The Importance of Mistakes

Mistakes are going to happen. Organizations can do everything in their power to eliminate the failures that create mistakes, but they will still happen.

If there’s a fear of making mistakes, and more importantly a fear of how others will react to mistakes, people may act in ways that are counterproductive. It is how people react to mistakes — and to the people who make them — that ultimately determines an organization’s long-term success.

Creating an environment where mistakes are tolerated and where people are encouraged to admit mistakes is a good thing. However, more often than not, organizations make it their goal is to eliminate mistakes, not to encourage them. Discouraging mistakes inevitably does more harm than good.

Zappos set the bar high in terms of embracing mistakes. Back in 2010, Zappos’ CEO Tony Hsieh tweeted:

$1.6 million mistake on sister site @6pm.com. I guess that means no ice cream for me tonight. Details: http://bit.ly/blfLnF

As it turns out, Zappos accidentally set their website pricing so that no item would cost more than $49.95 for an entire day. Unfortunately for Zappos’ bottom line, many of their items cost much more than $49.95. Zappos took a $1.6M hit from this mistake.

In a message on the Zappos blog, Tony Hsieh wrote:

To those of you asking if anybody was fired, the answer is no, nobody was fired — this was a learning experience for all of us…

PS: To put an end to any further speculation about my tweet, I will also confirm that I did not, in fact, eat any ice cream on Sunday night.

Instead of engaging in a search for the guilty, Zappos analyzed their pricing engine and found plenty of problems. Zappos quickly learned that the current process required programmer skills to execute. The $49.95 pricing problem stemmed from just a few symbols missing in an overly complex code. Thanks to this mistake, Zappos gained visibility into the complexity of their pricing process and quickly implemented improvements. A mistake is simply an opportunity to learn — though admittedly some are more costly and embarrassing than others.

Unfortunately, unlike Zappos, many organizations would react to such a mistake with a witch hunt. Who was responsible? What went wrong? What would be the right punishment?

A real-world example of this type of problem centers on a bank and the problem of daily shortages and overages. Management decided they would solve the problem by putting any teller who had two discrepancies on probation, with the third incident resulting in termination. They played the “fear” card. What happened? Nearly all the shortage and overage discrepancies disappeared. Problem solved.

How could the discrepancies disappear so quickly and so completely? The tellers developed a simple but sophisticated system — they began operating their own pools of money. When overages occurred, instead of being reported, they were saved. When tellers came up short on a given day, they would withdraw from the funds saved on the “over” days. Those who needed funds borrowed from those with excess funds. A sophisticated system of borrowing and lending evolved.

In reality, the discrepancy problem was clearly not solved; it simply migrated underground. Whenever fear exists, people will develop defense mechanisms for survival. This further decreases productivity.

What could be at stake in an environment where mistakes are intolerable? Imagine a pilot approaches the altimeter and asks, “What’s our altitude?” and the response comes back, “What would you like it to be?” This is obviously an absurd example as an altimeter is just an instrument that reports objective facts. That’s exactly the point. The altimeter isn’t worried about getting punished for delivering bad news; therefore, it can be relied upon to provide the information necessary to make good, often critical, decisions.

The first step toward creating an excuse-free company should begin with company leaders examining the fears that lead them to look for someone to blame when something goes wrong. If your organization can’t tolerate mistakes, employees won’t take risks, so you need to create an environment where mistakes are tolerated. And when you mess up, own it; don’t look for someone else to blame.

The pattern is predictable: as you see error in what you have done, you steer your work toward what you imagine you can do perfectly. You cling ever more tightly to what you already know you can do — away from risk and exploration, and possibly further from the work of your heart. You find reasons to procrastinate, since to not work is to not make mistakes.

The same applies to business leaders and project managers. It’s critical to create an environment where employees are encouraged to identify problems so they can be fixed. There is no doubt that when people are motivated by fear, afraid of management and afraid of being punished for making mistakes, productivity suffers. Management can reduce this kind of fear by encouraging and rewarding problem identification that leads to improvement.

According to the Project Management Institute, almost one half of strategic initiatives (44 percent) are reported as unsuccessful. Much of this failure is attributable to fear and paralysis. Instead of wasting time and energy finding someone to blame for a mistake or an unsuccessful project or initiative, organizations should use that time to be more proactive about future projects.

So, what can an organization do to help with project failures? First, examine your team’s reaction to mistakes and realize that fear and punishment do more harm than good. Create an environment of transparency, honesty and the willingness to point out problems and mistakes. Use the tools of continuous improvement to find root causes and implement lasting solutions.