Board member applauds executive for explaining a big mistake

From Adam Bryant's interview with Intuit CEO Brad Smith, in the New York Times Corner Office column. Bryant's latest book is, "Quick and Nimble: Lessons from Leading CEOs on How to Create a Culture of Innovation."

I spent six years in a job prior to Intuit, doing a range of jobs in marketing. I started the Internet division during the dot-com boom. I convinced the board to give us $40 million to sign two e-commerce deals, telling them that we could sell more things online than our sales force could sell. I told them we wouldn’t even need a sales force. After $40 million, we sold just 15 units.

So when I went to meet with the board, I figured that I was going to get fired. I called my parents, and my dad said: “Just go in and say: ‘Here’s what I thought. Here’s what happened. Here’s where I was wrong, and here’s what I would do differently.’ ”

I did that, and when I was finished, one board member started clapping and said: “You know what? You are more valuable to us now for three reasons. The first reason is that you won’t make that mistake again, so we want you to go and make a bunch of new mistakes. The second is that your engineers built a killer product, and now our salespeople have something they can put in their sales bag. And the third is the competition is all trying to convince the street that we’re old school and they’re going to do everything online. You just proved that that’s not likely, so we’re smarter as a result.”

A former CFO makes a deal on a handshake - and pays the price

Another story from Adam Bryant's Corner Office series. Bryant's new book is called Quick and Nimble: Lessons from Leading CEOs on How to Create a Culture of Innovation. This story is from Noreen Beaman, CEO of Brinker Capital.

I was about 35 and Brinker’s C.F.O., but I went into sales to get that experience. And I went out and I made a deal on a handshake. Because I was C.F.O. and had been so careful for the 10 years before, the people I worked for thought, “She’ll never do anything foolish.” So of course I did. I closed a big deal on a handshake, and it blew up. I should have been fired.

I lost all my political capital at Brinker. I had been there for more than 12 years, and now I was in the penalty box. But I worked really hard at sales and became the No. 1 salesperson — only because I worked hard, not because I’m a natural salesperson. I had to really dig in and do something I wasn’t good at.

But it made me more accessible to people I worked with. They still joke about it today, though it was 20 years ago. They’ll say, “Oh, remember when you did that?” And I’ll say, “Yes, I remember when I did that.” It made me have more humility.

Taking care of visitors - a sales mistake

Many years ago, I worked on a proposal to sell an information security system to Hong Kong Telecom. I worked for a very large company and the proposal was a joint effort of our Hong Kong team and our telecom experts in the US (I was part of the US team).

After submitting the proposal, we learned that the HKT procurement team would be visiting the finalists for a site visit and product demonstration. We let the team know they should rent a car at Boston Logan Airport, and gave them directions to where our office was. We had a very nice presentation, served a sandwich lunch, and they left.

Within a few days, we learned HKT had eliminated us from contention.

That seemed to be the end of it. But some weeks later, we had a call with one of our internal security leaders. He talked to us about our proposal and solution. It turned out he knew the key executive at HKT because they served on an international security committee together. Soon thereafter, we learned that we had another chance at the business, and were invited to spend a day presenting to the company at their Hong Kong offices.

In Hong Kong, we were met at the airport, driven to our hotel, and our entire week of meals, shopping, etc., had been planned. I had never been treated with such care by strangers before. Our presentation day went flawlessly, and we learned that the executive had invited our whole team to dinner at his club that night.

At dinner, we laughed and drank and ate amazing food. Sometime during the night, he asked me, "Do you know why you were eliminated from contention?"

"No."

"How have you been treated since you've been in Hong Kong?"

And I told him.

"When we came to visit you in Boston, you didn't even arrange our transportation. We had to rent a car and find your office outside town. Do you know we don't even drive here? We were so upset after that visit that we didn't think your company was suitable to supply us with anything. Luckily, your colleague" - the security guy, who was also at the dinner - "called me and asked if we could give you another chance to prove yourself. And so you did. You will be getting the business."

We did not view the HKT team's visit from their perspective, but from ours. For us, renting a car at Logan Airport and driving to Waltham was no problem. We also didn't understand that other countries took hosting visitors very seriously, much moreso than we did in the US. The visit to Hong Kong taught us that. From then on, when customers have shown us the courtesy to pay us a visit at our home office, I've made sure they are taken well care of, as I was all those years ago.

