Ooops …. They’ve made a mistake (Okay – NOT)

The BBC Business Daily Report of 5 January 2009 suggests its not okay to make the mistakes in business.  Their on the mark. The old chestnut ‘ if your going to try new things in business be prepared to make mistakes and learn’ has got to be one of the biggest of the many furphies to come out of popular management theory in the last 20 years.   Over the past year we have seen what happens if you make big enough mistakes….  it’s all over (for some at least).   Furthermore, make a big mistake, or enough little mistakes and you won’t get a chance to see if you’ve learnt anything.

The idea that selling lots of sub-prime loans to lots of people who couldn’t afford them constitutes lots of mistakes and not much learning, is pretty tempting.  Lots of people in lots of businesses down the supply chain, being careless, with insufficient knowledge, evaluating things wrongly – making mistakes.

If making mistakes isn’t actually a good thing then what is the solution?  Maybe it’s about thinking things out before you make the decision.  Disciplined planning and analysis, careful thinking and review and questioning  – all the hard things.  Its also about having a culture which supports honest and free speech – which not only encourages (and enforces) disciplined analysis but reinforces the exercise and debate of considered opinions.   The latter in my experience can be difficult  to achieve – as challenging as good analysis in the first place.

Does this mean you don’t take risks or fail on occasions?   Many decisions or plans have a risk (be it a known risk, a known unknown risk or an unknown unknown etc.) and even the most detailed decisions/plans have an element of judgement initially and along the way.  You don’t always fail because you made a mistake.  You can fail for any number of reasons beyond your control, but you need to hunt them down and pull the plug straight away.   A mistake occurs if you don’t look for problems and find them and then act on  them.

I know – sometimes there isn’t the time or money to do the analysis required.  This can lead to all sots of trouble – be it on your own head.   Its your call but maybe its better not to go into the jungle in bare feet.

The idea that we don’t learn from mistakes has interesting consequences for senior management and Boards.  If the solution to a mistake is to implement stronger regulation then why should those responsible for the mistake continue to hold responsibility in the aftermath?  Why should we think they have learnt the skills necessary not to make the same mistakes again, let alone other is a new environment?