by Alan Smith
In his excellent book, Black Box Thinking, Matthew Syed offers a radical new idea: that the most important determinant of success in any field, whether sports, business, or life, is an acknowledgment of failure and a willingness to engage with it. This is how we learn, progress and excel.
In my own business, we will from time to time make errors, some of which cost tens of thousands of pounds to resolve. Typically, a team member may have purchased the wrong fund for a client portfolio or forgotten to invest and left money in the cash account whilst markets have risen.
Fortunately, this is a rare occurrence, but each time it happens, we advise the client, offer our apologies, correct the error, and make good on any losses from our own resources. Before I read Syed's book I would express my frustration and disappointment to the team that the error had been made, disappointing the client and costing us a lot of money to fix.
Unknowingly I was creating a culture of blame.
I realized that no one on our team was showing up to work with the intention of making a mistake to create problems for our clients and our firm. Everyone was doing their best in fast-moving and complex circumstances and getting things right 99% of the time.
However, we are human, and we do get things wrong. We have bad days, we have lapses of judgment, we forget things. I decided to make a change in the way we handled errors going forward.
I realized that every mistake presented a unique opportunity to learn. The only thing I was going to be upset about in the future was if we failed to learn from the mistakes we made.
We created our own template that we call a Learning Enhancer (importantly, not an ‘Error Review') and introduced a new system where the key members of the team involved , as well as another who wasn't involved , go through a process of review, learning, recommendations and actions which they then share with the rest of the team.
The intention is to make clear that mistakes are okay, we will all make them, and we can all learn from each other, get stronger and build a culture of growth, improvement and avoidance of blame.
In his book Principles, legendary hedge fund manager Ray Dalio explains the philosophy which underpins his firm's outstanding success: "Having a process that ensures problems are brought to the surface, and their root causes diagnosed, assures that continual improvements occur."
This approach should be embraced by every team, company, community, and nation, particularly when experiencing challenges that have never been faced before. Let's stop the accusations and finger pointing and realise that we're all in this together and that we can emerge stronger together too.
Alan Smith is the founder and CEO of Capital Asset Management, one of the UK's leading firms of independent Chartered Financial Planners. From their origins as a small, transaction-based IFA, Alan and his team have grown the business into a modern, profitable, boutique firm, delivering lifestyle financial planning services to a growing client base of affluent families.
