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.

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.]

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.”

Those you promote are also role models

Another story from "What to Ask the Person in the Mirror," by Robert Steven Kaplan. This story demonstrates that leader role modeling extends beyond what she does down to the people she picks as lieutenants.

The CEO of a Professional Services firm was in the midst of attempting a strategic repositioning of his company. His objective was to expand the services his company provided and move into new advisory businesses that were adjacent to the company's traditional business. I thought the strategy made a lot of sense and was consistent with the firm's distinctive competencies, and that there was a terrific market opportunity to provide these additional services to the firm's clients.

From my firsthand observations, I believed that this leader was an excellent role model. He not only articulated the central values and vision for the firm, but also was very scrupulous about leading from the front - that is, making sure that his behavior was consistent and exemplified the qualities that he wanted his leaders to exhibit in this firm: commitment to excellence, putting the client's interests first, coaching and mentoring top talent, and establishing an atmosphere of fairness.

Despite these built-in advantages, he was struggling to figure out how to execute the strategic repositioning that he had been advocating. He had personally chosen his senior lieutenants since he had become CEO two years earlier. He himself had always been a superb producer before becoming the firm's leader, and he naturally gravitated toward promoting other producers - that is, people like him - into key senior roles. In other words, when he made promotion decisions, he was willing to overlook shortcomings in his people's leadership skills, coaching skills, and moral compasses because he valued revenue generation far above these other attributes. Initially, this seemed to work; but over time, voluntary turnover among the top-performing quartile of professionals began to increase, and it became more difficult to move professionals between divisions.

I suggested that he ask his head of HR to interview a number of midlevel managers to learn more about the increased turnover. I also suggested that the HR head do exit interviews … to find out the reasons behind the departures. Finally, I suggested that he add some interviews with midlevel managers who hadn't left the company - yet. I agreed to meet with the head of HR first, to debrief what he learned, and then join him for a meeting with the CEO.

The HR head … heard that while the CEO espoused values of fairness and valuing the employee, the division heads he had put in place sent very different signals, indeed. No amount of speeches from the CEO or exemplary behavior on his part could make up for the behavior of his key subordinates. The constant refrain encountered by the HR head was that production is the be-all and end-all at this company. If that wasn't the case, why did the CEO fail to choose subordinates who exhibited the behaviors he was touting? Why did he always go for the producers?

The midlevel employees who had remained with the company were quite cynical about the new strategic initiatives and didn't want to sign up for them. While these new directions might make strategic sense for the company, they involved a substantial degree of risk. In particular, years would have to pass before production in the new businesses reaches the same level as in the existing businesses. And if production was the critical metric - as evidenced by all those promotion decisions - why should someone who was succeeding at an existing position decide to move, and thereby incur a risk? It also emerged that the division heads were actively discouraging key subordinates from moving into these new areas, because losing them might detract from production in their own divisions.

The CEO… was quite disturbed by this feedback. I encouraged him to first actively coach his key subordinates on what he expected of them. He should explicitly expand the criteria for compensation to include factors other than pure production. He should assure people who were transferring to the new areas that he would personally watch over their compensation and career progress. (pp 177-180)

Reprinted by permission of Harvard Business Review Press. Excerpted from "What To Ask The Person In The Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential," by Robert Steven Kaplan, Copyright (c) 2011 Robert Steven Kaplan; All Rights Reserved.

This leader changed his behavior to be a better role model. Yet he had promoted people like himself, with the same strengths and weaknesses, and when the organization needed to change, these subordinates were the impediment to doing so. Another reason that developing a diverse team is better - you can change more readily when needed.

Leaders' actions speak far louder than their words

Here's another story about CEO as role model and the mistakes that can create. It is by Paul Anderson, former CEO of BHP Billiton:

After I spent about a year at BHP Billiton, ...profitability was up, and our efficiency was up; we were getting great productivity. You could look at almost any measure, and it was positive. Except safety. Safety had actually gone down a little bit.

I was very vexed by this, and I kept asking the head of the safety group, "What is it? Why isn't the organization embracing a safety culture, and why can't we seem to improve our safety performance?"

After beating around the bush for a while, he finally blurted it out. He said, "Well, you're the problem."

I said, "I'm the problem? I'm a real proponent of safety; we've got it right in our charter; I can't imagine a higher objective for the company; I can't imagine anything going before it."

He said, "Well, you're a lousy role model - just look at what you're doing."

I replied, "Lousy role model - what do you mean?"

