The 13-years old boy dropped heavily on his chair, haggard. He had just lost the U14 unofficial world tennis championship semi-final to a player that some called “the Mozart of tennis.” For the day’s loser, this was yet another defeat, fueled by a desperately unconventional forehand.
Yet he was a determined learner: soon he would analyze this game with his coach and see how to make do with his technical limitations. It was a painful process, but it worked: he became the world’s #1 tennis player. His name is Rafael Nadal.
Turning failures into the fuel that propels your business
This story from Charles Pépin’s The Upsides of Failure is a reminder that everybody regularly fails. The difference is that successful people learn from their failures while unsuccessful people don’t. Many of my clients’ CEOs have developed an intuitive sense of how to learn from their own failures – otherwise, their business would have disappeared long ago.
However what many founders are not good at, is dealing with other people’s failures: their own intuition cannot be taught to their team, who has not gone through the same transformative entrepreneurial journey.
They need a method to tackle their organization’s failures. In fact, based on my experience, the more methodical and disciplined a CEO is in making their organization learn from its mistakes, the higher the likelihood of long-term success. This article describes a method for your organization to learn from its failures and the pitfalls to avoid.
A methodical approach to failure
Ray Dalio, who founded Bridgewater from scratch and turned it into the world’s biggest hedge fund, explains in Principles how learning from failures was a key driver to his success: “Problems are like puzzles that reward you if you solve them, so you can better deal with similar problems in the future. Struggling to achieve our goals forces us to evolve: Pain + Reflection = Progress.”
He describes a 5-step (painful) process of learning from mistakes:
- Step 1: Have clear goals.
- Step 2: Encounter problems that stand in the way of your goals.
- Step 3: Diagnose problems to get to their root cause.
- Step 4: Design a plan to eliminate your problem.
- Step 5: Execute this design.
5 pitfalls to overcome to learn from failures
This looks straightforward enough. And yet many organizations fail to learn from their failures. Below are 5 pitfalls to overcome:
Lack of healthy growth potential
1. Not taking the time to reflect. CEOs fix a problem and then move on to fixing the next one, without reflecting on the root cause of the problem. “Our natural instinct when feeling pain is fight or flight. Don’t do either: calm yourself and reflect instead,” shares Dalio. If you don’t create the necessary time to diagnose the root causes of your failures, you will not improve and you will not grow much – regardless of how super smart you are.
One great place to reflect on your failures is your weekly leadership meetings: dedicate 30 to 50 minutes of your meetings to tap into the collective intelligence of your leadership team, and discuss and analyze the root causes of 2 or 3 recent failures every week.
2. Dealing with failures as one-offs rather than looking at the pattern of mistakes and using them to diagnose a deeper, more fundamental root cause. This happens often when the CEO is too close to the day-to-day operations and doesn’t take the necessary time with their leadership teams to connect the dots between mistakes and to reflect on the fundamental causes of recurring problems.
To overcome this pitfall, set aside time in your next leadership team meeting to dig deeper into a series of issues:
- Make a list of your mistakes and connect the dots between them.
- What are the patterns among these mistakes?
- Which other mistakes follow the same pattern?
Identify the 1 to 3 weaknesses that stand in the way – removing them will help you avoid making these mistakes again.
3. Not looking at the facts objectively. In order to learn from your mistakes, you need to “embrace reality and deal with it. Be a hyper-realist. Look at the world as it is, not as you wish it would be,” says Dalio. This sounds easy enough but is actually extremely challenging because, like all humans, we are not objective – especially when dealing with the harsh realities we wish weren’t true. Two aspects prevent us from looking at our failures objectively:
- Our ego “prevents us from acknowledging our weaknesses objectively,” explains Dalio. Our ego has an irresistible need to be right rather than to find out what is objectively true.
- Our blind spots and biases prevent us from seeing the complete picture of reality. We all have blind spots and tunnel vision, even those of us who think that they don’t. Nobody alone can see a complete picture of reality.
In order to overcome this pitfall, it is essential to remain curious and to surround yourself with people who openly disagree with you: people within or outside your company who view the world differently and will loudly share their opinion – exactly the opposite of like-minded individuals.
Kevin Lawrence in Your Oxygen Mask First advises CEOs to “find the truth-tellers: they deliver the truth that you don’t want to hear, and that most people don’t want to tell you. Keep them close. And, most importantly, ensure that you don’t make their life difficult when they give you the straight goods.”
4. Focusing on the symptoms instead of the root causes of the failure. In order to overcome this pitfall, ask yourself with your leadership team 5 times “why;” eg:
- Why did we fail at X? Because Harry didn’t do his job with X properly.
- Why is that? Because he was badly trained.
- Why is that? Because we hired the wrong person as a trainer.
- Why is that? Because we hired him in a rush when the previous trainer resigned – we didn’t have much time to be picky.
- Why is that? Because we always hire in a rush when people leave. We as the leadership team are so focused on the day-to-day that we don’t take time to anticipate and think about how to grow our team in the long term.
