacing and talking about mistakes.

In a discussion about the topic with HBS Working Knowledge, professor Edmondson summarized her findings thusly:

In well-led teams, a climate of openness could make it easier to report and discuss errors—compared to teams with poor relationships or with punitive leaders. The good teams, according to this interpretation, don't make more mistakes, they report more. When I suggested this to physicians involved in the study, they were skeptical. Their response was understandable: With a research grant for the purpose of identifying the error rate, this idea was decidedly unwelcome. My interpretation of the data suggested that we might not be finding the definitive error rate—and further errors might be systematically underreported in certain units but not others. Their skepticism forced me to work hard to develop ways to support my proposition, which ultimately they came to see as reasonable, if not obvious in retrospect.

Once again, we see that learning in adults means supressing instincts for self-protection, defying organizational incentives to conform and be "team players," and ignoring ingrained concepts like division of labor and roles/responsibilities.


This is from a working paper on the subject, "When Learning and Performance Are At Odds" from Professor Edmondson and her collaborator, Sara Singer:

...Effectively conducting an analysis of a failure requires a spirit of inquiry and openness, patience, and a tolerance for ambiguity. Such an inquiry orientation is characterized by the perception among group members that multiple alternatives exist, frequent dissent, deepening understanding of issues and development of new possibilities, filling gaps in knowledge through combining information sources, and awareness of each others’ reasoning and its implications(Argyris et al., 1978). Such an orientation can counteract common group process failures. Learning about the perspectives, ideas, experiences, and concerns of others when facing uncertainty and high stakes decisions, is critical to making appropriate choices.


Looking at this through the prism of innovation, you can see how using the whole disorderly team, how arguing and soliciting dissenting views is essential. Innovation means confronting the unknown, the complex, the ill-defined. Mistakes are to be expected, not avoided. Confronting, embracing failure, then gathering the entire teams's viewpoints on what didn't work and how to fix it, then stepping back and trying a different tack, is essential. Locating dead ends and understanding failure quickly and changing course leads to faster innovation development, lower cost and higher probability of eventual success.

Scott Berkun on learning from mistakes

While working on The Mistake Bank, I found this essay by Scott Berkun, author of books like "The Myths of Innovation." Upon reading it, I was struck by how well-articulated his arguments are and how closely his thinking relates to what we're trying to do with The Mistake Bank.

It starts off like this:

You can only learn from a mistake after you admit you’ve made it. As soon as you start blaming other people (or the universe itself) you distance yourself from any possible lesson. But if you courageously stand up and honestly say “This is my mistake and I am responsible” the possibilities for learning will move towards you. Admission of a mistake, even if only privately to yourself, makes learning possible by moving the focus away from blame assignment and towards understanding. Wise people admit their mistakes easily. They know progress accelerates when they do.

And there's lots more. The section entitled "How to Handle Complex Mistakes" is particularly relevant--as is his discussion on the importance of keeping a sense of humor about yourself. Please give Scott's essay a read.