He said, "You know, people notice that when you come to work you jaywalk across the street; you don't go to the corner. People notice that when you're out visiting a plant, if you're wearing dark safety glasses and you come inside, you take off the dark glasses even if you don't have a pair of clear safety glasses to replace them with and you're still in an area where you need them. They notice that when you go up and down steps you don't hold onto the handrail, which is the standard practice we have here. They notice that you don't park your car backward in a parking space which, again, is the safety standard that we have. You're just basically a lousy role model."

Of course, that took me a little aback. But he went on and said, "when you go to visit a manager, the first thing you ask is, 'How are you doing against budget?' You start asking financial questions; you don't start with, 'How is your safety program? What results have you had over the last year? What are your two or three safety issues that you have here?' So, people assume you're not particularly interested in safety. And in fact, they're focusing on everything but safety because you haven't really highlighted it."

That really struck me. I had never been in a situation where I was so clearly scrutinized as a role model and where safety was so important, because this was primarily a mining operation and steel mills, and very much an industrial setting. I realized that not only was I being scrutinized on the job, but also I was being scrutinized off it, too. One of the things that the head of the safety group said was, "People know you don't like to wear a helmet when you ride a motorcycle." And I thought, "Well, what's that got to do with anything?" But if you don't display these values in your personal life, then you obviously don't really embrace the values. It really drove home the point. Somebody once said, "Good leadership is doing the right thing, even when no one's looking." I realized that, actually, somebody is looking....

The key point I got out of that experience was that you are a role model 100 percent of the time. When you're the CEO of a company, you can't separate your personal life from your professional life. People learn what you do in your personal life; they follow what's going on; they watch you in situations where you might even thing you're not being watched. And if you don't walk the talk, they pick that up in a heartbeat. They sense very quickly whether your words and your actions are tied together, and if you don't match your words with your actions, the organization basically discards your words.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Communicating Clearly. Copyright (c) 2009 Fifty Lessons Limited; All Rights Reserved.

Get promoted, don't change your behavior - a mistake

This story is from "What to Ask the Person in the Mirror," by Robert Steven Kaplan, which discusses how to manage the complexities of senior leadership - not the complexities of business, but those of interpersonal skills, mentoring, communication and role modeling.

The CEO of a large consulting firm wanted advice regarding certain pressing strategy and leadership issues. He had spent thirty years at this company before recently being promoted to CEO. I had known him during my own career in investment banking, and had advised him at various points during his upward career climb. I liked him very much. He was always very bright and insightful. He had a very dry, sometimes off-color sense of humor. He had always been a bit of a cynic, but that was a humorous and generally appealing part of his personality.

The company was very large and - give its size and place in its industry - very high profile. The CEO called me one day and got right to the point. He was off to a "rough start" at the company, he said. First, he had done an in-person meeting with institutional investors and sell-side analysts, and he didn't think it had gone very well. In addition, he wasn't sure he had been approaching his direct reporters and company employees in the right way.... He asked whether, as a favor, I would meet with two or three of his direct reports and ask how they thought he was doing....

What I learned was that these direct reports had been thrilled that he had been named CEO. Having said this, they had expected him to recognize that he needed to behave differently now that he was CEO. The cynicism they used to enjoy now seemed inappropriate, and they wished he would stop it. For example, they didn't want him using the company town hall meetings as an opportunity to make cynical comments. They wanted their own subordinates to be idealistic about the company, and that required the CEO to show he was a "true believer." Even if it was only a role, they told me, they expected him to play it!

There was more - mostly variations on the theme of his new role. They wanted him to drop the off-color jokes, even in private settings. They thought that he needed to get in earlier in the morning. True, he had always been a late arriver - it had been the subject of much friendly banter, over the years - but they believed that because he was now the CEO, his tardiness was sending a bad signal to employees.... They suggested that he should think about driving a less flashy car to work and be a bit more mindful of his dress, even on casual Fridays. In short, they wanted him to look and act like the CEO of a conservative company.

When I sat down with my friend and relayed all of this news to him, he was both amused and perturbed. He explained that, for the past thirty years, he had never gotten any such feedback; now, all of a sudden, everybody had an opinion of how he dressed? He confessed that he thought the comments were off base, even ridiculous - and besides, how was he supposed to change his act at this stage in his life?