VC Mark Suster recalls a painful sales loss, and what he learned from it

This is the second story from Mark Suster's 2010 post "Embrace Learning: It Will Make You Stronger." Suster recalls how one of his startup companies, a collaboration software maker, lost a deal it thought was all wrapped up. I a similar experience almost 20 years ago and many of the lessons are exactly the same.

In the 2003/04 timeframe I was living in the UK and running my first company. I had been competing to win a contract at Thames Water, the largest water company in the UK. They were looking for a collaboration tool to manage all of their large water development projects. The initial contract was worth about $500,000 and the whole value of the contract would have been worth a couple of million over the years. I was working hand-in-hand with my close friend and associate Stuart Lander who was running our UK office and with one of our local sales reps.

We had initially been told that we had no chance because they had previously purchased Documentum and it would mean changing the system entirely. They had a team trained up in Documentum and we certainly had enemies from the inside. But we worked the account tirelessly for months. We helped the write out their requirements for a system. We met everybody in the organization. We had every reference client we worked with call their senior team members (we had already won a major project at Scottish Water, Anglian Water and another at a large water company in Paris, France).

There were about 8 initial contenders for the work and in the end it came down to just 3 of us. As the founder & CEO I personally went and met with as many people at Thames Water as I could. We felt this was a marquee account and one that would help us take our collaboration tool global as Thames owned assets all over the world. Winning the contract meant that we would hit our quarterly revenue figure and be in good position for our annual sales target.

And then the news came. A woman named Trish Hannon called me with the good news that we had won the project. I was to tell noone until the contract was signed. I immediately put a full team on contract management and another on drawing up an implementation plan.

DefeatI later learned one of my biggest lesson in sales. You are most vulnerable right after you have won a deal. It is when you’re competitors have nothing to lose. It’s when the people who are part of the decision making process who don’t support the decision seek ways to undermine you. That is when you potentially become complacent.

Two weeks after winning the deal and well into implementation planning we released a new version of our software. We had made the decision that we would no longer be supporting IE v 5.5 (we would support 6.0 and 7.0, which was in beta). Even Microsoft publicly said that there were security flaws with 5.5 and that people should upgrade. But Thames Water was still on version 5.5. We assumed they would take our advice and upgrade. We had discussed this with Trish.

An internal resource inside Thames Water used our upgrade and lack of 5.5 support as a way to re-open the decision. How could a company like ours be so callous as not to support their software (even one more than 4 years out of date)? Did we really have good change management procedures if we were willing to launch products without backward compatibility. And so on. They decided to re-open the competition for 3-4 more weeks. I knew THEN that we had lost. We fought hard to stay in the game.

They hired a consultant to help them with the review. They stopped allowing us to contact them directly. The momentum had shifted. Something happened and it was clear to me that this IE issues was just a smoke screen. Somebody had gotten to somebody senior in the Thames organization. It just so happened that the consultant they hired to chose a software vendor worked for a company that had owned one of our competitors. It was a tiny little collaboration company that only had a presence in the UK (and therefore couldn’t meet their international needs). And surprise, surprise the decision came back 3 weeks later than none of the preferred 3 vendors had won but rather this tiny little competitor owned by the consulting company charged with doing the review.

Outrage. Scandal. Surely inside Thames they would see it for what it was. Given that it was a public tender the chairman of our board had encouraged us to think about launching a complaint with the UK government agency in charge of such reviews. We talked with lawyers. We felt totally deflated. We decided it wasn’t worth the fight. We licked our wounds and moved on.

I am still not over that loss. I sometimes call Stuart and we recount what happened. But that loss was really important in my career. It taught me a lot of lessons. We spent enough time dissecting it to really learn.

Here are my take aways from the loss:

1. In a sales campaign you always need to call as high as you can. If you don’t, your competitors will. If you don’t know them, somebody else does. They may not overturn decision, but they sometimes do.

2. No deal is ever done until the ink is dry and the money is in your bank account. Never take your win for granted.

3. You are most vulnerable right after it has been announced that you won (I will write a separate post on this). This is the most important lesson I learned from this experience. All other lessons were sort of obvious. This one was eye-opening.

