entrepreneurship, mindset

Mistakes are Tuition

Over the course of his 84 year life, Thomas Edison acquired a record 1,093 patents and helped create the movie camera, microphone, the stock ticker, and even an early version of the tattoo gun. Edison famously only slept around 3 hours per night and could exist on such a small amount of sleep because of his frequent catnaps. He was also an exceptional promoter and businessman. His company, General Electric, is one of the oldest and most successful companies in US history.

His crowning achievement was the development of the incandescent light bulb. Over a several-year period, he worked to find an affordable and reliable solution to gas-powered lighting. The primary challenge centered around developing a filament that would be durable but cheap. In total, his team tested more than 6,000 possible materials before finding a solution made from carbonized bamboo. The process was expensive and full of prototypes that did not produce the desire results. However, when asked to reflect on these trials, Edison said:

“I have not failed 10,000 times. I have successfully found 10,000 ways that will not work.”

Edison’s mindset is worth examining. He did not view the thousands of unsuccessful experiments as failures. Instead, he saw them as the stepping stones that eventually led to the successful prototype.

How We Learn

There is a growing body of evidence that we learn most effectively by experimenting and analyzing the results. When we are young, we learn about the world around us by touching and tasting everything. No matter how many times we hear that a stove is hot, we ultimately have to experience the discomfort of being burned to understand. As a parent of two children under 10, I have concluded that good parenting includes allowing your children to fail in non-fatal ways.

In one recent study, researchers in Singapore examined how seventh-grade math students learned. Researchers divided students into a “direct instruction” group and a “productive failure” group. The direct instruction group learned how to work problems through a step by step tutorial from an instructor. In contrast, the productive failure group was allowed to struggle and fail at solving the problem. After allowing the students to attempt several unsuccessful methods of solving the problem, an instructor would help them analyze the failed attempts and find the correct answer. The study culminated with a final exam. The productive failure group significantly outscored the direct instruction group on all problem types. The most successful students were productive failure group participants who now could solve problems through several different approaches. The unsuccessful attempts had laid the mental framework for successful mathematical thinking.

The Cost of Wisdom

What are the implications? It means we don’t retain spoonfed wisdom very well. Instead, our learning correlates to its cost. Several psychological terms describe this tendency, like the sunk-cost fallacyendowment effect, and the Veblen good. One recent US Bureau of Labor Statistics study found that college students who worked a part-time job had an average GPA of 3.13, while nonworking students had an average GPA of 3.04. When you are washing dishes to pay for your classes, you are more motivated to absorb the information. We use the word tuition to describe the cost we pay to acquire wisdom and knowledge. Sometimes tuition is financial, but it can also be time, effort, reputation, or physical health. The more tuition we pay, the more deeply the experience impacts our future thoughts and actions.

At Simple Modern, we are deliberate about empowering teammates to make decisions and learn from the results. Sometimes this doesn’t go well. It could take the form of a new product that fizzles out before launch or a marketing campaign that fails to connect with our customers. Over the years, I have made two different leadership mistakes in these situations:

Mistake 1: Responding with frustration, anger, and disappointment. When I react this way, it expresses disapproval. If done repeatedly over time, this creates an environment of fear. It discourages innovative thinking and experimentation. I have learned a simple lesson about leadership – it’s never helpful to get angry.

Mistake 2: Minimizing the situation. It is equally unhelpful to sweep a disappointment under the rug. This behavior can be motivated by a misguided desire to protect ourselves or others. Unfortunately, it discourages honest assessment and introspection. It can also invalidate the disappointment others are feeling.

I am learning to respond differently to these situations. First, no one enjoys the feeling of disappointment. Give yourself and others empathy and grace. That will create a safe environment where real analysis can happen. After providing some time for introspection and reflection do a postmortem. What went wrong? Why didn’t things go as planned? If we could do this project over again, what decisions would we make differently? What unknown weaknesses did this situation expose? Just as Edison’s thousands of unsuccessful lightbulb filaments made his ultimate triumph possible, these clear-eyed evaluations are the foundation of personal development and growth.

