An entrepreneur is bound to make mistakes throughout his/her journey. However, the lessons a leader can learn from a mistake are invaluable. Entrepreneurs in their learning stage make plenty of mixed decisions – decisions related to hiring, investing in wrong projects, overspending, taking on more work than they can handle. The list is long. However, you need to ensure that you take every step necessary so that the mistake isn’t repeated.
1. FAILURE TO IDENTIFY OR ACKNOWLEDGE THE MISTAKE
No one likes being wrong. You will often come across entrepreneurs that are so fixated in their ways/thoughts that they don’t even acknowledge that they have made an incorrect decision. Its only after a significantly negative outcome that they realize that a mistake was being made. Acknowledging the mistake can prevent cascading, and often disastrous outcomes at the get-go. It’s recommended to catch the problem when you see it and nip it in the bud.
2. DON’T GET MARRIED TO YOUR PLANS
Whether you’re starting a business or implementing a new process, decisions or plans are made based on the probability of an outcome. Most, are convinced their idea is going to work before they decide to act on it, which makes sense. But, one must realize that convictions can work negatively as well. As a leader, you must be flexible. If a decision that has been made is not working, move to Plan B or Plan C. Don’t get stuck trying to prove to yourself that you made the right decision. Plans change, if something isn’t working, drop it! Switch to what you think will work & figure out what might be the best use of your time and skill set.
3. TIME SPENT VS VALUE CREATED
The time spent vs value created ratio is something you need to track very carefully. This is a costly mistake that entrepreneurs make to start out, pick an idea or process that will use time efficiently. We often forget that we only have a limited number of hours in a day. It is imperative that a leader spends his time-solving problems and making decisions that maximizes value creation.
For a businessman – measure the Time Spent vs the Money Earned ratio, for a scientist – the Time spent vs the Probability of Innovation ratio, for a Non-Profit Organization – the Time Spent vs the Level of Social Impact Ratio and so on.
BEWARE OF THE HIPPO CULTURE
HiPPO = Highest Paid Person’s Opinion. The HiPPO culture emphasizes forming a culture, where the highest paid person’s opinion does not necessarily influence every decision made in an organization. A good leader must ensure that the ideas and opinions from stakeholders across the value chain are considered before making decisions. Considering a diverse set of opinions before making an informed decision is imperative.
For example, in an operationally driven services business like ours the most junior person in the room often has a better pulse of what the real problem is on ground. It would be detrimental to our business if we only followed the HiPPO. The HiPPO can veto a decision when necessary, but it should not become the rule.
4. BECOME DISPENSABLE
All leaders enjoy the power of decision making, entrepreneurs often make that mistake. However, one must realize that a company cannot scale without making the leaders or senior management dispensable. Do all you can to become dispensable. At some point, decision making needs to be driven by processes & systems, not by the management. This might not be possible for an early stage startup; however, the company will never grow out of being a startup unless the leaders become indispensable.
Which means that they need to:
a.) Train their subordinate to do their job
b.) Set processes & a decision-making protocol that allows the senior manager to go on a
month-long vacation without day to day work being affected.
5. REWARDING MEDIOCRITY IS DANGEROUS
If your goal is to create value in the most efficient manner, you must try not to Reward Mediocrity. If a resource that you have hired is not performing and you do not see the potential for them to improve, let them go. If you have set a mediocre process that has worked in the short run, but will fail at scale, change it.