By: Mark Chussil
In business, we prefer cheap mistakes to expensive ones. We try recipes on ourselves, then in test kitchens, then in limited distribution, before we release (and good riddance to it) the parmesan-coconut omelet.
Similarly, we nurture and guide promising young managers through jobs of increasing responsibility. It takes a village to raise a child; it takes a company to raise an executive.
That kind of executive-rearing might avoid expensive mistakes but it is expensive in itself. For one thing, it takes a long time. For another, oral tradition is limited to the interpreted experience of history. For yet another, how many educational mistakes do people get to make when a company says “we want you to take risks but we will hold you accountable for results”? We all know what “accountable” means.
Wesleyan University psychologist Scott Plous describes an experiment in his marvelous book The Psychology of Judgment and Decision Making. Subjects are given three numbers, such as 3, 5, 7. Each subject’s job is to infer the simple rule the experimenter had in mind in creating that series. A subject can propose other three-number series (“11, 13, 17”), and the experimenter responds truthfully whether the subject’s series fits the rule (“yes”). When subjects think they know the rule (“three sequential prime numbers”), they tell the experimenter, who truthfully tells them whether the rule is right (“no”).
The experiment isn’t about the rule. The experiment is about how subjects look for the rule. Subjects typically design their series to confirm their ideas, not to challenge them, and then they almost always get it wrong. The obstacle to becoming right is looking for confirmation that you are already right.
Looking for signs that you’re wrong is important in business, because being wrong is often not obvious until it’s truly painful: the strategy doesn’t fail right away, say, or the product limps ambiguously along while depleting valuable resources. Unfortunately, many people have a vested interest in being right after a decision is made. That’s why the trick is to ferret out potential mistakes before vesting the interests.
My best mistake came in a pricing-strategy simulation I wrote called the Top Pricer Tournament. When I entered my strategies, I figured I’d enjoy a triumphant ego rush. Of course I’d take them out after the rush because it wouldn’t be fair to the more than 700 people who’ve also played to leave them in.
Then I saw how well my strategies performed. Rather, I saw how not-so-well they performed. At first I thought there had to be a bug in my software. There was no bug. Confronted with evidence that I was wrong, I compared my strategies to the most successful. In a flash I saw not only what I’d done wrong but also what I could do better. My big, cheap mistake turned out to be a great teacher.
We all know that our gotcha culture demands perfection. We all know too that mistakes are inevitable even as risk-taking is necessary. The solution is not to tolerate mistakes or avoid risk. The solution is to confirm less and challenge more. That means we need more than opportunities to make cheap mistakes; we need to understand why we made the mistakes.
- Don’t waste the mistakes you’re probably already making. Take extra time to follow them back through their roots, which may go deeper than you think.
- Look for reasons you might be wrong before you commit. For example, why have I never seen a parmesan-and-coconut omelet on a menu? It might not be an untapped market need.
- Use role-playing exercises, from impromptu play-acting to debates (take the other side for a change) to formal business war games.
- Put yourself in your competitors’ place. If you’re planning to win market share from them, for example, ask yourself why they’re planning to lose market share to you.
Remember that much of what we hear about business and strategy is more story than fact. Ask yourself how a person as smart as you would argue against your position. You’re not necessarily wrong, but no one’s always right.
Source: Harvard Business Review