Linda Rottenberg of Endeavor: "Go Big or Go Home" sometimes means "Go Home"

This story by Linda Rottenberg, co-founder and CEO of Endeavor, an organization promoting entrepreneurship in emerging markets, is part of "Failure Chronicles," a section of the April 2011 "Failure Issue" of Harvard Business Review.

As the plane took off for New Delhi, my mind was still grounded in the intense board meeting I had just held in New York. It was 2007, and Endeavor, the organization I had cofounded a decade earlier to support high-impact entrepreneurs around the world, was expanding rapidly. We had offices in nearly a dozen developing countries, from Brazil to Turkey. But our board was agitating.

“Linda,” the directors said to me firmly, “we’ve been operating in emerging markets for 10 years. Why are we not in India?”

We were not in one of the world’s fastest-growing economies because I felt that India, with its thriving culture of entrepreneurship, was not the right market for us. Endeavor’s mission—to mentor young business leaders, to get them access to capital, to turn them into rock stars—had already landed in India. But the board made a compelling case, arguing that if Endeavor was serious about growth markets, we couldn’t ignore one of the biggest in the world—not to mention one in which many of our own entrepreneurs wished to expand.

Once I was on the ground, my resistance softened further. I had encouraging meetings with top business leaders in Delhi, Mumbai, and Bangalore. Sure, India had a vibrant community of entrepreneurs, they told me, but more local innovators were needed. Within months, Endeavor had secured $1.5 million in committed funds—half the capital required to launch local operations—and three (out of the needed six) local business leaders were ready to join the board. At our annual gala, I announced the news: Endeavor India had arrived!

But so had everyone else, I soon realized. Silicon Valley’s premier VC firms were already active in India. The media were full of homegrown entrepreneurial success stories like Wipro and Infosys. Although we were off to a successful start, I feared the seeds of failure were already planted.

Still, I was reluctant to give up. I had faced this situation before. A decade earlier, Endeavor’s inaugural office, in Chile, had been struggling because of lackluster buy-in from the local business community. I decided to shut down the office. Six months later we reopened, having received calls from many business leaders there expressing their desire to work with us. Endeavor Chile swiftly became one of our top offices, led by an all-star board.

Was India another Chile, I wondered, needing only time to flourish? The answer was no. We had trouble recruiting additional local board members. Also, people were asking Endeavor to relax its “high impact” standards by focusing outside the capital cities, on the base of the pyramid. I feared mission drift. I needed to face reality: Failure was an option.

I soon announced that we would close Endeavor India.

As the leader of a fast-growing organization, I know the importance of setting an ambitious course of action—and stubbornly following it. I believe passion is a powerful guide. But the Law of India, to me, is: You can’t always will an outcome. You can’t always win. You just need to fail smart.

I often think of that plane ride to Delhi and of how important that experience has become to my understanding of entrepreneurship. One of my favorite business mantras is “Go big, or go home.” We talk a lot in business—and at Endeavor—about the first half of that equation, “Go big.”

But we need to spend a lot more time on the second half, “Go home.” Sometimes knowing when to shut down a failed initiative is as vital as knowing when to start one. Sometimes embracing failure is as important as toasting success.

This is a very difficult decision for entrepreneurs. Persistence is a critical success factor - but persistence in the pursuit of a failing objective is a drain on precious time and resources. The magic happens at that margin - between doubling down and going home. When do you decide it's time to "Go Home" on a new venture?

Game Developers Conference hosts a "Failure Workshop"

This news piece by Gamasutra, a gaming industry site, got my attention:

For the second year at GDC [the Game Developers Conference], game developers got together not to talk about their best practices or their successes, but instead about their failures....

Ron Carmel of World of Goo house 2D Boy hosted the panel, and opened by stressing the importance of sharing experiences of failure. If people don't talk about and share their failures, "We're missing out on 90 percent of our learning opportunities," Carmel said.

He talked about dispelling the "success myth," explaining that "the successes that you see usually come after a long string of failure."

Carmel is right. You don't read about the failures that predate a big hit. Instead, writers mine that success story for some formula they can sell to their readers about how to replicate this success. The game designers at this session know this isn't how it's done.

And we shouldn't be surprised that game designers are not afraid to fail and to learn from failure. Other posts on this site have reinforced that iterative learning is natural to gamers, as it should be to those who design games as well.

Gamasutra captured some great mistake stories from the session. We'll feature those in upcoming posts.

Daryl Morey of the Houston Rockets, on his mistake in waiving Jeremy Lin

On Bill Simmons' BS Report podcast, Daryl Morey, the General Manager of the Houston Rockets, discussed his team releasing Jeremy Lin before Lin joined the New York Knicks and became 2012's breakout basketball star.

