My biggest business mistake, and what it taught me

As the expression goes, hindsight is always 20/20. But how long does it take to get that 20/20 perspective? Here’s what Jerome Chazen, the co-founder of fashion house Liz Claiborne, told Knowledge@Wharton about the biggest mistake of his long career at the company.

“With the benefit of hindsight, I would have worked harder to moderate our growth. I think we allowed the growth potential to overtake the company instead of us being in charge of it. It’s a hard thing to explain. But you know, it was so exciting, for me anyway, to report better and better numbers, especially after we went public. I mean, I loved it. I loved those quarterly [numbers] that were up 20% or 40%, whatever. I think, looking back now, that I got carried away, that we should have done things more moderately.”

Liz Claiborne went public in 1981. Thirty years later, Chazen had learned the lesson that his excitement over making quarterly numbers was not in the long-term best interests of the company.

This kind of time lag in learning from a mistake is not unusual. For the deepest lessons an individual can learn, it’s required. Only with the passing of time can the intense emotions (positive or negative) of an event fall away and allow us to recognise mistakes and our contribution to them.

Not every mistake takes 30 years to absorb. Small oversights, process errors, results of projects or experiments can be evaluated hours, days or weeks after completion. Failures of these types result from lack of knowledge, routine human error, or poor assumptions.

But with another class of mistakes the stakes are much higher: the setbacks and failures that derail your future plans or call into question your self-image. These are the ones that occur because of your deepest weaknesses and flaws. For this reason, we prefer to avoid thinking about these mistakes, or to attribute them to circumstances out of our control.

I’ll share a personal example. I started my own consulting business in 2006. I expected that all the people who’d benefited from my expertise in my 20-year career would come calling as soon as I hung out my shingle.

Yet it took me seven months to land my first client. A little while later I got a second, who sustained the business for two more years. When that project ended, I couldn’t replace the lost revenue. I realised I couldn’t make a go of it, and took a corporate job.

I spent my first year as a salaried employee in complete denial. Any incoming call or email tempted me to jump right back into consulting. I blamed the failure on any reasonable factor: the poor economy, the structural changes in my industry, a dispute with my former company.

All those factors contributed to the situation, but dwelling on them was beside the point. It wouldn’t change anything going forward. I had to understand what I could have done differently, what I should do differently next time.

Dean Shepherd, of Indiana University, studies how people recover from failure. In his book From Lemons to Lemonade: Squeeze Every Last Drop of Success Out of Your Mistakes, Shepherd writes that there are three effective methods for moving ahead after a failed project:

Working through the loss: Evaluating and analysing the failure as quickly as possible and putting those learnings to work right away.

Restoration: Stepping back from the failure and focusing on other projects, using the break to renew our energies.

An oscillation: between the two other strategies.

Shepherd states that oscillation is the best approach for most people, offering a middle ground between working through, which can be gruelling, and restoration, which is self-nourishing but doesn’t contribute to learning.

If you work independently, it is always useful to have a project already prepared that you can take up when another project fails: call it “Break glass in case of failure”. If the main project falters, you have another project you can pick up right away, which can help with restoration by taking your mind off the failed project. And, if it’s similar enough to the project that failed, it can be a conduit for working through the loss.

If you are a salaried employee, you may find you have a fair amount of time to engage in restoration after a failed project. You can turn to other responsibilities, help out on a different project, or take a vacation.

Others, however, don’t take much time for restoration. Entrepreneurs are particularly skilled at bouncing back from failure and absorbing lessons quickly. This is partially due to need – they don’t have a salary to fall back on – and partially due to character. Skilled entrepreneurs know that many things don’t work out as planned and that mourning the loss of a project takes time and attention away from other projects that could be successful.

Shepherd’s book profiles an entrepreneur, Charlie Goetz, who endured three failed businesses (and built six successful ones):

“[To recover from a business failure,] I am one of these people who like to be left alone. One thing I am doing is thinking. For the first two weeks I am thinking about why it happened. What I could have done differently? In the next two weeks I start to think about what do I do now? What is my next logical step in this situation?”

Goetz learns from the failure and begins to move on in just four weeks – a very rapid progression. Even if we’re not seasoned entrepreneurs, we can learn from him. The faster we can gather at least the initial lessons from our mistakes and failures, and the more confident and resilient we are, and the sooner we can drive toward our next success.

Just make sure you set aside time for restoration as well. Forgive yourself, and make peace with the failure. In that way, you’ll be ready for the really profound lessons when they present themselves to you, years or decades later.

What’s your approach?

How do you find perspective and bounce back?

John Caddell is the curator of The Mistake Bank, a site that collects stories of business mistakes and articles on learning from mistakes and failure. You can follow him at @jmcaddell.