"At Least We Know Where We Are Not Okay"

It’s a funny statement that made me laugh out loud. Read it again. “At least we know where we are not okay.” It was a statement made by a group of participants going through a sophisticated business acumen simulation after receiving their results from the first year of running their business.

In this situation, the group of high-potential leaders chose a business strategy and executed that strategy through operational decisions. Unfortunately, their actual results compared to their forecasted results were not very good. They completely misread the market and two of their competitors undercut them on price. As a result, revenue, profits, and cash flows were negatively impacted.

After analyzing the results and assessing the market, they said it, “At least we know where we are not okay.” It was a mature, profound statement and got me thinking about the lessons one could learn from this approach.

Here are five things leaders can do when they know their mistakes and can identify and prioritize the short-term and long-term fixes.

The most important thing a leader must do is to own the mistake. Here are the best practices:

• Take Responsibility: Admit the mistake both to yourself and to any relevant stakeholders. Owning up to errors builds trust and shows integrity.
• Analyze What Went Wrong: Break down the mistake to understand its root causes, whether they stem from planning, execution, or external factors

The second step is to openly and honestly know where you are not okay and develop a plan of action. A good plan of action should include:

• Identify Solutions - Brainstorm and evaluate potential solutions. Consider both immediate fixes and long-term strategies to address the underlying issues.
• Set Clear Goals and Timelines - Outline specific actions, assign responsibilities, and establish deadlines to implement the solutions.

The next step is to learn exactly what you did wrong and adapt. In this case, the team going through the simulation realized they needed to do a much better job of forecasting.

• Reflect and Document - Once the issue is resolved, reflect on the lessons learned. Document these insights to prevent similar mistakes in the future.
• Encourage a Learning Culture - Share your experience with your team to promote a culture of continuous improvement. Encourage others to share the lessons they have learned as well.

As you learn, adapt, and fix the mistakes, everyone is watching. There is only one way to go and that it to communicate with total transparency including:

• Inform Key Stakeholders - Whether it’s your team, customer, investors, or anyone in the value chain, keep them in the loop. Be clear about what happened, why it happened, and how you plan to rectify it.
• Reassure and Manage Expectations: Outline the steps you're taking to fix the issue and prevent it from happening again. This helps to maintain confidence.

The last step is to both implement the changes and monitor them to make sure they work. In the case of the team in the simulation, they decided to have someone on their team predict the competitors' strategies and forecasts and do scenario planning for relevance. And they knew if that didn’t work they would make further adjustments. Things to do:

• Take Action: Execute the corrective measures swiftly and effectively. Ensure everyone involved understands their role in the process.
• Track Progress: Regularly monitor the impact of your changes to ensure they're working as intended. Be prepared to adjust if necessary.

In summary, some of the best learnings are the easiest learnings. Taking these steps can turn a mistake into a valuable learning experience that strengthens your business and team in the long run.