Jay Goltz - lessons from hiring & firing 8 production managers

Jay Goltz is a seasoned entrepreneur who in his spare time writes for the You're The Boss blog in the New York Times. In this post, Goltz talks about his long-ago struggles to find a suitable production manager for his custom-frame shop in Chicago.

I was recently talking to a friend of mine who is struggling to find a production manager to run his small factory. The conversation brought back painful memories of my own struggles, many years ago, to find someone to oversee my factory.

At the time, I was trying to delegate so I could move on to working on the business instead of in the business. These were not the good, old days. I was in my early 30s, and the company was growing quickly, perhaps too quickly. Things were out of control. I worked long hours, had constant problems, was stressed out all day — and I was going through production managers the way Elizabeth Taylor went through husbands.

In one four-year period, I went through eight. Their tenures lasted anywhere from three weeks to a year. Believe me, as I write this, it sounds as nuts to me as I’m sure it does to you. But I learned three very important lessons that turned the situation around completely — and I do mean completely. My current production manager has been with me for more than 15 years, and his predecessor was here for five years. My factory is a well-oiled machine, and I do very little of the oiling....

[After trying and failing with the eight prior production managers], I spent a lot more time looking for the right person and checking references (which is not a waste of time). I spent months training him. I continued to manage. And it worked. So here are the three lessons:

1. Hiring. I was very bad at it. I was young and naïve, and I didn’t understand that a custom-order factory like mine is very different from a widget factory. If you don’t have the right person, it isn’t going to work. And you might have to go through 200 résumés to find the right person.

2. Training. I thought that I could hire the person, point in the right direction, and move on to other things. I was not delegating, I was relegating — giving it away. A smart consultant summed it up for me accurately: “Jay, you are hiring a production manager, and you think you’re hiring a C.E.O. He needs to be managed.” Voilà.

3. Tenacity. After every one of my missteps, I wondered whether it was possible to do what I was attempting to do. Most frame shops are run by the owner. Maybe what I was trying to do could not be done. But if you fall off the horse, you really do have to get right back on. Let me repeat. I did this eight times. (O.K., truth to tell, it was really 10 times. I just don’t remember anything worth saying about two of them.)

Goltz is a little hard on himself - he also writes this: "I wish someone would have told me [how to hire better] — but that’s the nature of entrepreneurship. We’re always reinventing the wheel." The truth is, in any position of leadership, and especially as the head of a business, you will find yourself in a position where you have to learn from your mistakes. Even if someone tells you what you should do, you won't really learn until you dive in yourself, make your own decisions, and your own mistakes.

You can find a collection of hiring mistake stories here.

My favorite interview question

I have done more than one hundred interviews over the past five years. [You can find a bunch of them here.] My idol is Terry Gross, and I modeled my style on hers. I try to be prepared, curious, and to listen carefully to what my subject is saying.

I have found that there is one question that has led to more interesting and insightful responses than any other question by far. It is this:

"Is there anything else you'd like to tell me?"

You can't ask this question straightaway; for me it comes last. But as long as the earlier questions have resonated, this last one is almost sure to draw out some great thinking.

I was interviewing the customer of an e- commerce client once, and wrapped up a 30-minute interview with this question. He paused a few moments to think, & then spent the next 45 minutes laying out a number of concerns he had with the client's systems. At the end of his answer, he said, "Thanks for asking."

If you ever need to interview a colleague, customer or family member, don't forget to ask this question.

[And, if you have a mistake story or two to share, and you'd like to experience my interviewing style first-hand, email us at mistakebank (at) caddellinsightgroup (dot) com.]

Renny Gleeson: the 404 error page is an opportunity to engage with users

In this TED talk, Renny Gleeson discusses the HTML 404 error (page not found), and how companies have creatively designed their version of this error page to build connection with their users. Says Gleeson, "A simple mistake should remind me of why I love you."

"Teaming" Day 5: Final Thoughts

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

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

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

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

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

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

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

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

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

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

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

"Teaming" Day 4: Varying reasons for failure

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

Blame and fault-finding is as old as humanity. We learn this early in life: "It wasn't my fault. They did it!" For mistakes in the workplace, the context of the situation matters a great deal when deciding whether an unexpected result is, in Amy Edmondson's words, "praiseworthy" or "blameworthy." She describes a spectrum of situations that explain failures, spanning from ... to ... Here's the list of reasons for failure, from most blameworthy to highly praiseworthy. Items in quotes are taken from Edmondson's description.

Deviance - failure due to not following prescribed procedures is a cause for reprimand, discipline, or firing.