4. We in the tech world extol the virtues of lots of product releases and rapid innovation. I hear Silicon Valley firms bragging all the time about how often they release software. In the consumer world, maybe. In the corporate world this strategy is flawed. Many large clients prefer stable technology and no changes – even sometimes when there are known security flaws. When I was at Salesforce we launched a new version of our UI. We gave users the choice to upgrade or keep with the classic UI. Years later 10% of users were still on classic. Go figure.

5. In every deal where you have serious competitors there is always somebody on the inside against you. You need to find out who that is and neutralize them.

6. No matter how much your customer tells you that they love you and that they favor you it is possible they are telling other people the same thing or some variation of this. (you would have thought I would have learned this lesson in high school ;-)

7. No matter how much large clients tell you they want transparency in pricing, they always seem to fall for the same old trick. Competitors price low to get in the door and then nail them with scope control, change orders, product extension costs and other hidden items. You can try to convince them of your “pay no more once you’ve signed up” model but they fall for the other guy’s pitch every time. Low numbers are sexy. I stopped trying to win this argument and chalk it up as some sort of human condition that I can’t change (like thinking that $14.99 = $14).

8. Time is the enemy of all deals. If you have a chance to close something – don’t let it drift.

9. Losing sucks. But at least it has made me a better competitor.

British Power Company apologizes for misselling to consumers

We're in the habit of collecting and sharing corporate apologies here, and last week, there was a big one. After being fined £10.5m by regulator Ofgem, natural gas and electricity supplier SSE posted an apology on the front page of its website (image above) and a longer letter from Ian Marchant, its CEO, on the company blog.

Ofgem described SSE's issues this way:

Customers contacted by SSE were exposed to misleading statements, inaccurate and misleading information on SSE’s charges and misleading comparisons between SSE’s charges and the costs with other suppliers. These failures meant that many customers were unable to make well-informed decisions about whether to switch to SSE and about comparing products in a competitive market, and they were exposed to the risk of choosing a more expensive energy deal. Customers were also told that they could save more money on switching to SSE than was possible.

The SSE apology reads, in part:

The breaches of licence conditions on which the fine is based should never have happened and it is simply not acceptable that they did. Our failings have context – the obligations on energy suppliers were changed significantly and we had a lot to do to change our practices – but there is no excuse; we should have done better.

Today’s announcement is also a clear message for energy companies. Ofgem has been saying for some time that energy suppliers need to transform the way they deal with customers. We agree and we believe that through our Building Trust programme we have led the industry in translating words like fairness, simplicity and transparency into action. We’ve reduced the number of tariffs we offer, we’ve simplified bills, we check that customers are on the best deal for them and we’ve stopped doorstep sales. We've strengthened the compliance processes in our retail business.

The reality is, however, that while SSE has taken a lead on this, Building Trust only started in October 2011 and took a while to implement. However, in many ways it was two years too late. In October 2009, Ofgem introduced new obligations on energy suppliers to make sure sales are conducted in a fair and transparent manner and, frankly, we should have complied with the letter and the spirit of the rules.

We didn’t respond quickly enough to those new obligations and, in particular, we were too slow to recognise that the sales methods sometimes used on doorsteps of potential customers were unacceptable. While SSE was first out of the blocks on this issue, stopping doorstep sales in July 2011, before any other major supplier, we were still much too slow.

This apology has a lot to like, although Marchant leaves the impression that the "Building Trust" program was a proactive step the company took. In fact the Ofgen investigation started in 2010 and Building Trust would certainly have been a response to that investigation. If Building Trust had been launched before the investigation, I would have given SSE much more credit.

[Thanks to Iain Nisbet from www.absolvitor.com (Absolvitor: Scots Law Online) and facebook.com/absolvitor for sharing this story.]

Paul Downs stops blaming the economy for his sales downturn

Paul Downs, writing in the New York Times You're The Boss blog, published a series of posts on dealing with a downturn in orders this year. The final post discussed Downs's coming to terms with his responsibility to solve the problem and not blame outside forces. This is the "sense of agency" and it comes up again and again in learning from mistakes (it's a key focus in Chapter 1 of the Mistake Bank book).