Morey, in this clip, describes the difference between what he calls "Type I" error - his error of commission - and "Type II" error. Morey is guilty of a Type I error - he waived Lin when he should have kept the guard on the roster. Besides the Knicks and the Golden State Warriors (the team that drafted him), the other teams committed a "Type II" error - they never gave Lin a chance in the first place, despite each having had the opportunity to do so.

This is important. The Rockets and Morey got criticism for letting Lin get away. The other teams largely escaped criticism because they didn't even give him a chance. Who's the better decisionmaker here? Morey or his passive rivals?

Listen to the audio clip here: Daryl Morey of the Houston Rockets on Type 1 Error (1:38) [There is an embedded audio player you can access at the bottom of the page.]

Here's a precise statistical definition of Type I and Type II error. What Morey describes isn't exactly this, but I get his point.

Why journal your mistakes?

I am reading a Harvard Business School working paper, entitled "Learning From My Success and From Others' Failure: Evidence from Minimally-Invasive Cardiac Surgery." The key finding is right there in the title. We learn better from others' mistakes than from our own. This is largely due to the "self-attribution bias" that behavioral economists like Daniel Kahneman discovered - in our limited perspective, we ascribe our successes to our abilities and efforts, while we blame failures on external circumstances. 

This means we by nature carry a large blind spot around with us--it's hard, and unnatural, to reflect on and scrutinize our own actions to look for areas of improvement. In fact, it can make us feel bad about ourselves - not a good situation for learning, no?

Here's where journaling comes in. When something goes awry, all you need to do is write it down. Classify it as a Mistake and move on. Then, weeks later, after the intensity and emotions of the moment have dissipated, you look back at it, think about it. What happened? Think about your role - recognize that mistakes and failures are owned by groups, but self-improvement is your task alone. (This is having a sense of agency.) What could you have done differently that could have affected the outcome? Next time your face a similar circumstance, how will you handle it?

Documenting and reflecting on mistakes isn't easy. It's a discipline that needs to be learned. But think about this: according to the Harvard paper, most people don't learn well from their own mistakes. If you can be one of the few that do, it puts you at a tremendous advantage. That advantage will create opportunities, and allow you to capitalize on them.

If you'd like to try a free journaling app that was created to aid in this process, sign up here.

A Post Mortem, even if you win

[This post first appeared in the Rocket Matter blog.]

I's customary, when you are in a competitive bidding process, to hold a post-mortem or an "after-action review" if you've lost. And this makes sense: lessons from failure make a deep imprint. Losing takes a psychological toll and causes us to seek not to repeat it. So the loss review is a natural outgrowth of this feeling – let’s look back on what we did that contributed to the loss and learn from it.

What happens when you win? Here’s what I’ve seen after winning a deal:

•       you bang a gong
•       you have a party
•       you talk about how smart and clever you were

Celebrating wins is essential and motivating, and you should definitely do that. But when the champagne bottles are empty and the euphoria has died down a bit, think for a minute. Did you do everything perfectly? 

“Of course not,” you say. “There are things to learn from every competition, win or lose.” And if you reflect on your win, you’ll realize that the victory was at least partially due to circumstances outside your own actions – the mistakes of your opponents, a sympathetic judge, a convenient venue, etc. You may in fact have won in spite of yourself.

If you only look back at the losses, you are discarding massive opportunities to learn.

Perhaps it’s time to start conducting win reviews. Here’s how:

1. A few weeks after the result is known, ask each person involved in the case to think about the entire process, from start to finish. Ask them to look for surprises. When were you surprised during the time we were working on the case? What happened? What would you do differently next time?
   
2. Gather everyone together in a meeting (2 hours should be plenty of time). Appoint someone who was not involved in the case to moderate the session. Record it if possible.
   
3. Acknowledge the victory and spend 10 minutes reliving the triumph. Then move into learning mode. 
   
4. Set the stage by discussing how much of winning and losing are events outside of your control. “You know, we had a few breaks in this case. If this or that had happened differently, we might have lost. Now, let’s think about what we did that next time we could do better and give ourselves an even better chance to win.”
   
5.  Ask each attendee to briefly describe one of their “surprises.” Only that person speaks; this is not a debate, or a competition. Go around the table a few times until you have a list of 10 or more things you’d do differently. [Make sure to listen carefully to the quiet folks; they will have great ideas that you hadn’t considered before.]
   
6. Use a voting method to select the top 3-5 items.
   
7. Spend 30 minutes discussing each of the top items from the vantage point of, “The next time we face this situation, what do we want to do instead?”
   
8. Document those findings and share with the entire company. 

It may be difficult to find the time to do a win review. Even harder is gathering the will to reflect on the past and learn from it. But if you want to be better than your opponents, you will make it happen.