Inattention - "inadvertent deviation" from specifications. This sometimes happens to me when I forget to attend a conference call I'd committed to. Blameworthy!

Lack of Ability - failure due to lack of skills, training, etc. Blame here rests partially on the worker, and partially on management, who need to assess and verify ability on an ongoing basis.

Task Challenge - failure due to the inherent difficulty of a task. Failing to get a hit in baseball seven out of ten times is simply a facet of the game.

Process Complexity - a breakdown in a system due to "novel interactions." Not blameworthy, in fact workers need to be encouraged to report these types of failures, so the novel interactions can be diagnosed and training developed to overcome the new obstacle.

Uncertainty - failure due to circumstances unforeseen at the time an action was taken. This type of failure happens often when there is a long lag between action and outcome. For example, locking in the price of next year's natural gas supply, and then seeing prices fall dramatically. Failures due to uncertainty are reason to evaluate how decisions are made and whether steps can be taken to manage uncertainty or its consequences. (People who succeed in an uncertain environment get undue credit. This discussion by Daniel Kahneman on stock-pickers addresses this point.)

Hypothesis Testing - "an experiment conducted to prove that an idea or a design will succeed or fail." Whether the hypothesis is proven or disproven, you've gained valuable information as a basis for higher-stakes decisions.

Exploratory Testing - an attempt to probe and understand a novel area. Many of these attempts will fail, but even a small percentage of successes will yield large rewards. Praiseworthy!

This quote was cited in an earlier post, but it's worth repeating when talking about how to assess whether someone should be blamed or praised for a failure:

When I ask executives to...estimate what percentage of failures in their organizations are caused by blameworthy events, the answers usually come back between 2 and 5 percent. But when I then ask what percentage of failures are treated as if caused by blameworthy events, after a pause or laugh, their responses often yield a much higher number in the 70-90 percent range.

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

"Teaming" Day 3: Three Types of Failure

This is our third post on Amy Edmondson's "Teaming: How Organizations Learn, Innovate, and Compete in the Knowledge Economy."

Chapter 5 is called "Failing Better to Succeed Faster" and it's full of wonderful insights about learning from mistakes. Amy defines three types of failure so well and so crisply that I won't paraphrase the definitions, but will quote them directly:

• Preventable Failures: process deviations in well-understood domains, usually caused by behavior, skill or support deficits. 

• Complex Failures: process or system breakdowns that arise due to inherent uncertainty and may or may not be identified in time to prevent consequential accidents.

• Intelligent Failures: the unsuccessful trials that occur as part of thoughtful experiments and provide valuable new information or data.

Of these three, complex may be the most difficult to manage. In routine environments, preventable failures should be easy to spot and to diagnose. In innovative environments, tolerance for failure is built in. In complex environments, however, deviation from expectations could be a "near miss" that could lead to a "consequential accident." It could be valuable information about a change in the environment. It might be an anomaly, due to events out of your control. How do you learn and improve in complex operations?

When reviewing these types of failures, first, don't blame individuals. Second, don't jump to the first explanation that springs to mind. [Quote from "Teaming": "The primary danger in failure analysis is that people tend to leap prematurely to conclusions, unless the analysis emphasizes a careful consideration of all possible causes and effects."] Finally, take ownership of the failure by looking at things you and your team can do differently when confronted with a similar situation in the future.

Here's a real example. I was involved on a sales campaign with a large customer. We crafted a very innovative solution for them. The team at the customer was very confident in our capabilities and had justified this project. We had negotiated price, and contractual points. Finally, only one more signature was needed by a customer executive.

He did not sign.

We who had worked on the opportunity were crestfallen. We had done everything we could to win this deal, and had nothing to show for it. Our first reaction was to chalk the failure up to bad luck, or fate, or even an evil, conniving customer executive plotting to screw us.

But as we reflected on the situation, it became clear that we had not done everything we could have. We had not fully understood who at the customer could make a commitment for this business. And we hadn't gotten in contact with that person to see if this project helped him with his objectives, or whether there were other projects he felt more passionate about. So, the learning was this: the next time we engaged on a sales campaign, we would, as early as possible, understand who would sign the contract and assess how to enlist that person's support. And if we couldn't enlist that support, consider stopping the pursuit.

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

"Teaming" Day 2 - The Process Knowledge Spectrum

This is another post on "Teaming: How Organizations Learn, Innovate, and Compete in the Knowledge Economy," by Amy Edmondson.

One concept in the book is the "Process Knowledge Spectrum." This spectrum describes three broad types of business operations that require different approaches to learning and tolerances for mistakes. It runs from Routine Operations through Complex Operations and to Innovative Operations on the other pole.