5. De-personalizing the diagnosis. “Not connecting problems to the people who failed and not examining what it is about them that caused the failure, will not lead to improvement,” says Dalio. I notice this very often – situations where the CEO avoids facing the facts about someone’s performance due to their fear of giving feedback, fear of conflicts, or fear of considering potentially letting them go (or because, as in the dialogue above, they feel guilty for being the root cause of the situation).
In order to overcome this pitfall you should:
- Identify who is responsible for the (failed) outcome.
- Determine whether the person responsible is:
- Competent, self-reflective, and able to learn from their failure.
- Incompetent, or competent but unable/unwilling to learn from their failures.
Define the next steps. Remaining purely objective is a challenge here; this is one of these situations where having truth-tellers around you is of paramount importance.
“True winning is understanding that failure is the first step towards winning,” summarizes University of Connecticut basketball coach Geno Auriemma, who led his team to 17 undefeated seasons, including eight consecutive.
Which of these five pitfalls has the biggest impact on your ability to learn from failures?
Consider the difference between learning and acquiring new information. If you don’t put newly acquired insights to practical use, it remains theoretical knowledge. This leads me to my final question for today: What is one thing that you will do differently this week to address your top pitfall?
I work with growth-minded CEOs who are frustrated by the way their business is growing. Often they spend their days fighting fires – typically a sign that their company has outgrown their management approach – and haven’t developed the culture of vulnerability-based trust necessary for their teams to learn from their mistakes.. In short, they feel stuck. I know the feeling: I have been in their shoes when I was running a business that we turned around from sales decline to double-digit business growth.
As a business coach my passion is to help leadership teams define their actionable business growth strategy, create a culture of accountability and effective strategy execution, and become better leaders – so they can grow faster and with less pain.
If you too want to grow faster and with less pain, contact me now: Xavier@AmbroseGrowth.com.
“My company has lots of potential, but I just feel my employees are not engaged. If I don’t push, nothing seems to happen. I’m working night and day and we’re still missing 40% of our targets. I once dreamed of being a firefighter, I guess that dream has come true. All I do is put out fires, I have no time to focus on my business.”
Sound familiar? CEOs and leadership teams can change this picture, it’s all about accountability. Creating a fierce culture of accountability starts with the CEO and leadership team.
Why is accountability important?
Accountability is about owning a problem. You want employees to behave as if they own the piece of business that they are running. When you are accountable for a specific result, you will do whatever it takes to achieve it – and you would like your team to perform this way as well.
Carlos Brito, the CEO of brewing company AB Inbev, summarizes his views on accountability in these words: “We always compare that to a rental car: you drive a rental car in a different way than your own car. With a rental car someone else will live with the consequences of your driving. With your car, you know that it will be yours the next days, months, and years, and you know that you will be living with the consequences of your driving. Employees who behave like owners are here for the long term, and they will live with the consequences of their decisions – good or bad – and that builds a great company.”
Why am I having accountability issues?
Accountability issues are very common among growing companies. When you founded your company, you were personally accountable for everything. As your company grew you started delegating the responsibilities for some results – e.g. production, customer service, or sales. However, you may not have created the communication channels required to hold your teams accountable. Why would you? You didn’t need any of this yourself, and yet you grew your business successfully. Why would these smart managers need anything different?
For one, your employees are not you. If they were, they would not be working for you: they would start their own business. Second, your company is now more complex than we you started: it has more people involved, and all these people now need to be on the same page. Third, when you started your company with a few employees, you could be on top of each of them and had short communication lines: you knew what everybody was doing, all the time. Now that your company has more employees it is impossible for you to manage them the same way: this would soak up all your time. This is exactly why you need to put a system in place that will achieve what you want (ie create accountability), without you spending all your time on it.
1. Lead by example
Like many aspects related to company culture, accountability starts with you and your leadership team. In order to create a culture of accountability you have to model the behaviors that you want to see in your organization. When it comes to accountability the rule is simple: when you make a commitment as a leader, you have to keep it. If you don’t, why should anyone else be interested in doing so? You can’t complain that employees miss their deadlines if you are occasionally late as well. As a CEO “all eyes and ears within your business are focused on you. What you say and what you do are invisibly and constantly observed, scrutinized and evaluated as your managers and employees are looking for clues as to how they should behave,” explains Mark Green.
Leading by example is not only about you sticking to your commitments, but also about your expectations from your team – and your behavior when your managers don’t meet your expectations. If your team members notice that there are no consequences for missing targets, why would they try their best? Similarly, if you tolerate one of your team members to produce poor results, why would other team members feel pressured to produce quality? When you hold your team to a higher standards, you are sending a strong signal across the organization.
2. Have the right people on the right seat
Without the right people on the right seat, nothing of what you can do will significantly increase accountability. The key question is: would you enthusiastically rehire everybody on your team? I advise my clients to assess employees on two dimensions; performance and adherence to company values. You will find more information on how to use this tool in this article.