We had been friends for several years, so I felt free to talk to him in a fairly blunt way. He had to realize, I said, that he had made a major transition: from a 180-pound senior executive to the 800-pound gorilla the embodied the hopes, dreams, and aspirations of thousands of people. Like it or not, his every move would be closely observed, for the rest of his career. His statements would be parsed internally and externally. His moods would be observed, tracked, interpreted. How he behaved in restaurants, how he talked to the custodial staff, how he dealt with employees across the company - all would be closely scrutinized henceforth for clues to his character.

In short, he had become "role model in chief," and - I told him - this was part and parcel of accepting the job as CEO. Sure, he might feel the same as he did four months earlier, but to everyone around him, he was not the same. His words and actions all had more weight. Yes, he needed to be himself, but he also needed to recalibrate his behavior, taking into account his new weight and strength....

The good news is that, over a period of time, he took all of this feedback on board and eventually became quite comfortable with his new reality. But it definitely required a change in his mind-set.

Reprinted by permission of Harvard Business Review Press. Excerpted from "What To Ask The Person In The Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential," by Robert Steven Kaplan, Copyright (c) 2011 Robert Steven Kaplan; All Rights Reserved.

I noticed something of this issue in my own experience, when I was hired as a senior executive in a tech company some years ago. I soon learned that the time I arrived in the morning became a subject of discussion around the office. My first reaction was to point out that I was usually the last one to leave except for the night operations team. But the point was that people looked to me as a role model. In this company, people arrived at 8am, and a VP arriving at 8:30 or 8:45 was notable.

The transition from individual contributor and manager causes the same need to recalibrate. You are allowed to criticize management, strategy, direction, etc., when you are an engineer. It's part of the camaraderie of the workplace. But when you are promoted, you are management. The same criticism sends a very different signal - that of disloyalty or lack of commitment. Take it from a cynic!

So, if you like the way you are, and you get moved up into a new level of the organization, prepare to change anyway.

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.

When something goes wrong, the mistake is "not reacting to the opportunity"

Vibraphonist Stefon Harris, in a TED Talk, discusses how jazz music deals with mistakes. (See video below.) Unexpected events, Harris says, are opportunities - they only become mistakes if we don't react to them. This is a very interesting way of summarizing many of the ideas on this site.

Says Harris, "A mistake, from the perspective of a jazz musician...we don't really see it as a mistake. The only mistake is that I'm not able to perceive what someone else did. Every mistake is an opportunity in jazz." He demonstrates by playing in a certain key and asking the keyboardist to play a note not in that key.

After the wrong note, the band keeps at the same theme, and the note stands out like an unanswered call. "Hello, I'm here, please acknowledge." Nothing. Harris says the mistake was not the note, but that "we didn't react to it. It was an opportunity that was missed."

Then they play again, and the band shifts after the gnarly note comes in. Harris moves the key of the song, the drummer changes tempo. That wrong note sounds right all of a sudden. It sounds like, well, jazz.

A related riff appeared in the Times, which profiled Mr. Boyd E. Dunlop an 85-year-old jazz pianist from Buffalo who was rediscovered in the nursing home he lived in ("An Aging Pianist Finds A New Audience"). Mr. Dunlop's opportunity was to coax some music out of a broken-down old piano:

For years, the donated piano sat upright and unused in a corner of the nursing home’s cafeteria. Now and then someone would wheel or wobble over to pound out broken notes on the broken keys, but those out-of-tune interludes were rare. Day after surrendering day, the flawed piano remained mercifully silent.

Then came a new resident, a musician in his 80s with a touch of forgetfulness named Boyd Lee Dunlop, and he could play a little. Actually, he could play a lot, his bony fingers dancing the mad dance of improvised jazz in a way that evoked a long life’s all....

Mr. Dunlop arrived at the brown-brick nursing home nearly four years ago, a strong-willed but slightly bent half-note. He had 50 cents in his pocket, too much sugar in his blood, and a need to be around others. He liked to sit in the lobby and greet people, especially the women.

After a while, Mr. Dunlop let it be known that he was a musician. This did not distinguish him in a place where someone might claim to be a retired concert violinist or President Obama’s mother, and, in the first case at least, be telling the truth. Also, music here usually meant something to be endured — the weekly sing-along, say, with a resident armed with his own electric keyboard.

The broken cafeteria piano was a tease that Mr. Dunlop could not resist. He played when no one else was around, between meals, early and late. He learned how to dodge the piano’s flaws, how to elongate the good notes and suffocate the bad....

In the spring of 2010, a freelance photographer named Brendan Bannon arrived to discuss an art project with nursing home administrators — and Mr. Dunlop greeted him at the door. Mr. Bannon is balding, so Mr. Dunlop assumed for some reason that he was a doctor. “Hey doc!” he shouted. “Take my temperature.”