Routine Operations are business processes that are well-defined and for which conformance to specification is crucial. A McDonald's hamburger is made the same way worldwide. Mistakes in this environment are unexpected and due to inability or unwillingness to following procedure. Learning in this environment involves observing and noting small changes that can improve outcomes. The classic learning environment for Routine Operations is the Toyota Production System.

Complex Operations happen over and over again, but never exactly the same way twice. For example, customer service interactions or sales engagements. The people involved are different, the context has changed, and the environment has evolved. So the idea of "best practice" as used in routine operations is not applicable. (This hasn't stopped many organizations from trying unsuccessfully to make it so, but that's a subject for another post.) Mistakes in this complex operations often indicate, as Amy points out, system breakdowns. They can also indicate weak signals of change in the environment. They are rarely the fault of an individual, and treating them as such has a very negative side effect - it promotes hiding of mistakes, and, therefore, hiding the system breakdown or weak signal that is vital for learning and improvement.

Examples of Innovative Operations are development of a brand-new product or starting up a new business venture. In these operations, much is unknown, and only by developing hypotheses, probing and experimenting can learning occur. Innovators are often unperturbed by mistakes, and in fact welcome them. (Consider this quote from a famous innovator, Thomas Edison: "Negative results are just what I want. They’re just as valuable to me as positive results. I can never find the thing that does the job best until I find the ones that don’t.")

Uncertainty increases along the Process Knowledge Spectrum, from low uncertainty in Routine Operations to very high uncertainty in Innovative Operations. That amount of uncertainty indicates the usefulness of standard practice and the predictability of outcomes. In innovative projects, outcomes are highly unpredictable, experimentation is important and tolerance for failure needs to be high.

This spectrum is very useful in analyzing mistakes. If you are involved in a project in which the result is not what you expect, think about which of the above definitions fits the project best. Is it routine, complex or innovative? Knowing this will help you understand how to deal with the mistake and how to manage for mistakes going forward.

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

Amy Edmondson's "Teaming"

I'm so delighted that Amy Edmondson has published "Teaming: How Organizations Learn, Innovate, and Compete in the Knowledge Economy," a summation of her 20-year study of organizational learning & performance. Amy's ideas provide one of the pillars for this site and have helped shape my thoughts about perfectionism, leadership and teamwork.

I'm equally delighted that the book is utterly worthy of the expectations I had for it. Impeccably organized and crisply written, it sets out Amy's arguments so cleanly that you forget how radical her ideas are. At least, until you read something like this:

When I ask executives to...estimate what percentage of failures in their organizations are caused by blameworthy events, the answers usually come back between 2 and 5 percent. But when I then ask what percentage of failures are treated as if caused by blameworthy events, after a pause or laugh, their responses often yield a much higher number in the 70-90 percent range.

If you are looking for an introduction to the ideas we're exploring on The Mistake Bank, please read Chapter 5, "Failing Better to Learn Faster," several times. And then all the other chapters.

We'll spend the rest of the week sharing a few of the countless valuable nuggets from "Teaming." Expect it to be on our year-end "best of" list.

A full collection of posts related to Amy Edmondson's work can be found here.

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

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

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

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

Charlie Crystle audio story: deciding when to step down from your company

This story is from Charlie Crystle, who founded Chilisoft, a web infrastructure provider which in 1999 was sold to Cobalt Networks for $70 million. He and two partners later started Mission Research, which offers low-cost business software to support nonprofits.

Among other activities related to the startup ecosystem in Central PA, Charlie has founded a group of tech CEOs, Startup Lancaster, that meets monthly to socialize and discuss interests and experiences in the startup world.

In this brief story, Charlie shares the difficult process to decide to step down from a company you've founded. It's a situation ripe for mistakes, because there are so many ways to get it wrong - doing it too late, or too early, or when the core issue is really something else entirely.

Charlie Crystle on when to step down (3:14) [Right-click to download]

Rita Gunther McGrath: On being late for my own session at the World Economic Forum

Rita Gunther McGrath is the co-author of the seminal innovation book "Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity" and was #19 on the 2011 Thinkers50 list of top business scholars. She contributed this story from an early experience visiting the World Economic Forum in Davos, Switzerland.

Davos is this little ski town with one primary street which I have subsequently learned only supports efficient transportation in ONE direction. I had decided to go to a "Philanthrocapitalism" luncheon which featured Bill Gates, Tony Blair, Bill Clinton, Mohammed Yunus and Richard Branson (I mean, who wouldn't???). The hotel the lunch was at was at one end of the town and my session was at the other.

