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).

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.

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)

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.

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?

Ford Harding learns from a prospect who won't return his calls

Professional Services Sales Consultant Ford Harding, author of "Rain Making," shared a second mistake story.

In this one, he tells us of the profound teachings he received from a prospect who simply wouldn't call him back (right-click to download).

Related Post:
Ford Harding on sharing the good side and bad side with a reporter

Management Consultant Ford Harding - sharing "the good side and bad side" with a reporter.

Professional Services Sales Consultant Ford Harding, author of "Rain Making," was kind enough to share a mistake story for inclusion in The Mistake Bank.

Actually, he shared two. In the first, he relates a story that taught him there can be pitfalls in sharing the good side and bad side of things with a reporter (right-click to download).

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.

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.

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.

Mistake Bank #12 - Don't forget about support!

When I began my first job as a product manager, I inherited a new product that was being sold by a large partner. And once the first sale happened, I learned that having a support strategy is not optional.

The accidental filing system

Patsy Bates thought the deal was dead, so she could clear her files. Then her boss called...

Edited Transcript:

I was a buyer for a catalog company, actually two, run by the same person. We were not only buyers, but investors in the company, and we were also finding investors in the company - because we wanted to grow. And I remember introducing the president to one of our very good friends who was an investor. And I thought he'd be a good one to connect with Bob.

We got the meeting together, and they interacted. It was a positive meeting, I thought. But anyhow, at the end of the day, we did a lot of paperwork but it just never came together.

So, time went on, it was probably six months later, and I was working at home. My son was visiting us. It was a Saturday, a weekend. And we were sitting around, I was cleaning up my office. I cleared away a lot of papers that were no longer valuable to me. And I put them in the garbage.

Later in the day I got a call from the president of the company. He wanted to get back together with this investor; he wanted the names and he wanted to get all the paperwork I had on it, and would I please call him within an hour with all the information. Of course, this was all the information I'd just thrown in the garbage. I couldn't possibly tell him that on the phone. So I said of course it was in my file. If he would give me a minute I'd call him back, I'd get the information from my files, so we could connect these important two parties together. I went to my garbage can and pulled out all the papers I'd just thrown away. It took me a while to dig through the garbage to find it all.

I called him back with all the information. He was just so impressed with me, that I'd had it on file, and I'd got it back to him within an hour.

I got a big raise out of it. He thought I was such an incredible important part of this company because I kept such incredible files. Of course, he didn't see me pull it out of the garbage can. Which was a lesson for me. I shouldn't just say it won't connect, it's never going to work, so let's just clear out the papers and get them out of here.

It's good to hang onto papers for maybe two years, because God knows what going to happen down the line. Something might work when you think it doesn't work.

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