In a New York Times interview, Katherine Hays, CEO of software company GenArts, provided the best reason why:

I learned as an athlete — I rowed for four years in college — that you have to be present in the moment, and you can’t be distracted by something you just did that was really good, or by the fact that you’re a little bit behind in a race. You can’t focus on what’s just happened because you can’t change it. That’s not to say we shouldn’t pause and congratulate ourselves, but you have to balance that with maintaining focus on what the next steps are. You learn as an athlete to say: “Great, we won that race, but what are the things we could have done better? Because we have a race next week.”

You too will have a “race next week.” How will you prepare? Let us know in the comments.

True Grit #2 - English girls' school tries a "failure week"

According to the BBC, the Wimbledon High School near London will hold a "failure week" in February to teach its high-performing students that it's better to try new things and fail at them than to play it safe and try to sidestep situations where failure is possible.

The headmistress, Heather Hanbury, said she wanted to show "it is completely acceptable and completely normal not to succeed at times in life."...

There will be workshops, assemblies, and activities for the girls, with parents and tutors joining in with tales of their own failures.

There will be YouTube clips of famous and successful people who have failed along the way and moved on.

The emphasis will be discussions on the merits of failure and on the negative side of trying too hard not to fail.

This is a perfect time to teach that learning and development are more important than 100% grades. My high school experience was prime time for the pursuit of grades rather than learning, which I find really annoying in hindsight (in other words, that was a mistake :).

The headmistress' thinking is reminiscent of the importance of "grit" - the ability to bounce back from failure promoted by the University of Pennsylvania's Angela Duckworth. I hope headmistress Hanbury lets the girls know that mistakes can open up new vistas and new opportunities, worlds of possibility, rather than the closet of "perfection or nothing."

NB: The Failure Week was held from February 6-10 and here are some of the learnings from it. My favorite quote: "We just lost in debating this week – we’ve been joking: is that what it’s about??"

If by "it" you mean developing a sense of humor around your fallibility, the answer is yes--that's what it's about.

[Hat tip to @brainology]

George Bernard Shaw - "A life spent making mistakes is...more useful"

A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.

George Bernard Shaw (1856-1950)

via unitedearth.com.au

The Power of Confronting Your Own Weakness

I recently read a headline from Harvard Business School Working Knowledge that intrigued me: "Learning From My Success and From Others' Failure." It's a very important paper and I will be posting in more detail on it later, but what struck me immediately upon reading the abstract was the finding that learning from others' failure is easier than learning from one's own failures.

Then I read "The Crucible of Leadership" from the great Jerry Colonna as published in Fred Wilson's AVC blog. Among the many gifts of that post was a powerful story, which read in part:

Take as an example a client I worked with intensely over the last few weeks. She and a co-founder have been killing each other (okay, I have a flair for the overstatement…still, they have both been getting sick with a host of ailments—migraines and stomach problems). The arguments had gotten so bad that neither could stand to be in the same room with the other. Even I was exasperated. During one late night call, I asked my client to forget, for a moment, whether her co-founder was right or wrong. “I don’t care who’s right,” I said with my voice rising. “The only thing we have to focus on is what are you supposed to be learning from this.”

There was a long silence. I thought, “Okay. You’ve really pushed her too far. You and your woo-woo ‘lessons in the pain’ crap.” But then: alchemy. She opened up. “This is really shameful to admit,” she began, “but I know I’m a pain in the ass because I have to be right, all the time. I know it’s wrong but I can’t stop myself.”

And with that we had something to work with. I pressed her: Given this tendency, what do you really believe? What values do you hold? What kind of company do you want to build? And what kind of adult do you want to be?

Over the next few weeks, on guard for her need to be right, we carefully went to work changing her approach to the co-founder. For her, the crucible moment came in facing her shame, acknowledging who she really has been and as a result she got to choose how she wanted to manage and who she wanted to be.

We forge our truest identity by facing our fears, our prejudices, our passions, and the source of our aggression.

I would add to that last sentence "our weaknesses." Learning from mistakes doesn't only mean learning from others' mistakes. It means learning about ourselves, our deepest weaknesses and vulnerabilities. Is it harder to confront and take these lessons to heart? Of course. Jerry Colonna's client is a great example of that. But the rewards are manifold. The client is now able to confront this persistent and damaging situation with her partner, and can take this knowledge of herself into all her future interactions.

The lessons from our own failures "leave a deep imprint," but are also lessons that serve us the rest of our lives. Don't settle for only learning from others' mistakes. If you do, you're only halfway to where you need to get.

New York Giants and Jeremy Lin demonstrate how to accept and learn from mistakes

I'm still basking in the afterglow surrounding the Giants' recent Super Bowl win. A Sports Illustrated article mentioned something that might have helped develop the remarkable resiliency that characterized their late season and playoff performances. Here's a brief excerpt:

During the bye week following a 4-2 start, director of player development Charles Way invited fighter pilots from Afterburner Inc., a corporate training company, to address the team about the value of "debriefing" sessions. Pilots returning from missions build trust through sessions in which they sit in a room together, stripped of name and rank; each speaks openly about mistakes he made during the mission. Players also received a copy of a book by one of the pilots, James D. Murphy, the title of which expressed the ultimate goal: Flawless Execution.