Once you have the right people on your team you need to clarify their area of accountability. This is less obvious than it looks. The key question is: Who is accountable for each of the key functions in your company? As Mark Green explains “the exercise often reveals that there isn’t a single individual accountable for each function. When more than one person is “accountable”, nobody is accountable. It is easy to make assumptions that things will get done, but when there is not a designated person to account for a particular result, chances are, it is not going to happen. In this kind of environment, it is also easy to point fingers – Bob thought Mary would handle it, and vice versa. Other times, you’ll discover that a particular role hasn’t been filled by anyone at all; it is just implied that it will somehow be handled. Spoiler alert: it doesn’t!”
3. Clarify priorities
“The main thing is to keep the main thing the main thing,” wrote best-selling author Stephen Covey. “Individuals or organizations with too many priorities have no priorities and risk spinning their wheels and accomplishing nothing of significance,” says Verne Harnish in his book “Scaling Up.” Focus on a small number of priorities that will have the biggest impact on your goals, make sure that everyone on your leadership team is aligned on them – and communicate them broadly.
When employees understand where your organization is going and which role they play in it, they work less selfishly and they tend to make better business decisions on behalf of the company – simply because they can see the impact of their decisions and how they impact overall results.
4. Define clear action plans and metrics
Once you have identified who on the leadership team is accountable for each function and what your top priorities are, the next step is for each of your leaders to answer Mark Green’s key question: “What are the 3 most important results the company expects you deliver in exchange for paying your salary – and how should these results be measured? This step determines the results and metrics for each of your leadership functions. As we all know, you can’t manage what you don’t measure. If you want to increase the speed and quality of a particular service you offer, you should establish specific metrics to gauge those factors and identify metrics and targets for them. You may determine if you reach or surpass a target for three months in a row, you have achieved that objective.” Pick specific metrics, make sure that your leadership team is on the same page and that everybody aims for the clearly defined results – so that the rest of your organization can follow your lead.
Similarly, once you have defined top quarterly priorities, the question becomes: what do you and your team need to do in each of the next 13 weeks in order to achieve priorities? There are only 13 weeks in a quarter – if you do NOT view your quarter as a 13-week race, you will lose weeks and time which you will NOT get back. A weekly plan clarifies what can be expected every week, in order to meet expectations at the end of the quarter. It also makes it much easier for your leadership team to hold people accountable to their own 13-week plan.
5. Establish a metronome-like meeting rhythm
Just as a metronome calls time and sets tempo in a musical performance, so do a small set of consistently executed meetings to hold you and your team accountable, and keep everyone on the same page. The essential regular meetings are:
- Daily huddles (no more than 10 to 15 minutes) to evaluate progress on the very short-term priorities and identify any blocking issues.
- Weekly huddles (no more than 90 minutes) to review the status of the 13-week plan and course-correct if needed.
- Monthly and quarterly meetings to review progress on the priorities, take corrective actions when needed, and identify new priorities for the upcoming quarter.
I often notice that the most impactful meetings to drive accountability are the daily and weekly huddles: they create peer pressure and hence take the heat off your shoulders as the leader. They also improve communication: You won’t need to have the same water-cooler conversation three of four times, as is the case when you rely on chance hallway meetings for communication. And finally they enable collective intelligence to solve problems.
In the end, how much difference do these tools make on accountability? Pretty big, as this example from another Gravitas Impact business coach, Glen Dall, demonstrates in Mark Green’s book “Creating a Culture of Accountability”: “I worked with the CEO of a multi-location dental practice. The CEO had started with one practice that they grew very successfully – and then began expanding. At one point employee turnover rates increased to 200%. The leadership team would plan and set goals, but frequently failed to achieve them. The growth rate was declining. The CEO felt over-extended, frustrated and stressed.”
With the leadership team Glen Dall leveraged these tools to have the right people on the right seat, set priorities and targets, as well as establish a proven system to follow up on them. The result? “After our first 6 months of working together, the CEO told me, “You should be proud of how far you’ve brought the team. I feel that we have accomplished more in the past 6 months than we were able in the last 7 years.” That is the power of accountability.”
As a business growth coach, I work with founders of mid-market companies who are frustrated because their business is not growing the way they want; my passion is to help them identify and remove the growth roadblocks they have been hitting so they can grow faster and with less pain. Often their roadblocks include a lack of accountability: they have no system in place to regularly follow up on their team’s many commitments, or their teams don’t have clear priorities and metrics. I would like to learn about your growth roadblocks; contact me to discuss at Xavier@AmbroseGrowth.com.
What about you? How accountable is your team? How has Covid impacted accountability? Over the past couple of years, how many quarters has your company reached and missed their targets? What were the consequences of hitting targets, and what were the consequences of missing them? Do you have clear metrics and regular meetings in place to follow up on each of your priorities?
Let me know your thoughts in the comments section.