Over the last few years, I have made a conscious effort to find ways to get advice from other business owners. Writing this blog was the first thing I did, and I have found the feedback from commenters to be valuable. This year, in an effort to find a more focused set of advisers, I joined a Vistage business group. We meet once a month, and a portion of each meeting is devoted to analysis of business issues that each member presents. When a member of the group presents a problem, the other owners listen, ask questions and then suggest solutions.

Through the spring, I kept the group updated as my sales collapsed, and in May (as I explained in Thursday’s post), I told everyone that I felt like a victim of a bad economy. The thing was, nobody else in the business group was having such a hard time. Many of them felt the economy could be better but that conditions were still favorable. I seemed to be the only one who was suffering and the only one who thought that the problem was out of my control. One of the members told me bluntly: “I don’t want to hear any more about the Euro or health care or whatever excuses you come up with. This is YOUR problem, and YOU have to solve it.”

Excellent advice. Complaining hadn’t helped, upping my ad budget hadn’t worked, so I had to keep trying things until we either recovered or went under. But if it wasn’t an outside problem, then what could it be? It had to be something about my marketing, and that meant the problem was in AdWords. Once I decided the problem had to be there, I started looking at the data again to try to find a solution. But this time I approached my analysis with the conviction that the problem was something I had done — not something that was beyond my control.

Read Downs's post to learn what happened.

Infusionsoft co-founder Clate Mask on growing with the wrong customers

Great mistake story by Infusionsoft founder Clate Mask from the FailCon blog. FailCon '12 will be held next Monday, October 22, in San Francisco. More info here.

In 2009, we decided to remove the setup fee in our subscription service. We were on a mission to reach 100,000 small business customers worldwide and I wanted to get there faster. This decision nearly killed Infusionsoft.

Ambitious entrepreneurs will always push hard to acquire more customers, but too often, we push forward in our business growth initiatives without realizing the cost of acquiring the wrong customers. These are the ones who complain often, demand extra resources and erode employee morale. They might add to the top line, but they certainly don’t add to the bottom line—or the balance sheet. Know who your target market is so you weed out these bad customers and protect your bottom line.

We learned this lesson the hard way. For over a year, we watched our cancelations skyrocket and our lifetime customer value plummet. I knew we had to figure out a solution and fast. I couldn’t stand by and watch this decision ultimately lead to the death of Infusionsoft.

What we did was get totally clear on who our target customer is. This is the most important thing you can do to avoid hemorrhaging cash on costly customers. This clear understanding informs every function of the business. Entrepreneurs who don’t invest enough time in this will pay a tremendous price when their growth ambition outstrips their target customer clarity.

In 2011, we reintroduced an implementation service to enable our customers to succeed. This service is well worth the investment to new customers, and we realized that charging for valuable services actually discourages the wrong customers from purchasing. Requiring customers to purchase implementation services leads to customers who are more likely to show up for training calls. They are more likely to invest in their own success.

I have learned a similar lesson - business customers don't value free.

"Teaming" Day 5: Final Thoughts

This is the last in our weeklong series of posts on "Teaming: How Organizations Learn, Innovate, and Compete in the Knowledge Economy," by Amy Edmondson.

I will wrap up our week by highlighting some of the best quotes in "Teaming." I've added a couple of editorial comments in [square brackets]:

When facing an uncertain path forward, trying something that fails, then figuring our what works instead, is the very essence of good performance. Great performance, however, is trying something that fails, figuring out what works instead, and telling your colleagues all about it - about both the success and the failure. (pp 29-30)

Despite rhetoric to the contrary, many of us still expect ourselves and others to get things right the first time. We view failures as unacceptable. We give directives to those below, and look for direction from supervisors above. (p 40)

When people frame a task as a "performance situation" they are more risk averse and less willing to persist through obstacles than when the same task is framed as a "learning situation." Not only do people adopting a learning frame persist longer in unfamiliar, challenging tasks, but they ultimately learn more as a result. In addition, people with a performance frame engage in less experimentation and innovation and are less likely to formulate new strategies in difficult situations. Instead they're more likely to fall back on ineffective strategies they have used previously. (p 86)