Soon Manning and Tuck, respectively, were leading offensive and defensive debriefings the day after games. Coaches were not present. Meetings lasted from 20 minutes to an hour. "I wasn't coaching anybody," Manning says. "I was just coaching myself, looking at what I needed to do better and telling everybody. Then everybody would talk about what they needed to do to improve."

Says linebacker Mathias Kiwanuka, "There was a time there when we needed every single minute of [debriefing]. It wasn't about calling people out. It was an opportunity to see everybody hold themselves accountable. The big part of why we're here is that fingers don't get pointed. These kind of teams don't come along very often."

If accountability and execution characterized New York's undefeated run from 7--7, those qualities were beacons during the Super Bowl.

This practice recalls some of Robin Ely's great research on learning among oil-platform workers and Amy Edmondson's work on hospital nursing teams, as well as Justin Menkes writing on leadership. Learning and performance are enhanced when people are unafraid to share mistakes, when they look to themselves first ("owning their missteps") instead of blaming others.

In a similar vein, here's what Knicks sensation Jeremy Lin said in his postgame interview after hitting the game-winning shot against the Toronto Raptors: "I did a horrible job on Barbosa and Calderon... Shump did an unbelievable job... I let them get into a flow early, and that's on me. He bailed me out." Very little about his good performances, a lot about what his teammates did well, and what he can improve. Here's the interview:

Social app company Path apologizes for importing customer address books without asking

This week, there was a big to-do over the discovery that social-media startup Path had been uploading customers' address books without permission. The latest turn of events is an apology from CEO Dave Morin. It says, in part:

We are sorry.

We made a mistake. Over the last couple of days users brought to light an issue concerning how we handle your personal information on Path, specifically the transmission and storage of your phone contacts.

As our mission is to build the world’s first personal network, a trusted place for you to journal and share life with close friends and family, we take the storage and transmission of your personal information very, very seriously.

Through the feedback we’ve received from all of you, we now understand that the way we had designed our ‘Add Friends’ feature was wrong. We are deeply sorry if you were uncomfortable with how our application used your phone contacts.

In the interest of complete transparency we want to clarify that the use of this information is limited to improving the quality of friend suggestions when you use the ‘Add Friends’ feature and to notify you when one of your contacts joins Path––nothing else. We always transmit this and any other information you share on Path to our servers over an encrypted connection. It is also stored securely on our servers using industry standard firewall technology.

Now, I much prefer the straightforward "We Are Sorry" at the top of the post, as opposed to "we are sorry if you were uncomfortable..." that comes later. Imagine that I insulted you, and you pushed back, and I said, "I'm sorry if you took my comments the wrong way." You would not consider that much of an apology.

Morin's apology sounds like that. A straightforward statement such as, "We are sorry that we used your contacts without permission" would have been more to the point.

This "sorry you were uncomfortable" apology reveals that the company thinks what it did was correct and justified, and only because it garnered bad publicity did they do anything about it. This says something about social web services like Path. They feel that they deserve access to your information, and would prefer to do it without asking, unless people find out about it. I'll try to remember that when I get the next signup request for a new service.

What do you think? Is this a heartfelt apology? Does Path even feel they made a mistake?

A thought on due diligence

The following was posted as a comment to the old Ning Mistake Bank site. It's part of that site's archive but I no longer know who wrote it. Whoever it was, they were pretty wise:

Several of the stories posted on the site are on lack of due diligence causing problems later. However, we rarely look back on situations where we did too much due diligence. What opportunities did we not take because we looked too closely at them? Might some of them turned out great? I think circumstances influence our level of due diligence, especially when we're self-employed. When you need that next gig, or really want to make a certain deal, our brains look at the bright side and muffle our skeptical side. Sometimes that causes us problems, and sometimes it turns out great.

By the way, if you were the person who posted it and would like attribution, I'm happy to give that to you. Post a comment and I'll get in touch with you.

...and after rereading this post, it occurs to me that a tool that addresses this is possible. Something like an "reverse due diligence" - looking at the absolute worst case outcome of a decision, and comparing it to the possible upside, as a rationale for going ahead with the decision.

VC Fred Wilson: "Wear failures as a badge of honor"

Fred Wilson's A VC blog is a great source of information on investing and venture capital. And it's one of the few blogs where the comments are consistently a source of great insight. In 2009 Fred posted a story and thoughts on the topic of failure:

Barack Obama said this in his "back to school speech":

you can’t let your failures define you – you have to let them teach you. You have to let them show you what to do differently next time

That's so true. It took me a while to learn that lesson.

