Turn Mistakes into Compound Interest for your Business

We all strive for the golden ring of Six Sigma, and making as few errors as possible.  Making mistakes has become taboo as we compete in the global marketplace against German and Japanese firms that emphasize efficiency, consistency and reliability.  But what if that quest is stifling entrepreneurialism and innovation?   What if creating an atmosphere where employees are afraid of making mistakes is costing us on the bottom line?

Let’s face it, all of us have made mistakes throughout our careers.  Most them were small and easily corrected, but some may have been huge and had immense repercussions.  At the end of the day we are all humans and imperfect beings.  What’s more important is asking the question – did we learn from the experiences to ensure that we didn’t make the same mistake twice? How capable are we of introspection? The old saying “Fool me once, shame on you. Fool me twice – shame on me” comes to mind here.  For many of us it was our reaction to our mistakes (or the mistakes of others) that proved our worth and moved us forward.  The legendary UCLA basketball coach John Wooden once said “If you are not making mistakes then you’re not doing anything.”  So, if learning from those errors helped you in your career, don’t you owe your employees some leeway to make mistakes as well?

Yes, there are certain positions, tasks, or customers that you have no room for error – making a calculation error on the budget or overcharging your largest customer on fuel surcharge are examples of mission-critical errors.  However, each business has areas where perfection isn’t necessary and doesn’t pose a real threat.  We have previously discussed Kanban systems of continuous improvement.  Implicit in the concept of improvement is the possibility of being wrong occasionally.  Amy Rees Anderson in a 2013 Forbes article put it this way – “mistakes are not failures, they are simply the process of eliminating ways that won’t work, in order to come closer to the ways that will.”

Making a mistake means that the employee went outside of their comfort zone and entered a state of learning, which is where new discoveries are made, and lessons are learned.  However, many of us are reluctant to allow employees to make mistakes and the root cause tends to be a lack of trust.  That comes from two sources.

The first one is our own belief in being better at running all facets of our business than anyone else.  Why else do we all carry our phones with us on vacation and constantly monitoring and checking our e-mail?  It’s rooted in the belief that we are better at making decisions than everyone else.  It’s that attitude that’s holding leaders back from becoming greater leaders.  We can’t run successful businesses if we insist on doing everything ourselves.  Let’s face it, there are only 24 hours in a day and eventually we must sleep.  Short bursts of being a hero are possible, but it can’t be sustained over the long run.  Eventually we get tired and need to be recharged.

I was recently talking with a regional VP of a major bank who had just come back from a vacation.  She told me that for the first time ever she did not bring her phone with her on a trip.  A week before leaving she gave her people notice that she was only available by email up until a certain date and that any emails received while she was away would just be deleted.  Her reasoning was she had a team below her that she had empowered to make decisions and she trusted them to do so.  I spoke with her three days after she had come back, and she still felt rested!  How many of us have come back from a vacation only to feel like we had not even gone away?

The second reason for not trusting people to make mistakes stems from how we hire people.  Sometimes we just take the first reasonable candidate to fill the short term need instead of putting an emphasis on trustworthiness during the interview process and setting the expectations from the start.  Yes, it is painful to have to use existing staff to backfill vacancies but if you are just taking the first warm body that seems capable for the job, is it any wonder that we don’t trust them to make decisions, much less make mistakes?

We can all start by setting a culture where a degree of risk taking is acceptable.  Obviously, a VP is going to have more leeway than a customer service representative.  Given that constraint we need to make certain that we allow some room for experimentation so that a culture of continuous improvement can take place.  So how do we do that?

First, encourage people to own their mistakes and learn from them.  That means not lowering the boom on them whenever an error happens.  Do that and they will never develop the habit of looking objectively at the mistake, recognizing what they did wrong and understanding why that choice was the wrong thing to do.  Let them hold themselves accountable for their mistakes and acknowledge them.  If they are more worried about getting ripped into because of a mistake, then they will just hide them and never learn from them.  This will also result in you only knowing about mistakes when they become large and potentially costly instead of when they are small and easily fixed.

Second, make sure that the person who makes the mistake either fixes them or at least is involved in the correction.  I once heard someone say that lessons aren’t lessons unless they hurt a little bit.  Keep in mind that for most people the self-induced shame of having messed up is probably enough, you probably aren’t going to help things by piling it on, especially if it is a relatively small issue.

Finally, work with that person to develop safeguards to ensure that the same mistake will not get repeated.  Do a root cause analysis with that person so that they get an insight into what went sideways and why.  Most of your employees are more than smart enough to determine the root cause, they just might need some help with the framework.  By going through that process, they will gain insights that they can use in the future to start catching errors before they happen.  And guess what, an employee that can do that means better decision making in the future and just maybe you can join that bank VP in taking a vacation where you come back rested or even just go home at night and not feel that you need to constantly monitor things.  By being able to let people take on those new responsibilities you are going to free your own time up to take on items that will either grow your business or just contribute more to the bottom line.  Making mistakes – who thought that it would be a win-win proposition?