Not being familiar with the layout, I was advised by the hotel concierge to take a bus to get back to my hotel. What I hadn't realized is that the bus back has to go along a side-windy path that takes you all over the place and incidentally picks up and drops off all kinds of other riders, even if their locations are out of the way. I'd allowed double the time they said it would take, and the minutes were ticking....ticking...

Add to that the fact that every hotel and facility in the town has intense security, and you can imagine my anxiety.

It got worse. And worse.

By the time I was lined up at security to get into the conference area (it's like going through the airport) and had not YET gotten through security at the hotel or made my way to the 3rd floor seminar room my session was in...well, you can imagine the state I was in!

Fortunately, I called my helpful liaison at the World Economic Forum who moved heaven and earth to make things happen and I hit the room with only ten minutes gone. So much for fixing my lipstick and hair, it was right into business.

The session blessedly went well and my participants were fantastic about it.

Lessons learned:

• If the stakes are high, do a dry run. 

• Don't take well meaning advice from hotel concierges. 

• Walk if feasible; taxi if not. Life is too short to spend on buses.

Urban Outfitters apologizes for web outage, with kittens!

Urban Outfitters ran an online sale this week which they promoted with an email blast (see below).

During the sale, their website crashed. And to their credit, the company sent another email out apologizing for the outage, and adding free shipping. If I had tried to order something that day and was unable to, this email would have made me feel better:

This is evidence that you can turn a negative into a positive with some humility and a sense of humor. A deal-sweetener doesn't hurt either.

Thanks to the Listrak Email Marketing blog, which posted on this (and from which I got the screenshots).

From "Reverse Innovation": PepsiCo India's experience of trial and error

The new book "Reverse Innovation: Create Far From Home, Win Everywhere" by Vijay Govindarajan and Chris Trimble, describes the phenomenon of new products being born in emerging markets, with radically different value propositions and price points, and spreading to developed markets. This approach is the reverse of the traditional model for Western companies, which create (expensive) products at home, and then adapt them to developing markets.

This excerpt describes some of PepsiCo India's experience developing a new snack cracker named Aliva. It beautifully highlights the inevitability of mistakes when you are trying something new, and that persistently pushing through and learning from those mistakes are hallmarks of a successful product launch.

From its inception to its 2009 launch, the Aliva project took nearly four years. Aliva was evaluated against criteria that took full account of potential uncertainties. Such latitude was indispensable. Aliva had to make its way through a predictably fraught gestation. There were plenty of bumps in the road, and plenty to learn on the way.

Aliva's most vexing challenge was its packaging. Packages are hugely important to snack food performance. If snacks had remained in the era of the general-store cracker barrel, great branding opportunities would never have materialized. Aliva's packaging needed to be as distinctive as the shape of the cracker. The packaging had to communicate that Aliva was both healthy and fun. Decisions about the package would have implications for Aliva's texture and shape, the way the cracker was produced (through baking), and the attractiveness of the offering at the point of sale.

The Aliva bag featured a number of innovations. [Program manager Vidur] Vyas claims that nothing like it had ever been tried before. It was to be made from new materials on brand-new - and untested - machinery. The bag was designed to be flat on the bottom. Unlike typical snack bags in the United States, it could stand up straight on a retail shelf, tabletop, or counter. The packaging material was therefore heavier and stiffer than conventional plastic film. It turned out that a more rugged package could actually be made using only two laminate layers, not three. This solution was both more cost-effective and environmentally friendly.

The package specifications needed to address certain constraints of local infrastructure. It often took a long time to distribute perishable goods through a vast, predominantly rural retail network. Crackers can spoil more quickly than other types of snacks. Aliva therefore had to be protected from spoilage as well as breakage. A rugged, lightproof, hermetic package was key.

Vyas and his team endured a perfect storm of complications on the way to satisfying these needs. Because the Aliva bag was a first-of-its-kind package design, it seemed that every element of the package's structure and manufacture either had to be invented or endlessly troubleshot. To start with, the new packaging machinery was touchy. In limited test runs, things seemed fine. But once Aliva launched, in May 2009, problems cropped up during production-scale runs, particularly with the heat seal at the top of the bag. So, new material had to be designed. This required help from squadrons of global experts on polymers and lamination technologies.

There were nettlesome challenges on other fronts as well. Because Aliva would rely on a new baking system, which had only recently been used for the first time to produce cookies in PepsiCo's Mexico region, Vyas's team needed time and technical guidance to learn how to operate it reliably.