To learn from mistakes and missteps, organizations must employ new and better ways to go beyond lessons that are superficial (procedures weren't followed) or self-serving (the market just wasn't ready for our great new product). This requires jettisoning old cultural beliefs and stereotypical notions of success and replacing them with a new paradigm that recognizes that some failures are inevitable in today's complex work organizations and that successful organizations will be those that catch, correct, and learn from failures quickly. (p 150)

People tend to be more comfortable considering evidence that supports what they believe, denying responsibility for failures, and attributing problems to others. (p 155)

The difference between failures that are truly blameworthy and those that are simply treated as blameworthy reveals a gap between logic and practice. [I would add that it reveals a gap between a person's vision, or what she hopes to be true, and raw reality.] (p 160)

Engineers' or scientists' intuition can be telling them for weeks that a project has fatal flaws, but making the formal decision to call it a failure may be delayed for months. Considerable resources are saved when such projects are stopped in a timely way and people are freed up to explore the next potential innovation. [I've experienced this in business-to-business sales environments. The declaration of a loss can take weeks or months, chewing up resources all the while.] (p 174)

Most of us would prefer to have reliable solutions to the problems we face, and we certainly like to feel that we are good at what we do. But execution-as-learning requires us to accept our individual and collective fallibility. (p 225)

You can find all our posts related to "Teaming" here.

Glen de Vries: "When you think everything is lost, don't give up"

This story is from Glen de Vries, President of Medidata Solutions, as told to Patricia Olsen in the New York Times:

Eight years ago we were giving a sales presentation to a California company. The first day, everything went well. The second day, one of our employees spilled an enormous cup of coffee on the chief information officer. Then our software wouldn’t work. I thought we’d blown it. Our head of sales asked what we could do to salvage that meeting. Ballroom dancing teaches you to be confident, not arrogant, and we took that approach. We decided to act as if things had gone well and we were on the way to winning their business.

We told the group we’d had a bad day, but if they could see us at our best we were sure they’d like us. We sent them everything they needed to create and simulate a clinical trial. After using the system, they were sold. They ended up being our biggest customer. The lesson is that when you think everything is lost, that’s the time to not give up.

Stop saying "I think"

I have spent much of my career working alongside salespeople, helping to sell software products to businesses. The best salespeople had a knack for candid and crisp communication, with prospects and colleagues.

One such salesperson took me aside one day after a sales meeting where I had demoed our product for a prospect.

"Can I give you some feedback?" he said (note: this is an excellent way to approach a critique).

"Sure."

"Can you stop saying 'I think' so much?"

"I say 'I think' a lot?"

"When a customer asks how to do something with our system, you say, 'I think you would do this, then this.' You know the answer, but you say 'I think' anyway. It confuses the prospect and makes them unsure. Does that make sense?"

I realized that I used 'I think' as a tic or to indicate that everything has some uncertainty with it. But  prospects heard it as a lack of confidence - deadly in a complex sale.

Since that time,  I have tried to be more direct and leave out tentative words like "I think" when I'm talking to customers or executives.

I'm also sensitive to others demonstrating this same tic. I heard a few "I thinks" this morning from a tech guy addressing customers, and that brought this story to mind.

Medical Device company CEO: "Too often we choose to believe in an optimistic scenario"

Adam Bryant's Corner Office column in the Sunday New York Times serves up some great lessons drawn from making and thinking about mistakes. Here are some from Mazor Robotics CEO Ori Hadomi, first about creating an environment that encourages people to report mistakes and then tries hard to learn from them:

I believe that it is much more dangerous not to report mistakes than it is to make mistakes in the first place. It’s natural that we make mistakes. The question is, what do we do with these mistakes as an organization? Do we repeat the mistakes? Do we learn from them? Do we investigate them and implement a solution?...

Hadomi also conducts a structured review of the main mistakes made in the past year, used to inform objectives for the coming year. This is something we've advocated and it's great to see a company institutionalize this process:

We have a very structured process of how we communicate and set expectations and define objectives. In general, I believe people perform best when they know where they are heading. I don’t like a culture where people are surprised. I feel that most people want to have some certainty about where they’re heading and where the organization is heading. So we have a process that begins with the management team defining the objectives for next year.

But before we set the objectives we have a tradition where we define the five biggest mistakes we made last year — and we’ll focus on the big ones, not the small ones. And every year we look to see if there is something common among these mistakes. Then we set the objectives for next year.