A bond quickly developed, and before long Mr. Dunlop invited his new friend to hear him play what he referred to as “that thing they call a piano.” Mr. Bannon, who knows his Mingus from his Monk, could not believe the distinctive, vital music emanating from a tapped-out piano missing a few keys.

“He was a beautiful player,” Mr. Bannon says. “He was making it work even though it was out of tune.”

When all you have is a broken piano, if you want to play, you make it work. We can create mistakes by kicking something off and then not paying attention to how the world reacts around the idea - customers, co-workers, etc. Or, like Harris, and Mr. Dunlop, we can sense and respond - put something out there, then listen, then adjust.

Remember, there are no wrong notes in jazz. So how do we react when life throws things at us that upend our best-laid plans?

Charlie Crystle: when it comes to a cash, verify the numbers

Here's a great story from Charlie Crystle, one of the greatest tech entrepreneurs in Central PA (yes, there are some here in Silicon Pasture!). It's from his Digging In blog, essential reading if you're interested in starting a tech business here or anywhere.

Managing cash flow is an important practice to get to know early. It's pretty simple: you have your known ongoing expenses, known revenue (or not), and known investment (or not). You have to manage your cash--the combination of investment and revenue--to cover the expenses on an ongoing basis.

That's why hiring someone early on is such a big commitment. You're asking them to change their lives on your behalf, so you damn well better be able to make payroll.

I blew that in a big way once; I thought I had a certain amount of cash, and knew I had to contract the company to make the cash last, but then I got an email from my right-hand man informing me he had made a mistake--by $200,000. Oops is right. We laid 10 people off the following Tuesday.

Which raises another point: you're the leader, the CEO--you need to verify the numbers. I failed to do that, though my practice prior to that year was to know everything about finances. It was a mistake I still regret today.

[Remember, regret is not necessarily a bad thing.]

Tim Berry audio story: leaving a consulting firm to write books

In 2010, I had a long conversation with Palo Alto Software founder (and superb blogger) Tim Berry about mistakes. (The entire discussion can be found here.) He related one story about leaving a comfortable job in a consulting firm for a life as a freelance writer of computer books. Things turned out very differently from his plan, but not in a bad way. A "brilliant mistake," perhaps?

Tim Berry: leaving a consulting firm to write books (mp3 - 4:19) - right-click to download.

Best Books of the Year 2011

It has been a spectacular year for books about mistakes and learning from them. Here's the list of must-haves:

1. Brilliant Mistakes, Paul Schoemaker. Five years after publishing a terrific HBR article on the subject, Schoemaker celebrates mistakes as, in Joyce's words, "portals of discovery," a way of navigating through a largely unpredictable world. And he presents a compelling case for making "deliberate mistakes"--creating projects that go against the conventional wisdom in a strategic way, in order to uncover invalid assumptions and shifts in the environment. From Schoemaker: Companies strive for error elimination, hiring advisers and relying on sophisticated management tools such as Six Sigma. It’s little wonder, then, that most decision-making books follow suit, encouraging you to focus narrowly on mistake avoidance today rather than provoking you to plan for the stream of decisions that you will face tomorrow.

2. The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work, Teresa Amabile and Steven Kramer. A mammoth research project that tracked the activity and temperament of dozens of workers and managers on a daily basis brought forth a simple, startling insight: workers are happier and more productive when they make continual progress toward meaningful goals, and unhappy/unmotivated when obstacles are put in their way. The application of this insight improves both managers' effectiveness and workers' self-regard. Why is this book on the Mistake Bank list? Because the authors urge managers and workers to face reality, even if it's unpleasant, and handle setbacks with grace and persistence. From the book: By its very nature, meaningful work is hard; people often get the greatest satisfaction from overcoming the most difficult challenges. Failure is inevitable along the path to innovation. Though you should try to minimize obstacles and setbacks under your control, you can never create a problem-free bubble for your people. You can't nourish inner work life if you drive yourself and your team crazy trying to avoid all problems. Rather, focus on providing people with the catalysts and nourishers they need to overcome the obstacles they will inevitably face.