Finally, the team aspired to create a cracker in an eccentric triangular shape. The cracker's unique design was considered an important aspect of the values the brand would communicate. The triangle shape was meant to connote speed, stimulation, and taste. The triangle's curved edges were meant to connote health. At first, however, the crackers suffered unacceptable levels of breakage. Coming up with a workable version - a cracker with a low rate of breakage and a pleasing combination of textures - required innumerable trials.

But if Aliva's journey to market had an unusual share of difficulties, that is only because it was forging entirely new paths in a number of areas. To its credit, PepsiCo patiently tolerated a high degree of necessary experimentation... with packaging, with the baking system, and with the architecture of the cracker itself. (pp 167-168)

From "Reverse Innovation: Create Far From Home, Win Everywhere," by Vijay Govindarajan and Chris Trimble. Published by Harvard Business Review Press. Excerpted by permission.

Daniel Kahneman: It's "more enjoyable to identify the mistakes of others"

More wisdom on mistakes and self-knowledge from one of the best books of 2011, Daniel Kahneman's "Thinking, Fast and Slow":

It is much easier, as well as far more enjoyable, to identify and label the mistakes of others than to recognize our own. Questioning what we believe and want is difficult at the best of times, and especially difficult when we most need to do it, but we can benefit from the informed opinions of others.

Part of what I'm trying to figure out here is if we can make it a little easier to look inside ourselves, to get a better idea of what we "believe and want," so we can make better decisions and sidestep avoidable mistakes. Another objective is to get us to think about how to make better mistakes, so that given our difficulty in truly knowing what drives us, we can find that out by trial and error with lower cost to ourselves and others. Finally, by sharing others' mistakes, I hope you can learn more about your own situations and maybe take that learning into account in your own decision-making.

Check out the complete collection of our Kahneman-related posts.

TerraCycle's Tom Szaky makes a tough decision

An undertone of this project is decision-making. Each decision point is an opportunity to make a mistake. Avoiding decisions are mistakes in themselves. Yet in a complex environment there is no playbook for assuring a decision leads to a good outcome.

It's rare to get a peek into someone else's significant decision-making process, so kudos to TerraCycle CEO Tom Szaky, who discussed a key business decision in the New York Times "You're The Boss" blog this week.

TerraCycle has been trying to add a new type of business to its existing one - collecting juice pouches and remanufacturing them into consumer goods such as purses. In this case, the juice companies (such as Capri Sun) subsidize TerraCycle's costs for collection. The new business (called World of Waste, or W.O.W.) involves engaging consumers to cover the costs to collect and recycle other products for which the manufacturers aren't willing to pay TerraCycle to collect.

Enhancing TerraCycle's information systems to support this new model has caused delays in the program's introduction. Those delays are the subject of Szaky's post. I was most interested in the section where he talked about the management debate between investing in enhancing the existing juice pouch business model versus adding this new, quite different model:

I have made a firm decision that W.O.W. will not be delayed again. Not everyone on my senior management team agreed with this decision. The essence of our debate was whether we should spend all of our resources building our existing infrastructure (which is proven but dependent on one source of funding, our brand partners) or whether we should take three or four months and improve our I.T. infrastructure so that it can handle the new demands of W.O.W. (with a new system, W.O.W. would allow us to receive funds directly from consumers and thereby diversify our revenue). Of course, W.O.W., if it works, would not start generating real revenue until 2013, because we would not be able to introduce it, at best, until late in the third quarter of this year.

The arguments on both sides are compelling and logical. On the one had, it makes sense to strengthen a proven business model and have it immediately generate more revenue, which can in turn help drive our ability to invest further in the company. On the other hand, adding a new revenue generator and a major extension of our offerings could open us up to new customers and bring a big new revenue opportunity.

So far, my experience in business (which admittedly is limited, given that I’m 30) has taught me that taking such gambles is a worthwhile endeavor — even if the odds are against you. I have also found that in such moments it is difficult to make decisions that everyone on the team will support. Perhaps this is why most organizations have a leader and are not run by committee.

Dialogue, debate, decide, fall in line. This is a classic decision process. As Szaky says, there is a leader so these hard decisions can be made. And when he says "taking such gambles is a worthwhile endeavor - even if the odds are against you," he is saying that the bold decision energizes the team and makes it work like crazy to make the decision successful. (For more on this point, check out my article on The 99 Percent.)

Lyndon Johnson biographer Robert Caro finds his career-long theme via a mistake

This is from the New York Times profile of Robert Caro, written by Charles McGrath, published in advance of Caro's fourth volume in his monumental biography of Lyndon Johnson, "The Passage of Power: The Years of Lyndon Johnson." McGrath's article points out that many turning points in Caro's career came as a result of mistakes:

There was never a plan," Caro said to me, explaining how he had become a historian and biographer. "There was just a series of mistakes."