When I first started out in the venture capital business, I was afraid to make a mistake. Once I started investing and taking board seats myself, I worked super hard to avoid losing money. I went for almost a decade without making a losing investment.

But then in the aftermath of the internet bubble, the wheels came off of the bus. We wrote off close to twenty investments in the span of two years from late 2000 to late 2002. It was devastating on many levels.

But when I look back on my career, it is not the successes that I think back on most. It is the failures, and particularly those two years when everything that could go wrong did go wrong.

When Brad and I started Union Square Ventures in 2003, we laid out a roadmap for what kind of firm we wanted to create, what kind of investments we'd make, and how we thought the Internet was going to evolve. That work was largely a result of the lessons we both had learned in the aftermath of the bubble.

I think embracing failure is one of the things that makes this country such a great place to do business in. In many parts of the world, if you fail once, you are done. People won't touch you with a ten foot pole. But here in the US, it's almost a badge of honor. And our President explains why.

When we met with entrepreneurs, I'm always interested in their failures. And most people have them, you just have to dig a bit to find them. If someone has failed and taken the time to learn from it, I think that's a big positive. It makes us even more excited to back them the next time.

So don't hide your failures. Wear them as a badge of honor. And most of all, learn from them.

Super Bowl special #2 - "Two good things happened" after Patriots punter embarrassed himself in front of 100,000

From Sports Illustrated:

[New England Patriots punter] Zoltan Mesko does not need much prodding to launch into a story about what was at once both his most embarrassing and most famous moment as a Michigan Wolverine.

One of the Wolverines’ longest-running traditions is to leap up and slap an eight-foot-tall “Go Blue” banner as they sprint onto the field before a home game. As a senior in 2009, Mesko was one of the first players out for Michigan’s season-opener against Western Michigan.

Only he was a little too enthusiastic. The 6-foot-5 punter got a little too much air and smacked the banner hard — a little too hard — with both hands. That caused him to lose his balance and tumble awkwardly to the turf, where he was smacked into by several of the 80 or so hard-charging Wolverines running behind him.

The clip hit YouTube immediately. ESPN’s “GameDay” interviewed Mesko after the Wolverines’ eventual win, just to talk about the banner incident.

Mesko laughed the mishap off then. And now, despite being in the NFL for two years and making his first Super Bowl, he’s still more than happy to talk about it.

“So, two good things that came about because of that, besides a lot of laughs,” Mesko said Thursday. “I got a little one-minute special on ‘Gameday’ — they interviewed me about what was happening when I was getting trampled.

“And second, a sorority noticed it was at 90,000 views on YouTube, and they said they’d throw a party for the football team when it hit a (hundred thousand).”

The original YouTube video reached that milestone, and Mesko took his teammates to celebrate at that impromptu sorority get-together. Consider that the prime example why Mesko was a huge hit with his Michigan teammates and a veritable legend around campus.

Here's the video:

Super Bowl special: the 3 mistakes that created the New England Patriots' dynasty

Sports Illustrated, writing about Super Bowl 46 between the Patriots and the Giants, outlines three decisions, which appeared to be mistakes at the time, that created the modern Patriots, a team that has been to the Super Bowl five out of the past 12 seasons.

1) Overpaying for the franchise. While bidding for the Patriots in 1993, Robert Kraft felt that the team was worth $115 million, and he was prepared to pay up to $125 million for the team. Prior to this, the Patriots had been owned by a succession of goofy owners (remember Victor Kiam?) and played in the worst stadium in the league. When James Orthwein asked for $172 million (the largest price ever asked for an NFL team at the time), Kraft swallowed hard and paid up, though at the time no one (including his wife) thought it was a price worth paying.

2) Hiring Bill Belichick as coach. Belichick, a successful assistant coach with the Giants for many years, had an undistinguished run as Browns head coach from 1991 to 1995. Nonetheless, after the 2000 season, Kraft had his eye on Belichick, then an assistant with the New York Jets, as a possible head coach for his team. At the time Kraft had decided to hire him, Belichick was under contract to the Jets to become their head coach if then coach Bill Parcells were to retire - which happened the same day that Kraft asked for permission to negotiate with Belichick. After the dust settled (Belichick submitted a famous resignation letter written on a napkin: "I have decided to resign as HC of the NYJ.") It cost the Patriots a valuable first-round draft choice to compensate the Jets for signing Belichick, a price that seemed steep at the time. In hindsight, it was a tremendous bargain.

3) Replacing Drew Bledsoe with Tom Brady at quarterback. Bledsoe was the best quarterback in Patriots history and had led them to the Super Bowl. He had been the #1 overall pick in the draft the year he came out of college. Brady was the 199th player picked the year he came out. In Brady's second year, Bledsoe got hurt, and Brady led the team well in his absence. When Bledsoe was healthy again later in the season, many (including me) assumed Bledsoe would get his starting job back. Belichick and Kraft thought otherwise. They stayed with Brady and the rest is history.