Q. What are some of the patterns you’ve seen in the mistakes?

A. One of the most obvious mistakes we found is that too often we choose to believe in an optimistic scenario — we think too positively. Positive thinking is important to a certain extent when you want to motivate people, when you want to show them possibilities for the future. But it’s very dangerous when you plan based on that. So one of our takeaways from that was to appoint one of the executive members as a devil’s advocate.

Q. Really?

A. He’s actually very challenging and he knows how to ask the right questions. He really makes sure to say to me, “Let’s be more humble with our assumptions.”

Learning by experience: "I would not leave until they would teach me what I was doing wrong"

There's a nice little learning story from Daniel Lubetzky, who started KIND, the snack food company. In this Wall Street Journal interview about growing his business, he describes how he learned to sell to grocery store owners and managers:

WSJ: What experience did you have in food manufacturing prior to launching Kind?

Mr. Lubetzky: Kind evolved out of my first company, PeaceWorks, [an importer and manufacturer of Mediterranean spreads] which I started in 1993. At that time, I had no training in the food industry whatsoever. I took my legal briefcase and filled it up with jars of my company's spreads and I would go store by store. They would tell me 'Get out! You have no idea what you're doing.' I would not leave until they would teach me what I was doing wrong.

This says something important about rejection. It's OK to be rejected, or to fail, if you get something out of it. In Lubetzky's case, he got a graduate-level course in retail and selling. If Lubetzky had simply left a store after being told to get out, he wouldn't have learned what to do differently, he wouldn't have had the incentive to keep "learning," and he certainly wouldn't have ended up where he is today.

Why do losing sales deals last longer than winners?

An interesting post by Michael Liebow on Selling Power ("To Improve Sales Performance, Fail Faster") says this:

Looking at a knowledge base of deals assembled from a variety of companies and industries and totaling more than 10,000 opportunities, the numbers are striking. Winning deals on average took only 75 days to close, while losing deals took 175 days to close out ― 100 days longer.

We've looked at the idea of "chasing losses" in another post. Rather than quickly cutting losses, we tend to chase them, hoping things will turn around and validate our initial beliefs. In the above study, salespeople and sales managers "chased their losses" twice as long as they pursued wins.

Liebow continues:

This culture of bravado makes cleaning a sales pipe nearly impossible. Yet what can only be described as losing fodder must be cleaned out of the pipe if an organization ever hopes to leverage its investment in the sales process. Thus, the trick to winning is to find a way to allow for a clear quantitative assessment of the pipe and clean it so that your best people across your organization are available to spend precious resources, time, and cycles on the deals with the highest likelihood of winning.

Salespeople, like all of us, need to face problems squarely in order to be successful. Figure out your losing opportunities, and stop working on them. Now.

Novartis' Joseph Jimenez: forecasting errors caused by culture, not process

This story, from Novartis CEO Joseph Jimenez via Adam Bryant's Corner Office series in the NY Times, has echoes of Amy Edmondson's research into high-performing hospital teams. Read the story, and I'll tell you what I think the connection is:

Q. What are the most important leadership lessons you’ve learned?

A. One occurred when I was a division president of another company. I was sent in to turn the division around after four years of underperformance. It was a declining business. And when I got there, I completely misdiagnosed the problem. I said: “Look. We’re missing our forecast every month. What’s wrong?” I brought in a consulting firm, and we looked at what was wrong. And the answer was that we had a bad sales and operations planning process, where salespeople, marketing people and operations people were supposed to come together and plan out the next 18 months and then forecast off of that. So I said: “O.K. We’re going to fix this. We’re going to have the consulting team come in and help us make that a better, more robust process, with more analytics.”