In the following excerpt, McGrath explains how Caro first became interested in the subject of getting and wielding political power, a theme that he has carried through five massive books over more than 40 years of writing:

In order to marry, Caro needed a job. The Times offered him one as a copyboy for a salary that he now recalls as "something like $37.50 a week." The New Brunswick Daily Home News and Sunday Times offered him $52 a week to be a reporter, and Caro took it. Another mistake, except that it led to an early lesson in power politics. The paper's chief political writer was on leave to work for the Democratic Party in Middlesex County during an election. When he became ill, Caro took his place. He wrote speeches and did P.R. for one of the party bosses. On Election Day he rode around with this man to the polling places, and at one point they came upon the police loading some black people into a patrol wagon. "One of the cops explained that the black poll watchers had been giving them some trouble, but they had it under control," Caro recalled. "I still think about it. It wasn't the roughness of the police that made such an impression. It was the - meekness isn't the right word - the acceptance of those people of what was happening. I just wanted to get out of that car, and as soon as he stopped, I did. He never called me again. He must have known how I felt."

The fascination and revulsion Caro found in that scene, in the privileges and unwritten rules of power, made a lifelong mark. Soon after that, Caro fixated on the behind-the-scenes opoerator Robert Moses, initiator of many 20th century New York public works projects (Triborough Bridge, Lincoln Tunnel, Cross Bronx Expressway, etc., etc.). That led to Caro's first book, "The Power Broker: Robert Moses and the Fall of New York" (winner of the Pulitzer Prize), and, then to his 40-year study of another power broker, Lyndon Johnson.

Entrepreneur Randy Minchew: listen to what the numbers tell you or else

Entrepreneur Randy Minchew posted on the My Venture Pad blog some lessons he has learned from his own mistakes ("Mistakes From Past Ventures I Won't Be Making Again"). Here's a taste:

Lesson 1: Respect the numbers.

I used to rely on my intuition too much when it came to pulling the trigger on a deal. What I found was that, while my intuition is great for helping me employ the right people, it’s not enough to make financial decisions.

A great example was when I started a restaurant. My wife (and business partner) told me that, based on the startup costs, our new restaurant would have to serve 800 people a day in order to make a profit. I promptly told her to stop being negative and explained that I had a gut feeling that we could make it work. The business went bankrupt in two years. I now have a great respect for the numbers (and others’ input!).

Minchew also offered some advice for others, which I wholeheartedly agree with:

People make mistakes in many of their everyday ventures; it happens. The important part is applying the lessons that you learn from these mistakes and considering them in future initiatives. And while you’re at it, don’t be ashamed to share them with others. You might save them from sharing in the same frustrations.

The act of sharing mistakes with others so they can learn is one of the main points of this site. Thanks, Randy, for sharing yours.

You can read his entire post here.

Mistake stories come alive when we discuss them

Recently, my wife and I were driving south to visit family, and on the drive we listened to the "This American Life" episode featuring the retraction of the Apple Foxconn story (which we discussed in an earlier post).

There's a lot going on in the story - the role of journalism, journalism versus theater, telling truth versus fiction. The episode took an hour, and then for the next hour or hour and a half, my wife and I talked about the story - what it meant to us, what we thought about it. The heroes and villains, and what really was our perspective on all these actions. After that, I had a much deeper understanding of the story and my reaction to it than if I had listened to it alone.

I think that's an important lesson for anyone who wants to learn from others' mistakes: you can get even more out of them and maybe substantially more if you share them with others. Because it is in discussion that we make sense of complex and ambiguous situations that frequently come up in business, in life and certainly around the issues of making mistakes and failure. Absorb these stories, share them, discuss them. Come to your own conclusions, and please share your comments on the site; it helps all of us get a bit smarter.

Thinking you can emulate Instagram is a mistake

Amid all the hype this week over Instagram's acquisition by Facebook for a cool $1 billion, it's worth pointing out the following. Your business will not be able to take advantage of many of the factors that enabled this 12-person company (12 people!) to quickly gain 30 million users and the attention of the biggest social software dog on the planet. Those factors include impeccable timing and a specialty (mobile) that fit a particular weakness of its acquirer.

You'd be better off scrutinizing failed ventures for things that their leadership actively did that you would not want to emulate. Sidestepping avoidable mistakes gives you a chance to succeed, at least modestly, with virtually any business. The difference between a modest success and a blockbuster will, for the most part, depend on things that are part of your environment or conditions peculiar to the time. They don't call it "catching lightning in a bottle" for nothing.