Bold moves that seemed like missteps at the time, and turned out to be brilliant mistakes after all.

CEO Sergio Marchionne: Fiat 500 launch "poorly executed"

Fiat & Chrysler CEO Sergio Marchionne explains why the US launch of the Fiat 500 undershot company projections. "Speaking bluntly," he says, "the launch was poorly executed." He doesn't say "I screwed it up," but he doesn't give excuses or deflect blame. This is showing a sense of agency. Marchionne also doesn't overreact to this data point, and takes the long view - this is the first step in reintroducing Fiat's cars to the US marketplace. It's a great 2-minute lesson in how a CEO should talk in public.



(Hat tip to Stephen Wunker)

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.

Another gem from Plain Dealer's "My Biggest Mistake" - Learning from a rapid international expansion

The Plain Dealer's "My Biggest Mistake" series by Marcia Pledger is the best resource for mistake stories anywhere, and should be regular reading for anyone who visits this site. This story is from Sudarshan Sathe, CEO of New Concepts, Inc., a Solon, Ohio, company that provides products and services to the steel industry.

A couple of years after I started a metals brokering company that caters to the steel industry, business took off. I was driving to Canada every week and flying to London several times a year.

I made the mistake of opening offices in those countries -- even though they were one-person operations -- so I could better serve customers in those markets. I thought that there would be active growth in those markets beyond what we were already doing and that failed to materialize.

The problem was I'm a hands-on manager and I was not able to properly manage the people in offices so far away. Infrequent phone calls and technology just isn't the same as face-to-face conversations. Managing is a two-way street. With offices so far away, I didn't get to interact with them and learn from them either. Those far-away offices could not connect with the rhythm and flow of the main office. The loss of that kind of connection was the cause of failure....

As always, I consider any difficulty to be a cause for self-examination. I did a lot of introspection. Then I realized I had to close the Canadian office, which I did after two years and the London office after nearly four years.

When you make a mistake you have to come face to face with yourself and see what part of your personality made it possible. I learned I like to be personally involved with the work. I'm not the type of person who can be a hands-off manager. It's a small operation and I have a certain way of doing things, which worked. I wanted to see it continue. But I had to find a new way to grow. And I knew I had to do it closer to home.

In 2008, I bought a well-established company in the wastewater treatment field.

But after my experience of trying to operate satellite offices in London and Canada, even Eastlake seemed too far [25 miles] away. Despite the expense, I moved the five-employee company to Solon, where my other company is located.

Mistakes in business or in life emanate from you. The challenge is to recognize them and work on correcting those within you. As an Indian philosopher has said, "The world is a mirror. What you see in the world is your own reflection."

Note that Sathe never points fingers at anyone but himself. This shows a sense of agency and ownership that will serve him well. He also learned from his international experience, and put that learning into practice when he invested in moving his acquired company so he could spend more time with its team face to face.

Mistakes you will make. They will cost you. But taking accountability for them, learning from them, and applying that learning will repay you handsomely.

Katherine Hays of GenArts discusses two hiring mistakes

If you count the number of mistakes people in business talk about, hiring is one of the top categories. There must be something about trying to assess someone's strengths, weaknesses, and cultural fit that exposes many of our weaknesses and biases. This story is from Katherine Hays, CEO of GenArts, a visual-effects software company. The interview is part of the Corner Office series by Adam Bryant in the New York Times.

Hays gets right to the meat of discussing learning and improvement ("what a shame if you're not continuing to build on them very deliberately), and volunteers a mistake story straightaway - and what she took away from it.

[Bryant] What else have you learned about leadership?

[Hays] It’s important to keep things in context, whether it’s good news or bad news. Either can be very distracting to the team. I’m pretty good at keeping those in context and focusing on the task at hand. Some of the boards I’ve worked with are really good at that as well. They just don’t overreact, no matter what the news is.

Those things came naturally to me. That being said, I think being a great leader is like being a great athlete. You can start with some natural abilities, but what a shame if you’re not continuing to build on them very deliberately, and continuing to kind of push yourself out of your comfort zone, trying to understand what you’re missing, and what you can learn from other people.

[Bryant] Any other lessons?

[Hays] Being very good at hiring people is key. And I would say I made two mistakes in hiring. Both times they had all the right answers to the questions, amazing backgrounds, really strong résumés, but my gut just said, hmm, this doesn’t feel right. And I didn’t listen to myself, and I hired them, and it was a mistake. I couldn’t articulate what it was that didn’t feel right, which is why I think I convinced myself to hire them. But something felt less than genuine about them.

So the lesson there was, at the end of the day, even if everything seems to check out, you listen to your gut. And I’ve given that guidance to a lot of my team. If they come in and they say, “You know, something doesn’t feel right,” I say, “Don’t hire them.” Far better to pass on someone than to bring the wrong person into the team.