And it turned out it wasn’t at all about analytics. Because once we did that, and we put that new process in place, we still continued to miss forecasts. So I thought, “Something’s really wrong here.” I brought in a behavioral psychologist, and I said: “Look, either I’m misdiagnosing the problem or something’s fundamentally wrong in this organization. Come and help me figure it out.” She came in with her team and about four weeks later came back and said: “This isn’t about skills or about process. You have a fundamental behavioral issue in the organization. People aren’t telling the truth. So at all levels of the organization, they’ll come together, and they’ll say, ‘Here’s our forecast for the month.’ And they won’t believe it. They know they’re not going to hit it when they’re saying it.” The thing she taught me — and this sounds obvious — is that behavior is a function of consequence. We had to change the behavior in the organization so that people felt safe to bring bad news. And I looked in the mirror, and I realized I was part of the problem. I didn’t want to hear the bad news, either. So I had to change how I behaved, and start to thank people for bringing me bad news.

Edmondson found that hospital teams with the highest outcomes also had the highest reported incidence of mistakes. When she dug into this paradox, she found that the high-performing teams had the psychological safety to share mistakes so they could be fixed and avoided in the future. The poorer-performing teams tended to cover up their mistakes.

Choosing not to learn from a predecessor

It's been a while since I posted one of my own mistake stories, so here's one:

I joined a company as VP Sales & Marketing after it had been purchased by a private equity firm (another Mistake Bank story entirely). My predecessor was leaving the company and our tenures overlapped by a few weeks. He made sure I knew he was available to talk whenever I wanted.

I did spend some time with him, but not too much. I asked him for summaries of the existing accounts, but got frustrated with the pace and the selection--he started doing them in alphabetical order, and I wanted them from largest to smallest.

One reason was I had (at least thought I had) a very different strategy to pursue from the past sales strategy. There was also the feeling (not explicitly confirmed) that he was being moved out because his vision wasn't suitable for the future.

There was also a visceral feeling of rivalry that got in the way. Why did I want to share my thoughts with this person who had done this job, with whom I'd be compared for the next months and years? It was easier to just keep my distance.

Which I did. A few weeks later, he was gone, and we only talked once or twice since then.

If I had it to do over, I would have spent more time quizzing him about the culture of the company. How are things done here? How do you lead people in this environment? I would try to test out my strategy: could this work? What obstacles and issues might get in the way of achieving this strategy? If you were me, what would you do right now?

But that's for another time. In this case, I didn't ask any of those questions, and it's impossible to know how much effect had on our results the next several years.

Monica Gould audio story - can chasing a large customer simply be a time drain?

I love this story, recorded during our longer interview with Monica from 2010. It felt to me, as she was relating it, that she was discovering and analyze this situation in the moment; as if, in fact, she was coming to terms with her feelings about it just as we were talking. She argues with herself a bit: "I'm not sure it was a mistake... [but] it's just not a fruitful use of time..." just like we do when we are evaluating something that isn't working out as we'd planned. Magic!

Download "Monica Gould - realizing a strategic opportunity is actually a waste of time" (2:21)

Transcript:

I don't know that it was a mistake, I just... strategically I've invested a significant amount of time in garnering state government contracts. And it's just not a fruitful use of time. I say it's a mistake because I should have realized how closed that market is and perhaps not invested as much time and energy in it.

Because it's an opportunity lost. I'm spending time marketing in this arena, and there's another whole business arena that's a whole lot more accepting of bringing in new people and networking and meeting people.

I guess the big lesson is, once you go into a marketing strategy, test the waters, give it some time to work, but don't waste too much time in it. I've retracted my time and resource from doing that. Not because I don't think there's business out there, but I don't think they're willing to bring new people in. They're entrenched with the contractors they have. It doesn't matter how good you are, unless you have worked for PennDOT for 15 years, they're not just going to take a new firm. I'm not the only person who's experienced that. It's really not worth my time and energy to bid on that stuff. I learned, don't waste too much time in one area. You're going to lose opportunities to get work elsewhere.

"It never occurred to me that you can't control some variables"

Another business mistake story reported by Marcia Pledger of The Cleveland Plain Dealer. This story is from Carole Richards, president of North Coast Education Services in Solon, Ohio.

You have to have passion about your product or service if you want to be successful. But I made the mistake of spending way too much emotional energy and time on one deal only.

When my company was five years old, I spent an entire year trying to close a deal that didn't happen. At the time, I was too naive to understand that politics plays a role in business. It never even occurred to me that you just can't control some variables.

At the time, revenues for my company were about $100,000. The deal would have easily tripled sales overnight. I really believed it was going to happen, and I ignored the nuances of politics because I wanted it so desperately. Funding would have come from a foundation and the school board. One person who controlled the purse strings had other plans for the money and killed the deal.