3. Thinking, Fast and Slow, Daniel Kahneman. One of the fathers of behavioral economics and a Nobel Prize winner, Kahneman sums up the lessons he's learned in his decades of studying human nature - and is not above using himself as a subject. Kahneman writes: One of [my] themes is that people who face a difficult question often answer an easier one instead, without realizing it. We were required to predict a soldier's performance in officer training and in combat, but we did so by evaluating his behavior over one hour in an artificial situation. This was a perfect instance of a general rule that I call WYSIATI, "What you see is all there is." We had made up a story from the little we knew but had no way to allow for what we did not know about the individual's future, which was almost everything that would actually matter.

4. Better Under Pressure: How Great Leaders Bring Out the Best in Themselves and Others, Justin Menkes. A book that illustrates what corporate senior leaders need to do to succeed. Menkes describes great executives' understanding of their own fallibility and their willingness to take responsibility for mistakes ("owning their missteps") as keys to flourishing in the pressure-cooker of corporate leadership. From Menkes: Leaders adjusting to a significant increase in responsibility invariably make many mistakes. Those who ultimately excel recognize and own these missteps quickly and use the experiences to grow into their positions of elevated authority and increased complexity. But for this learning curve to occur, it is absolutely crucial that they accept their role in these mistakes. If they have a low sense of agency, they cannot, and will fail.

5. Mindset: The New Psychology of Success, Carol Dweck. I'm cheating here - "Mindset" was published in 2006. But I didn't read it till this year, and without a doubt Dweck's research and writing are among the most influential in the learning field, especially among other academics. She was referenced in more of my reading than any other scholar (Kahneman was #2).

From Dweck: Tom Wolfe, in The Right Stuff, describes the elite military pilots who eagerly embrace the fixed mindset. Having passed one rigorous test after another, they think of themselves as special, as people who were born smarter and braver than other people. But Chuck Yeager, the hero of The Right Stuff, begged to differ. “There is no such thing as a natural-born pilot. Whatever my aptitude or talents, becoming a proficient pilot was hard work, really a lifetime’s learning experience.… The best pilots fly more than the others; that’s why they’re the best.”

What were the best business books you read this year? Weigh in below in the comments section.

Cy Young/MVP winner Justin Verlander learns to avoid vanity license plates

A light post for a Friday. This is from Dan Patrick's interview in Sports Illustrated with Justin Verlander, who recently won both the Cy Young Award (best pitcher)and Most Valuable Player Award from Major League Baseball:

JV: The only time I was embarrassed was as a rookie. I still get a lot of grief to this day about this and rightfully so: My dad got me a [car] in high school with a license plate that said BRNGN IT.

DP: You were Nuke LaLoosh from Bull Durham?

JV: Yeah, I was Nuke LaLoosh. I came into the clubhouse with that license plate. We had some veterans who just wore me out about it.

DP: How about CYMVP for your next license plate?

JV: I've learned from my mistakes. I'm not going to have a vanity plate—just typical letters and numbers.

Kathryn Schulz discusses the importance of regret

Kathryn Schulz (author of "Being Wrong: Adventures in the Margin of Error") has a great TED Talk covering regret - why it's painful, and why it's necessary. Knowing that the absence of regret is a trait of psychopaths is one reason why we shouldn't feel too bad when we, you know, feel bad about something we've done. Schulz had a prior talk which we posted on earlier in the year.

Dan Frommer shares one of his bad predictions

Predictions are fun to make and usually fun to forget. It's so easy to write about what you think will happen, and awkward or painful to look back and compare that to what really took place.

Dan Frommer of the cool SplatF blog took himself to task for an old prediction about how Palm and Flash could create a powerhouse mobile partnership ("The Dumbest Thing I've Ever Written About Flash"). Here's what he wrote in 2007 in Business Insider:

If Palm and Adobe could work together on a stunning user interface and offer the massive community of Flash developers wide-open access to a solid phone platform on good-looking devices, it could be a huge hit.

And here's the November 2011 view (after Palm had been purchased by HP and then set adrift, and Adobe announced that it would no longer develop Flash for mobile):

But it was so impractical! Not just the idea of Palm and Adobe banding together — they actually did try to work together on Flash for WebOS devices, and it still failed. But the idea of Flash working well on a mobile/touch device was so far-fetched in 2007, and is still pretty looney today. And that’s a big reason why Adobe is now winding down mobile Flash development.

Bad predictions are eight for a dollar in the tech world, but a sense of humor and self-reflection, as Frommer practices here, are much rarer commodities.

Michael Bloomberg recalls being fired 30 years ago

TechCrunch's "Founder Stories" series recently presented an interview with Mayor Michael Bloomberg of New York City. Mayor Bloomberg is a highly successful tech entrepreneur as well as a 3-term mayor of the Big Apple. He discusses the role of hard work, as well as luck (he mentions luck twice), in his success.