Tim Berry audio story - on overestimating people early on

Another story from my 2010 conversation with Palo Alto Software founder (and superb blogger) Tim Berry. (The entire discussion can be found here.) In this story, Tim discusses a "long-term mistake" of his, and how he compensated for it.

Tim Berry - "I consistently overvalue people early on" (mp3 - 2m10s) - right-click to download.

Transcript:

I've never been a gun person, but I gather that the weapon sometimes has a natural lean to the left, or the rifle comes out high or the rifle comes out low. You get to know the weapon. And the markspeople compensate for that natural misalignment of the weapon by knowing that they need to aim slightly to the right or slightly up.

So I think of that analogy when I recognize that, through the years that I've been running a business, since 1983, when I went out on my own, I consistently overvalue people early on, early in the relationship. I've learned, with job interviews, and managing people, I've learned that this is a weakness, this is a flaw. And I know after I've finished the interview that I'm going to come out too up on that person. So I've tried through the years to recognize that and compensate. For example, when I was running the company, I started to get other people into the interviews to compensate. For example, for years, I'd never hire anybody until my wife had met and approved that person. Because she had better people skills.

Restaurateur Barbara Lynch learns from the failure of her produce store

There's a lot impressive about this interview with Boston restaurateur Barbara Lynch in the New York Times, but Lynch's crisp summary of her biggest failure, including what she learned and a bonus lesson, stood out to me:

Q. What failures have you learned the most from?

A. I haven't had many failures but one was to open a produce store called Plum Produce in the South End of Boston. It was basically a beautiful little storefront in which we had porcini mushrooms, heirloom apples, all sorts of produce from the local farmers who supplied the restaurants. But when I opened it in 2006, the South End was filled with young professionals who didn't like to cook during the week. My lesson was to do more research and understand the challenges of retail more.

Q. Anything else you would do differently?

A. My advice would be, try to own the property. I don't care if it's a garage but buy it because with me, nine restaurants later, I don't own any of my buildings. I lease.

Lynch owns several restaurants, two bars and a catering company in Boston.

Carol Dweck interviewed... and learning to type

Harvard Business Review has released an 18-minute interview with the author of one of our favorite books of 2011, Stanford scholar Carol Dweck. She discusses her favorite subject (and one of ours): fixed and growth mindsets.

The entire interview is great, but one powerful section discusses how to give feedback when things don't go as planned. It's as good a summary of the value of companies learning from mistakes and failure as I've seen. Says Dweck:

The person giving the feedback needs to focus on...how they engaged in the process, maybe as a team, what strategies they tried, how they gauge when and whether those strategies were being successful, whether they were sensitive enough to change strategies when they were starting to get the negative feedback. How they went forward, how they corrected themselves. And why, in the end, it might not have worked and what they might do differently next time.

One CEO I talked to rewards value added. Being able to put knowledge or skills back into the company - even when a project wasn't successful.

[Interviewer] Can you say a little more about that? What do you mean, "putting back into the company"?

[Dweck] What did a team or a person learn from an effort, even when it wasn't successful? Many successful people - Einstein, Thomas Edison - say they've learned more from their failures than often from their successes. So many huge breakthroughs came after a number of huge failures that provided learning experiences. You're not going to reward someone just because they failed, but what did the journey teach them that will help them and others in the company become successful the next time? So as people are engaging in a process, in a project, they are monitoring what worked and what didn't, to feed it back into the company to make it a communal learning experience, the more that is reward-worthy.

Here's a personal growth-mindset story. One winter in my mid-thirties, I went through a slow phase at work. I decided that I should learn to touch-type. After twenty-plus years of two-finger typing (including writing a novel and writing thousands of lines of code), I downloaded a typing tutor and, over a two month period, learned to touch type. It was difficult. I was utterly incompetent. But with practice, I was able to learn it.

This is one of my favorite memories. I thought I might be too old (and too accomplished) to learn much new. Instead, with practice, I went from not being able to do something to having that ability.

You can access the full Carol Dweck interview here.

Gilt Groupe CEO: Relearning that "References matter most" in hiring

From "How I Did It: Gilt Groupe's CEO on Building a Team of A Players" in the Jan-Feb 2012 Harvard Business Review. The author is Kevin Ryan, CEO of flash sale site Gilt Groupe.

I don't think there's a science to recruiting, but I do some things differently. The hiring process typically has three elements: the resume, the interview and the reference check. Most managers overvalue the resume and interview and undervalue the reference check. References matter most....

The presumption is that reference checks aren't worth much because people are scared to say anything negative. That's a valid concern, because there have been lawsuits. But the way around it is to dig up people who'll speak candidly. Invariably, they're people you know personally or people you can network to find. You can't simply rely on the names a candidate supplies....

