When Deliberate Mistakes Mean Good Business
- by Paul Schoemaker
Ask elderly people about their areas of greatest regret, and most will recount errors of omission rather than commission—what they failed to do rather than what they did. People agree that in retrospect one can learn much from mistakes. Considering the cost of deliberate mistakes and the high probability of failure, however, you need to be strategic about when to pursue them in business. The strategy of committing mistakes on purpose is most effective when some of the following conditions hold true.
1. There is much to gain relative to the cost of the mistake. The cost of a deliberate mistake that fails (one that turns out to have no value) should be considered relative to the potential rewards (including learning) if it succeeds.
2. Decisions are made repeatedly. When core assumptions drive frequently made decisions, such as those about hiring, advertising, risk assessment or promotions, a strategy of making deliberate mistakes is likely to be valuable. For rare or one-time decisions, such as a company’s choice of whether to relocate its headquarters or engage in a merger, deliberate mistakes make little sense.
3. The environment is in flux. Whenever the world changes, people and organizations need to make mistakes to fully appreciate how the new reality affects their mode of operating. In these situations, mistakes are often unavoidable and inadvertent because current approaches are no longer effective. Making deliberate mistakes on top of inadvertent ones can accelerate learning. Procter & Gamble, for example, operates in the fickle consumer product market, where very few product introductions succeed. Their policy: fail often, fast and cheap.
4. The problem is complex and the solutions are numerous. The more complex an environment becomes, the more likely it will be that your understanding of the situation is incomplete. Making deliberate mistakes can expose flaws in your mental models and reveal other ways of approaching a problem.
5. Your experience with a problem is limited. If you are unfamiliar with a problem, be open-minded when approaching it. In the 1980s, most large grocery stores had little experience with organic foods. Suppose these stores had made the “mistake” of dedicating large sections of floor space to this market—or establishing independent chains. This is what Whole Foods Market did when it founded its first small store in Austin, Texas, in 1980. By tapping into a new market early on, Whole Foods now has more than 300 stores in North America and the United Kingdom with a stock market value exceeding $11 billion, after enjoying 20 percent growth per annum for many years.
By exploring how to access mistakes for their learning potential, you can challenge cherished assumptions and improve future prospects.
Editor’s Note: This post is adapted from Brilliant Mistakes: Finding Success on the Far Side of Failure, from Wharton Digital Press.