While I was watching the interview, I thought about this quote from Paul Schoemaker: "The school of hard knocks is a great teacher, even if the tuition is very high, precisely because the lessons make such a deep imprint." At least three times in the interview Mayor Bloomberg refers to his being fired from Salomon Brothers more than 30 years earlier. In spite of his subsequent triumphs, the occasion of his firing still gnaws at him, still gives him something to prove. Here's the entire interview:



You can find Mayor Bloomberg's story of his firing in this excerpt of "Bloomberg by Bloomberg" from the New York Times.

Lessons from mistakes "make a deep imprint"

From Paul Schoemaker's "Brilliant Mistakes: Finding Success on the Far Side of Failure":

The school of hard knocks is a great teacher, even if the tuition is very high, precisely because the lessons make such a deep imprint. We need emotion born of direct, difficult experience to internalize, remember, and learn.

(c) 2011 Wharton Digital Press

Thinking about deliberate mistakes

As we prepare for the US Thanksgiving Day holiday, I am thankful for the book I'm reading right now, Paul Schoemaker's "Brilliant Mistakes." Here's a quote (one of many excellent observations in the book):

Companies strive for error elimination, hiring advisers and relying on sophisticated management tools such as Six Sigma. It’s little wonder, then, that most decision-making books follow suit, encouraging you to focus narrowly on mistake avoidance today rather than provoking you to plan for the stream of decisions that you will face tomorrow.

Schoemaker feels so strongly that in complex, dynamic environments (like any business) deep-rooted assumptions are the seeds of decline, he challenges us to make "deliberate mistakes" - violating one of these deeply-held beliefs (in a limited, experimental setting), to measure whether it is still valid.

The idea of deliberate mistakes causes me to think of Cynthia Kurtz's story work. Cynthia was adamant that any observation she made (or that I made) about a project we were doing should be countered with an alternate view. If I thought a set of stories pointed to a positive view of the client, Cynthia would counter, "What would a pessimist say?" And after exploring that for a few minutes, I could equally well make the case that those stories also had an ominous subtext. Evaluating situations in this way began to illuminate their complexity, as jewels that shone differently depending on which facets were held to the light.

I spent many months working with a large wireless carrier, helping them make sense of stories their customers were telling them in customer-service calls. It struck me that many of the leaders, upon hearing of an issue, would very quickly formulate a strong hypothesis about what was going on, without any specific evidence.

In one case, we were trying to investigate a situation where an alarmingly large number of customers, when they were changing their rate plans, were dropping their data packages. The immediate reaction was this: "customer service representatives are not trying hard enough to sell the value of the data packages."

I tended to identify more with the customers, given that I had little history with the company, and saw a few different possibilities. I tried to use Cynthia's approach to add nuance to the problem: "What would your customer service rep think is going on here?" "What is the customer's view of this?"

The managers I worked with on this project - lower- and mid-level managers - were receptive. They could easily place themselves in the shoes of the customer, or the rep. A few alternate hypotheses surfaced quickly: customers might not be getting value out of the data package, and the rate plan change caused them to do this evaluation; customers might have a fixed budget and could not keep the new plan and the package without raising their bill; customers might be looking specifically for ways to lower their bill.

Soon we had six hypotheses that we could test. Yet, on this and other projects, the complex truth had to fight against simple judgments, and it was a hard fight. If the practice of deliberate mistakes could be ingrained in companies like this one, we could spend more time trying stuff out and finding what works instead of arguing our own viewpoints.

Which arguments, at the end of the day, don't matter to the business.

Seth Godin: Keep exerting "righteous effort," especially after failing

In "After You've Done Your Best (and It Didn't Work)," Seth Godin writes this:

Early in our careers, we're encouraged to avoid failure, and one way we do that is by building up a set of emotions around failure, emotions we try to avoid, and emotions that we associate with the effort of people who fail. It turns out that this is precisely the opposite of the approach of people who end up succeeding.

If you believe that righteous effort leads to the shame of personal failure, you'll seek to avoid righteous effort.

This is precisely what Carol Dweck finds when she studies people with the "fixed mindset" - setbacks cause their effort to decrease, not increase, because they seek to avoid failure (or give themselves excuses for it), rather than learn from it.

It also sounds quite a bit like what Mona Simpson said of her brother Steve Jobs: "He was never embarrassed about working hard, even if the results were failures."