Little Lessons

When Mistakes Happen

Posted by Mark Fallon

Find me on:

Jul 19, 2019 5:01:00 AM

Foggy Coast

"No one ever choked swallowing his or her pride." - Harvey Mackay

I was wrong this week. Twice. Okay, at least twice.

Because the two mistakes I’m discussing involve clients and prospects, I can’t go into too much detail. But in each case, I underestimated the challenges involved with a project. And both times, I had to admit I was wrong.

In the first instance, a project that I thought would be easy to finish will require more work. My initial approach to the project was too simplistic. I thought that by applying my past experience with similar clients, I could complete my part of the work in a few hours.

Once I began the work, I uncovered a lot of information I didn’t know at the start. While similar to other clients, this company had some critical differences. This meant my part of the project would take a lot more than a few hours. In fact, it will take me a few weeks.

I now had to explain to my business partner that I underestimated the level of effort. We discussed how to adjust my schedule, and how she could assist me. Fortunately, my error won’t impact the client, and we’ll complete the project on time.

My second mistake will impact our prospect. I had conducted an initial review of several contracts and thought I’d uncovered some opportunities for savings. Before completing an in-depth review, I shared the good news with my prospect, and promised a written estimate of the savings within a week.

Anyone with experience working with contracts can guess what happened. When I started the detailed review, I uncovered numerous clauses and agreements that would prevent any immediate savings. My initial optimism faded and reality set in.

Before I contacted the prospect, I discussed the issue with my partner. Perhaps I was missing something, or there was another approach. Together we agreed that we couldn’t promise significant savings. We also agreed to let the customer know – immediately. Which I did.

And I’m not alone. The CEO of a slightly more famous “Berkshire” company admitted to a mistake a few years ago. Warren Buffett, the billionaire Chairman and CEO of Berkshire Hathaway Inc. (note: there’s no business relationship between The Berkshire Company and Berkshire Hathaway), shut down an unprofitable credit card division of his company. In his annual letter to shareholders, Buffett took full responsibility for the losses, emphasizing that managers warned him against the idea.

Buffett had thought he could expand a profitable subsidiary, Geico Insurance, by moving into the credit card business. The Geico managers weren’t enthusiastic, and tried to persuade him against it. As Buffett explained in the letter, “I subtly indicated that I was older and wiser. I was just older.” The division lost $44 million in bad loans and over $6 million in operations before it was shut down.

Three mistakes with three different levels of impact – more work, disappointing a prospect, and losing over $50 million. But these three blunders also have one thing in common – the person who made the mistake admitted it.

Too often, instead of admitting they’re wrong; people try to deflect the blame on others, or on lack of time and effort. These approaches will just aggravate the situation. If you blame other people for your mistakes, you’ll lose their loyalty. And if you try to delay confrontation, you may work longer and harder, but the results will only get worse.

The initial embarrassment you may feel when admitting you’re wrong fades quickly. In my first problem, we were able to quickly make adjustments and complete the project on time. In the second case, our prospect may not save a lot of money, but they know that they’re working with an honest consultant. And Warren Buffett was praised in the national press for his integrity, and his company’s stock price rose.

When you admit a mistake, you’re allowing the opportunity to learn a lesson. I’m developing a new checklist for estimating how long certain projects will take. I’ll remember to read all the details before making any comments on a contract. And Mr. Buffett has been reminded to follow his own practice of not interfering with the operations of his subsidiaries.

Making mistakes should be avoided. But there are worse things you can do. Like not acknowledging you made a mistake. That’s just wrong.

See where Mark is speaking next

Topics: improvement, values, honesty, listen, little lessons, trust, problem solving