One feature of Instagram's leadership that I do think is instructive is their ability to nimbly adjust their product as they got feedback from users on where the market was headed. That's a habit we all could use to emulate.

Fred Wilson on "Coming of Age" as an investor

This post is from Fred Wilson's AVC blog. We've reposted many stories from Fred (you can find a selection of them here). It's not a mistake story per se, but a recollection of mistakes of inexperience he made, and which he is seeing from young venture capital investors today. I especially like the generous and optimistic tone of the post.

Mar 312012

Coming Of Age 

I’m out here slingin bringin the drama,
tryin to come up in the game
and add a couple of dollar signs to my name
- Memphis Bleek Coming Of Age by Jay-Z

I'm not going all Ben Horowitz on you. But imitation is the finest form of flattery and I do like how Ben rolls on his blog and in the venture capital business.

I'd like to talk this morning about how hard it is the come up in the venture capital game. I work with a bunch of VCs who are in their early 30s and have less than five years in the business. They work hard, put in ridiculous hours, are on top of all the latest trends, companies, technologies, etc. They meet with tons of companies every week, work hard for their portfolio companies, and are on planes flying around to the important confereneces and demo days. I can assure you they are working harder than I am.

But when it comes to winning deals, they have a distinct disadvantage. They can be working on a deal for a year or more, and then when the entrepreneur decides to raise funds, a more experienced VC such as myself can swoop in, spend a week or two building a relationship with an entrepreneur, and take the deal away from them. I've seen it happen. I've done it myself.

They make rookie mistakes. They let a reporter hang out with them for a week thinking they can trust them. They talk when they should be listening. They overpay for deals thinking that will win the deal for them. They use their phones in board meetings. They fight with entrepreneurs over meaningless things.
When I see these things I cringe. Because I've been there and done that. I spent the first ten years (maybe 15) of my time in the venture business as a young VC trying to make it in the game and not really knowing how. I've made all of these rookie mistakes and more. I feel for them, I often mentor them, and I really enjoy working with young VCs.

When a young person asked me about getting in the venture capital business, I advise them not to. I think VC is an experienced person's game. Startups are not so much. Startups are a great place to be in your 20s and 30s. VC is a great place to be in your 40s and 50s.

I look at Ben and his partner Marc and think "they did it right." They got into the venture capital business when they had all the experience one could ever want working with startups. They don't lose deals to more experienced VCs. They win deals over more experienced VCs.

But of course many young VCs made the decision to get in the game at an early age and are committed to making it work. They are going to have to take their lumps. Make the mistakes. Learn from them. Continue to work harder for less results to show for it. And lose deals they should win.

One of the things I did not do very well that many of these young VCs are doing much better is building relationships with more experienced VCs. As I said, I work with a bunch of them. Teaming up with a more experienced VC can help you win a deal, you can learn from them in the board room, and you can ask them for advice when you screw up.

Going back to where we started this post to end it, I like how Jay-Z and Memphis Bleek partner up in Coming Of Age. That's the way to do it.

[JZ] Hahahh I like your style
[MB] Nah, I like YO’ style
[JZ] Let’s drive around awhile

"Mistakeville" is hosting a mistake-story contest

The new site Mistakeville, a place to share mistake stories, is holding a mistake story contest in the month of April. One winner per week will win a $25 Amazon gift card. Here's the link to enter. Please check it out!

"Strategy + Business" magazine says "Netflix wasn't all wrong" in its strategic changes

The saga of Netflix's shift to streaming from its start as a video-by-mail company continues to unfold. As we've noted in several posts, Netflix and its chairman, Reed Hastings, were derided for the split of the two businesses, the dramatic pricing changes (subscribers who had both streaming and video-by-mail - like me! - saw up to a 60% increase in their monthly bills) and the way they communicated it to their customers.

Now, several months down the line, the opinions of Netflix's moves are more mixed. In Booz & Co.'s Strategy + Business magazine, authors Ken Favaro and Kasturi Rangan provide an early reassessment of Netflix's mistakes.

Favaro and Rangan criticize the timing of Netflix's moves, but note that

Netflix likely judged correctly that its mail business was going to be cannibalized and ultimately replaced by streaming. But no one can really know for sure how fast that might happen. Moving too early can be disastrous, as Netflix learned, but moving too late can be even worse — as companies such as Kodak, Research in Motion, and Nokia have discovered.

