Transforming Your Mistakes Into Great Opportunities

I believe the difference between a great company and a mediocre one isn’t whether it avoids mistakes. It’s how much it learns when it makes them.

Everyone makes mistakes—every entrepreneur, every business leader, every employee. The mark of a great company isn’t that it avoids failures—that’s impossible—but that it has the wisdom to take full advantage of them.

Behavioral economics tells us that we humans are short-sighted by nature. We are wired to seek out evidence that confirms what we already believe and to ignore evidence that contradicts it. On top of that, we are usually overconfident, thinking we know more than we do and underestimating how much we don’t know. This leads to tunnel vision and myopic judgments. The great virtue of mistakes, whether by accident or design, is that they widen your range of experience and shrink your ego—and thereby open you to discoveries you’d otherwise never make.

History is in fact full of such brilliant mistakes. A notable one occurred in the early 1960s at MIT. Meteorologist Edward Lorenz had just completed a large round of simulations of a weather system and wanted to repeat the experiment over a longer time frame. Rather than waste valuable processing time, he manually typed in final numbers from the results table. To his surprise, the second simulation diverged radically from what he expected. He puzzled about it for days. Then it struck him: he had entered numbers using a computer printout that rounded all numbers to three decimal places, whereas the computer stores six decimal places. This tiny rounding error pushed the second simulation onto a markedly different path. In that sense, the exercise was a failure.

But the apparent error led Lorenz to a far more significant discovery. In a complex system, tiny changes in the initial inputs can cause massive changes at a later stage. Lorenz’s discovery is now known as the “butterfly effect”—after the notion that the fluttering of a butterfly’s wings can ultimately lead to a tornado halfway around the world—and is one of the foundations of chaos theory.

The Lorenz example illustrates the two prime ingredients of a brilliant mistake:

1. Something goes wrong far beyond the range of prior expectation; and

2. New insights emerge whose benefits greatly exceed the mistake’s cost.

The brilliant part lies especially in condition (2), but also in recognizing that (1) is necessary for (2) to occur. You want to increase the chance of (1) and (2) occurring together. When they do, you could have a brilliant mistake on your hands.

It’s not easy to get your business to view failure so positively, but it can be done. I for example ask my partners to share their mistakes at a monthly meeting. At first they were reluctant to open up, but eventually these confessionals became a favorite part of the session.

The partner who presents the best mistake of the month gets a trophy—Initially, the trophies stay in the desk drawer of the (un)lucky winner. But over time, winners became proud enough to place the trophy on their desk for the entire month and share with their clients how they transformed their mistakes into opportunities. In short, I managed to change the culture from one that hides mistakes to one that celebrates them. You can do likewise, and your company will reap the benefits.

Let me start by asking a question you probably think you know the answer to, and yet most everyone gets it wrong: when do you think former president John F. Kennedy was most popular? If history is as good a teacher as it’s cracked up to be, your answer will probably be “After he was assassinated.” The next most common assumption is that Kennedy was most popular after his election or after he “won” the Cuban missile crisis. Each answer is wrong. The correct answer, paradoxically, is that JFK was most popular after he flubbed the Bay of Pigs invasion. That’s correct: Kennedy gained popularity after demonstrating to the world that he had feet of clay.

So Kennedy’s botching of the Bay of Pigs invasion and accepting responsibility for it showed that he was not only human and fallible but also honest, forthright, and possessed of a back large enough to shoulder the responsibilities of his office. Because Kennedy fell off his pedestal and dirtied himself but didn’t pass the buck, people could identify with his plight and feel safe giving him the credit he deserved, without fear of being overwhelmed by who he was or what he had achieved.

If we apply that reasoning to the workplace, we find that people often judge those who have achieved stellar success to be lousy bosses or, more precisely, elitist snobs who lack people skills. In my experience, that judgment has nothing whatsoever to do with the actual interpersonal competence of the successful leader.

Looking untouchable is not the goal of a strategic pratfall; looking human is.

Now you know… Share your thoughts

Written by

Ziad K Abdelnour is a Wall Street Financier, Author, Philanthropist, Activist, Lobbyist, Oil & Gas Trader & President & CEO of Blackhawk Partners, Inc.,