Learning by their biggest mistakes

Decision-making : a blueprint for avoiding disaster has emerged from our series in which business leaders admitted the worst

IN 1982 Peter Webber was invited to go into partnership in what was to become the My Kinda Town restaurant chain. He declined the offer because he was certain the idea would not work, and now reckons that the mistake cost him pounds 2m to pounds 3m.

While an RAF equipment officer, Norman Adsetts made the mistake of assuming his stock control systems were running smoothly, and lost an aircraft. If it had not been found he might still be paying for it.

Brian Taylor, as a young production manager at a fish processing factory, bought 15 tons of squid - and then found out that his customer only wanted squid that were less than 2ins long. Almost all of the order had to be written off.

These people learnt from their mistakes, but what can we learn from them? The My Biggest Mistake series in the Independent on Sunday provided us with an opportunity to learn from others. The 250 contributors in the series came from a range of business sectors and typically held senior positions, such as chairman (22 per cent), managing director (20 per cent) or founder of a business (10 per cent). Women made up 12 per cent, and 42 per cent were university-educated, 13 per cent of them attending Oxbridge colleges. The average age was just under 51, with a range from 28 to 66.

Errors always occur in a particular context and when we set out to analyse the mistakes their context was the first thing we looked at (see figure 1).

We broke down these broad categories and found the most common context was in managing business expansion, which formed the background to 20 per cent of all mistakes reported in the column.

Examples ranged from Gerald Ratner's failed attempt to buy out an American jeweller to Evan Steadman's production of Maxwell: the Musical. In addition, many of the mistakes were reported against the context of making personal choices, 14 per cent of them in fact, such as Sir Hal Miller's decision to go into politics, and Sir Peter Parker's chance to take French nationality.

To help us classify the mistakes we developed a framework derived from research by two German psychologists, Dietrich Doemer and Harold Schaub at Bamberg University, who have used computer simulations to examine the kinds of mistakes made by managers. The results are shown in figure 2.

When we broke down these broad categories the two most common kinds of mistake involved selective attention and over-generalising, together accounting for more than a quarter of all the reported mistakes.

Selective attention is when someone concentrates only on a small part of the available information; like David Bruce, whose highly successful chain of Firkin pubs nearly went bankrupt in the early days, because he did not realise that they were running at a loss.

Turnover was so high that he did not bother with a profit and loss account. If he had focused on a broader range of financial information, a first- year loss of pounds 86,000 on a pounds 1m turnover might have been avoided.

Generalisation is when someone has a strong idea of how things should be and works with assumptions and generalisations that are not tested. Geraldine Laybourne made this kind of mistake when she produced a television programme that failed because it was too far removed from the children for whom it was made.

As she put it herself in her article, her team needed to "get rid of our prejudices about what we thought kids needed, and listen instead to what they wanted".

The mistakes reported ranged from confusing the Dutch prime minister with his personal assistant, to over-ordering 5,500 pairs of tights; from being too innovative in a market that was not ready for it, to not listening properly. Similarly, the consequences varied; one mistake cost the thick end of pounds 10m, others cost the business, while yet others cost nothing more than embarrassment.

What are the implications of all of this? The My Biggest Mistake series has shown us that successful people have made some huge mistakes; but more important, they have learnt from them. The lessons that emerge are important; here are some examples:

q Never allow emotion to rule the pocket.

o Wanting something badly is not enough to make it profitable.

q If you want sustained change you have to build allies.

q If you are a UK retailer do not go to America.

q Whatever the structure of the deal, personal relationships are always critical to its success.

q Do not underestimate the time and cost required to educate the market. Understanding a country's culture is necessary before you can understand the way it approaches business.

q Do not switch successful ideas from one culture straight into another.

q Never assume things will get better - make it happen.

q Never rely on the judgement of politicians.

In a culture that punishes mistakes, people will not feel free to talk about things that go wrong. No one will be able to learn lessons like these, and ultimately, it will be the organisation that suffers.

An organisation that cannot talk about and seek to understand its mistakes cannot learn effectively. An organisation that cannot learn cannot compete properly.

Organisations that take the time to understand their mistakes are investing in their future. We believe it is an investment that will reap rich rewards.

q Pearn Kandola is a firm of chartered occupational psychologists in Oxford that helps organisations of all kinds to succeed through unleashing their human potential. Michael Pearn, Tim Payne and Chris Mulrooney are part of Pearn Kandola's team, which specialises in helping organisations learn more effectively. They are conducting further analysis on the 'My Biggest Mistake' series.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
News
Robyn Lawley
people
News
people
Life and Style
lifeDon't get caught up on climaxing
PROMOTED VIDEO
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
Sport
Romelu Lukaku puts pen to paper
sport
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
News
people
News
A speech made by the Turkish Deputy Prime Minister urging women not to laugh in public in order to preserve morality has sparked a backlash on social media from women posting defiant selfies of themselves laughing at his remarks.
GALLERYWhy are Turkish women having a chuckle at the government's expense?
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star