More than 20 years later, I periodically think about that experience when I'm planning new projects. Now, I put in all the energy needed to make it a worthwhile project, but I never invest emotionally until it's a reality.

"Thank you for pointing out my mistake"

Kelley Robertson is a sales trainer and the author of the "Fearless Selling" blog. This story of his discusses making a mistake... and how to deal with the results.

A little while ago I wrote a blog post and referred to the decision maker as a male and the executive assistant as female. Of course, this mistake stereotyped the positions. Big blunder!

Needless to say, I received several comments and emails from people pointing out that this “assumption” was grossly outdated.

I REALLY dislike making mistakes like that especially since I’ve been writing regularly for the better part of fifteen years and I usually take care to avoid fundamental gaffes like this. But stuff like this comes with the territory.

Here’s the lesson.

You’re going to make mistakes with your customers. You will screw up. You may misquote a project. You may under-estimate delivery times. You might suggest the wrong product. But that doesn’t matter.

What matters is how you handle the problem.

The worst thing you can do is to make excuses, try to justify it, or redirect the blame. Suck it up, take responsibility and thank the other person for pointing out your mistake. This can actually help you stand out from your competition and help you increase your sales because companies like to do business with people who are willing to admit mistakes.

John Bliss audio story - the downside of going downmarket in tough times

John Bliss is the founding principal of BlissPR. This story is part of a longer interview from 2010. John talks about the risks of going downmarket to get clients when the economy turns bad.

You can listen to the story here (1:48).

Transcript:

I will have been in business 35 years on June 1. I've seen a number of economic cycles. There's good times and there's bad times. One lesson that keeps coming back and was proven again in 2009, which was not an easy year: there is always a tendency to go downmarket in bad times, so you have revenue coming in the door, so you don't have to lay off people.

It hurts, because even unsophisticated clients who don't pay as much, they're still going to require an enormous amount of time. And, in down times, you're still going to run the risk of them not paying you. And we ran into that in 2009. It didn't hurt us badly, but it hurt.

If we took 5 clients that we wouldn't normally have taken, I wish we'd only taken, say, 2 of those. Because that we could have absorbed that more easily. So that's another lesson.

At the time, it's tough to remember that, when you see your base clients reducing their fees. And you're reading scary economic headlines. You feel, any business almost is good business.

Jill Konrath audio story - "Mr. Prospect"

As a young Xerox sales trainee, Jill Konrath learned her sales demonstration script perfectly... perhaps too perfectly.

"Mr. Prospect" - 2:56


You can learn more about Jill and her work at JillKonrath.com.

Transcript:


When I first started my sales career, I was at Xerox Corporation and they had a wonderful training program. Every sales rep was expected, prior to having their own territory and making their own cold calls, to memorize a demonstration about a copy machine. And the demonstration was a multi-page script that included everything you needed to know about demonstrating a copier, from here's where you put paper in, to here's how you clear a jam, and here's how you do all these things.

And the script went, "Mr. Prospect, for years Xerox has designed copiers to satisfy the needs and requirements of all our customers. Our experience and success in the marketplace has shown that regardless of specific needs, four basic criteria that need to be met.” And then we listed the criteria and from there the demonstration flowed.

It took me a long time to memorize that script verbatim. But I did. I practiced and practiced. I drove in the car with the script in front of me on the steering wheel. I taped [my speech] as I was driving along. And finally I was able to pass the test with my boss. "Mr. Prospect, for years Xerox has designed...." And I went through it flawlessly. Which was great because I was finally released to go out to the real world and start cold-calling.

And very shortly after that I got my first prospect to come in and see my demonstration at the Xerox Demo Center. He came all the way in from across town. I was all set. I had practiced ahead of time religiously and I knew I had it nailed. When he came in, I gave perhaps the best demonstration of my life. I nailed that script. I took him from the very start to the very end.

At the end I asked if he had any questions or what he thought. And he turned to me and he said, "Jill, my name is not 'Mr. Prospect.'"

Now I don't remember if he ever bought that machine or not; all I know is that I was so embarrassed that I called him "Mr. Prospect" that I never made that mistake again.