In the end, they admit that, while Hastings made avoidable mistakes in communication and assessing customer reaction, it's impossible to make a bold strategic move without breaking some glass:

Customer reaction to any change in a company’s value proposition is difficult to know a priori, even with the best market research. Having the agility to change your choices when new information comes to light is essential to strategy success. This type of agility, no matter what mistakes Netflix made, may save the company in the end.

Predicting the future is hard; ask a psychic

In the July-August 2007 Harvard Business Review, Paul Saffo explained in his article "Six Rules for Effective Forecasting" (link) that "prediction is possible only in a world in which events are preordained and no amount of action in the present can influence future outcomes." He goes on to write, "Above all, a forecaster's task is to map uncertainty, for in the world where our actions in the present influence the future, uncertainty is opportunity."

This belief was reinforced in an August 2007 news item from my local business newspaper, the Central Penn Business Journal:

...Business owners between 200-212 N. Second Street in Harrisburg will have to pack up if city officials approve plans for an 18-story office, parking and retail building at that location.

Four businesses would be affected: Cobalt Hair Salon, 2nd Street Psychic, Chilly Willy's ice cream parlor and the Tom Sawyer Diner....

Psychic Angie Tom, who owns 2nd Street Psychic, was in Europe and could not be reached. A psychic who works for Tom said she did not see this coming and could not say what Tom would do in the future.

If psychics can get caught off guard, then we must live in a world rife with uncertainty.

WSJ's Middle Seat columnist Scott McCartney: "Never call home happy" from a business trip

The Wall Street Journal's "Middle Seat" columnist, Scott McCartney, related his own tip in an article entitled, "25 Ways to Make Traveling Easier, Starting with a Single Shoe":

Never call home happy. I learned this the hard way many years ago. Out of town covering a big news event, I called home giddy. I was enjoying a fine meal with a large contingent of reporters. My wife listened quietly while I recounted the excitement of the story and the fun we were having over wine. And then I heard all about the two kids who had been throwing up all day. Big mistake on my part.

There are several travel-related stories on the site - you can find them here.

From FailCon: Designing for Failure - Lessons from Jetpack Joyride

This post was contributed by FailCon, an international conference on common business
failures and how to recover from them. http://thefailcon.com. FailCon has a blog that discusses subjects near to our heart.

I recently sat in on a post-mortem presentation at GDC by Luke Muscat of Halfbrick games, the creator of Fruit Ninja and Jetpack Joyride.  While he discussed dozens of ingenious tidbits on how to keep people feeling challenged, spending money, and generally having a good time, one thing stood out as especially relevant to us: Jetpack Joyride is designed to make the player fail. Over. And Over. And Over.  In fact, it relies on the user not only failing but enjoying it so much that they stick around and share it with friends.  With millions of downloads, clearly it’s working.

So just how have they made inevitable failure so fun, and what can the rest of us learn from this?

Reward Failure:  In Jetpack Joyride, with your ultimate death comes an immediate reward screen recognizing your progress, any mission goals you accomplished, and offering you a slot machine chance for any coin you picked up.  This can be pretty easily practiced with yourself and employees, too.  When encountering a failure (either personal or amongst employees), focus less on the problem that happened and more on what risks were taken, what was learned, and how this is going to improve the process down the road.  Keep yourself and the team feeling engaged with the organization, and show that each failure does contribute to the final product.  Make it very clear that taking well-informed, relevant risks is a good thing.

Always Have A Next Step: Immediately after exploding, Joyride shows you what your current missions are, to remind you that there is still more to get done.  This is by far the most important take-away for business leaders.  The quickest way to recover from a personal failure is to know what the next step is.  Before taking a big risk, set up a contingency plan: know exactly what things might help in a recovery, and have a short and easy to-do list on the side.  That way, when failure rears it’s ugly head, you can smile and nod and turn your attentions immediately to the next step, without having to worry about getting stuck in a rut.

Reduce the Barrier To Retry:  Joyride is a quick game with a one-tap ability to replay after failing.  Make failing that easy in your organization.  Use the Next Steps tips to always have a way for people to start again.  More important, make sure no one is dwelling on the failure.  The worst thing you can do is hold it against someone, having a three-strikes rule or anything like that.  This will make each re-entry more frightening.  Discuss what happened promptly, incorporate the lessons, and then move on to something new.

Most people design a business for success; it keeps everyone positive and envisioning a clear final goal.  But businesses rarely reach the first goal they sit; dozens of road blocks come up along the way, and you need to be able to recover and pivot quickly.  While you should keep strong goals in your mind, designing for failures - making them manageable and recoverable - is safer and more realistic for yourself and your company.