We don't always get this right. For one hire, an outside recruiter that helped with the search had checked some of the references. Ordinarily we try to do this ourselves. The man didn't work out - it was just a bad fit. After he left, I ran into a couple of people I knew: one who had worked for the guy at another company and one who'd done business with him as a banker. I hadn't realized that either of them knew him. They told me exactly what they thought of him - which jibed exactly with our negative experience. Sometimes you don't hear an honest assessment till it's too late.

Sometimes a mistake takes you someplace new - other times it reinforces (with a jolt) what you already know. This story is one of those other times.

Tiny Tim takes a do-over

This story came to mind recently because I've been spending more time visiting my parents, who are now both in their mid-late 80's. I'm feeling that my time with them is growing short, and every visit prompts reflections, often on the drive back home, of times past.

My dad once got tickets to a concert, which was a very unusual occurrence. This was in the '70's, before there were casinos in our area, but it was a casino-type show featuring Tiny Tim - a ukulele player who sang in a quavering falsetto. It is very hard to describe his kind of performance, and almost harder to explain his popularity in the 1960s and 1970s.

I was a teenager, and already at the stage where I didn't want to do anything with my parents, least of all see Tiny Tim in concert. But I went, reluctantly (I did most things reluctantly those days).

The show started. There was something wrong with the PA system. The sound was broken up, and dropped out for stretches at a time. The monitors must have worked OK, because Tim kept going for three or four songs before someone got word to him that the sound was messed up. He stopped. I was slunk down in my seat - it was excruciating.

They fixed the sound in a few minutes, and he kicked off again. But wait... he restarted from the first song. Teenage me was mortified. He was heaping embarrassment on top of failure. What a disaster! Those four songs took forever, and the remainder of the concert crawled by.

I took stock as I left; that was likely to be the worst show I would ever see in my life. Bad music, bad sound - and a do-over!

My parents had a different view. "What a performer!" they said. "How brave of him to keep going, and even to redo the songs we hadn't heard." I thought they were insane.

Now, as I look back, I have a lot more respect for Tiny Tim, and for my parents' assessment of the concert. It would have been easy for him to storm off in a huff when the sound failed - he wasn't the sound guy, after all. Or he could have run through the rest of his set quickly and gotten out of there; no one would have blamed him for that. But, instead, he thought of his audience. He thought of my parents. They had paid good money for those tickets; they deserved the best show he could give. And they deserved the entire show. So he took a risk and restarted.

It takes a lot of courage to be a performer, and that same courage is useful in many areas of life - when trying something new, when making a break with the past, when standing up for your beliefs. When faced with those situations, perhaps I'll wonder, "What Would Tiny Tim Do?"

[As I wrote earlier, it's hard to describe a Tiny Tim performance. Fortunately, we have YouTube]

Quicken admits a mistake and sets out a path to making it right

Karen Wilhelm of the Lean Reflections blog sent along this email she received, dated 22 December 2011:

Mac users have been steaming about this issue for some time. Intuit has never supported the Mac community very well (I run QuickBooks on Windows via Parallel - not a good solution by any means). And this falls short of an apology to users. "We have not always delivered on this promise" and "I understand the frustration" are a few steps below "I'm sorry." But the company does appear to be responding to the outcry from users.

It's interesting that the letter writer, Aaron Forth is an outsider to Intuit. He came to the company via its acquisition of Mint.com. Perhaps this made him more open to supporting the Mac community than Intuit lifers. What do you think?

Pacific Gas & Electric incents inspectors to find fewer leaks, with tragic results

There was a tragic accounting of the cost of hiding mistakes in the San Francisco Chronicle this week. In a report on the San Bruno, California, gas explosion in September 2010 that killed eight people, the Chronicle indicted a culture of PG&E mistake-hiding that readers of this blog know creates bad outcomes.

The entire article is vital reading, but you can learn much of what you need to know by reading the story's lede:

Pacific Gas and Electric Co. long relied on leak surveys to determine that its gas transmission pipelines were safe even as it was handing out bonuses to supervisors whose crews found fewer leaks and kept repair costs down, a Chronicle investigation has found.

PG&E did not scrap the leak-related incentive system until two years before the September 2010 blast in San Bruno that killed eight people and destroyed 38 homes. It did so then only after three company whistle-blowers complained to PG&E's top officials and board of directors that the utility was encouraging supervisors to overlook possible safety threats.

The complaints led to an internal company audit in April 2008 that concluded the policy of providing incentives for finding fewer leaks encouraged crews to produce inaccurate surveys. The policy was among several factors keeping PG&E from being able to "effectively identify leaks and to reduce risks to employees and customer safety," the audit said.

Prompted by the audit's findings, PG&E conducted a rush inspection of its entire gas distribution and transmission system starting in October 2008. The surveys uncovered many more leaks than crews had found in checks performed since 2004.

[Thanks to Bob Sutton (@work_matters) for pointing to this article.]