Turning wrong into right

 

Investing is about failure. You are more likely to be wrong than right. Some will say that a great investor is one who is at most 60% right. It seems natural that we should spend more time on faults, errors, and failure. Change failure into success or at least a learning opportunity may make all the difference in the world. 

This topic is addressed in Amy Edmondson's Right Kind of Wrong: The Science of Failing. Written by an HBS professor, there are a lot of good stories of failure and what can be learned, but the core work is based on the serious research that all failures are not the same. Classify failure and we can do a better job of avoiding.

Failure is an outcome that deviates from desired results. Errors or mistakes are unintended deviations from prespecified standards. Violations are intentional deviations from rules.  We want to avoid violations, minimize errors, and learn from failure.

All failures are not the same. There can be good and bad failures. Good failures are necessary for progress. From good failures come discoveries. Basic failures are caused by mistakes that can be avoided, but there are also complex failures that are driven by multiple causes. 

Because we have aversion to failure and mistakes we try to avoid them and hide them under the rug. Let's not talk about mistakes. Hence, there is little opportunity for learning. 

Effective teams may see more mistakes because they are more willing to report failures and learn from them. They are open to learning from mistakes. The important point is to try and classify failures and focus on the why and how it can be avoided in the future. Is the failure systemic to the procedure used? Failures occur because rules are not followed, or the wrong rules are in place. Other failures can be associated unexpected events, which require a different mindset. There are also failures associated with new discovery, intelligent failure from dealing with high uncertainty allows for strong learning. 

We will all make mistakes. The question is whether we can stop basic failures and learning from complex and intelligent failures.