A Million Dollar Mistake

Around the beginning of 2016, Simple Modern was about to launch its first insulated water bottle. We observed that the larger drinkware market lacked premium quality but affordably priced licensed drinkware options. Internally, we believed we could create the ideal solution, so we began the lengthy process of pursuing NCAA licenses while simultaneously launching our branded products. After building several samples, the University of Oklahoma agreed to be our first licensing partner. Shortly after, we had one of the most significant breaks in our company’s history when the retailer Sam’s Club agreed to consider our products. We were incredibly fortunate to show our product to a buyer that shared our vision and excitement. That meeting would set in motion a purchase of several hundred thousand units for retail programs in 2017. As you can imagine, we were ecstatic. Every consumer brand’s goal is to gain customer awareness. This program would be a massive shot in the arm for our new company.

There was a small but gnawing question in the back of my head. “Who is going to buy all of these tumblers?” Throughout the sales process we had been so focused on the product that we had not spent much time evaluating the order size. Everyone agreed that there would be a lot of demand for the product, but we would be launching something brand new. I pushed those thoughts to the back of my mind because there was plenty of other work to be done. We were simultaneously managing rapid growth in our branded business while executing on a complex order for Sam’s Club. In May 2017, our team spent almost two solid weeks unloading containers and loading trucks with over 500,000 NCAA licensed tumblers. In addition, we had discovered a packaging issue that required us to unpack scores of pallets, individually sticker the units, and then re-palletize the products. You can check out a time lapse of that process below.

One of my favorite memories from those days was a night where we loaded trucks until 10 pm and then went to watch a late-night showing of Guardians of the Galaxy 2. The picture below is a panoramic of all the product before we began to ship it out.

The initial sales data looked promising. A few clubs had sold through entire pallets in the first weekend. The program had launched right before Father’s Day, and our item had been a big hit as a gift purchase. It was a real mountain top moment for the company. In the weeks that followed, we realized something less encouraging. Father’s Day weekend was the peak of demand for the entire summer, and it was starting to look like we would not sell through all the two packs during the allotted program time. As the summer drifted towards August, it became evident that we had a problem. The product was great, and it had sold well, but we had shipped Sam’s Club way too many. When a retail program doesn’t perform to the sales plan, the brand leadership and buyer devise a strategy to fix things. In this case, there were tens of thousands of extra two packs that needed a home. During one of the conference calls during this period our buyer said something that has stuck with me when she observed, “Everyone talks about wanting to be a great partner but during situations like this you learn who really values partnership.” We were fortunate to be working with a buyer that was a true partner. Working together we devised a plan, but for it to work we had to make the painful decision to buy back almost $1,000,000 of product. It was the right decision, but company finances would be very tight for most of the next year and a half.

It was disappointing not to sell through all of our products, but the experience was not a failure. It was tuition. We had initially believed growing our brand required us to sell as many units as possible, but we learned that selling an appropriate amount of product is even more critical. Over the last few years, I have seen how learning from that tuition helped us grow into a more effective company. In 2020, we were preparing to ship another licensed order to Sam’s Club when the COVID stay-at-home orders went into effect. We worked quickly with our partners at Sam’s Club to modify the order’s size before it shipped. The result was a great program where everyone won.

When things don’t go well, it creates the perfect environment to grow and learn. We can convert our mistakes into the fuel for our growth. As Henry Ford once said:

The only real mistake is the one from which we learn nothing.

Reflection Questions

What is your most recent disappointing outcome? Did you view it as a failure or tuition?

When have you empowered someone else by reframing a disappointing outcome as an opportunity for growth?

What is an example of failing to use a setback or mistake as tuition in your own life?

Who are the people looking to you for leadership (at home, work, personal life)? How can you apply this principle to responding to their misstakes or missteps?

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