No-one likes mistakes, but here is something I have learned from one of South Africa’s most ambitious companies about how to tolerate risk-taking and deal with mistakes which inevitably will happen from time to time.
How tolerant are you of mistakes in your business?
I was having a meeting in the staff dining room at the Investec head office one day, a decade or so ago.
It had two levels, so when you walked in, it was easy to scope the room to find the person you were looking for.
Suddenly, the feeling in the room changed.
I looked up toward the entrance and CEO Stephen Koseff who’d been at the helm for nearly three decades was surveying the room. He missed nothing. He locked eyes with me. “What are you doing here?” he said. Loudly enough for most of the room to turn and pay attention.
He came down the stairs, stopped briefly by my side and in a stage-whisper said: “You see those guys, I’m going to crap on them.”
He made his way over to the table’s only available seat and proceeded to quietly, but animatedly admonish its occupants over something they had got wrong.
One got up and hastily left the table, while the one-way conversation continued until ten minutes later the colleague returned.
He delivered his message and satisfied, Koseff pushed his seat back, got up, made an unnecessarily large detour past my table: “ You see?” he smiled, “I crapped on them.”
He chuckled to himself and skipped up the stairs, satisfied that a crisis of some kind had been averted.
Years later I reminded him of that day. He appeared to remember and told me something profound.
At Investec, he said, mistakes were not punished, provided the person or team that made it, did so with the right intention. If they could explain why they had made a particular call, even if it had cost the business money, the matter would be written off to experience.
With a single caveat.
“If you do the same thing again and did not learn from the initial mistake, you are fired. Because that’s just stupid. And we don’t employ stupid people,” he said.
Companies don’t grow because of perfect decision making. They grow through trial and error. On balance, says Warren Buffett, when investing you just need to get more things right than wrong, and you will make money.
The same goes for running your business. If you are not making mistakes, you are probably not taking enough risks.
If you cannot tolerate mistakes in your business you will build a culture of zero risk taking, and if no-one takes risks, your business will eventually shrivel and die.
There are some guidelines.
You should never make a call that if it’s wrong, will break you. And if you build a culture that encourages risk taking and rewards that thinking, you also need to ensure you hire and promote the right people to make big calls. You can’t do it all.
Here’s the hardest bit. If even your best people fail to learn from their mistakes, you have to cut them loose.
Your survival depends on it.
And if you tolerate complacency in one part of the business, it will spread, and afflict other parts of your operation too.
No one said leadership was easy, but having some principles that govern organisational thinking help ease the burden just a bit.