Leadership: On Making Mistakes

Leadership: On Making Mistakes

Because we live and work in a society where making mistakes isn’t well-tolerated, it can be difficult to see any value in making mistakes. After all, mistakes often cost us time and money, and in small business both of these resources are at a premium.

However, you might be surprised that some of the most prominent leaders in the world value mistakes-a lot. Take a look at what some of these leaders have to say about making mistakes.

Gordon Moore, co-founder, Intel
“One thing a leader does is to remove the stigma of mistakes. People who are afraid of making mistakes all the time just don’t try anything.”

Sam Walton, founder, Walmart
Sam Walton, famous for driving an old beat-up pickup truck to work even when his worth was in the billions, was fond of saying that if you keep expenses down you can afford to make a lot of mistakes!

Robert Kiyosaki, bestselling author, “Rich Dad Poor Dad”
In his book “Business School for People Who Like Helping People,” Kiyosaki recounts how he learned the process of selling: by making mistakes. In the context of sales, Kiyosaki calls it rejection. He and his sales mentor, Charlie Robinson, would make sales calls together. Robinson would say virtually nothing during the visit, but would simply watch Kiyosaki work. Then the two would return to the office and review every mistake Kiyosaki made that caused a rejection. During that time, Kiyosaki even volunteered at a charity organization, making cold calls, so he could increase his rejection rate and learn from them. The message? Make as many mistakes as you can because mistakes are how you learn.

Herb Kelleher, co-founder, Southwest Airlines
When one of Southwest Airline’s property managers made a mistake (he made an oral commitment of $400,000 to the City of Austin for the preliminary design of a new airport when Southwest had no intention of supporting the new airport), Herb Kelleher backed his manager with the money. Although the lesson was hugely expensive, Kelleher didn’t get upset. He just jokingly told the manager: “Now pal, this is a fairly expensive lesson. A $400,000 lesson-I hope you remember it!”

Does that give you a new perspective on the value of making mistakes in your small business, and learning from them?

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Photo credit: Stewart

Tags: Gordon Moore, Herb Kelleher, leadership, making mistakes, Sam Walton

Test Marketing: Fast, Cheap and Easy

Test Marketing: Try Stuff On for Size

If you’re a sole proprietor or small business owner, marketing can seem like a headache that just won’t go away. You might have lots of good ideas, but you’re not sure which ones to pursue. And, if you’re like most small business owners, you only have a limited budget to invest in marketing, so which marketing options should you pursue?

Test Marketing an Idea
A really quick and dirty way to check out your ideas is to use test marketing. When you test market an idea, you implement the idea on a very small scale to a limited portion of your customers or “audience.” For instance, if you’re in the dry cleaning business and you want to try out a volume discount idea, you might test the idea by offering it selectively to people who regularly bring orders of $50 or more for dry cleaning. The people in this test market obviously do high volume and are probably interested in saving money.

Set Time Limits
Set a time limit for your experiment and keep track of the results carefully. Look back through your records and see how many orders these people brought in, how often they came in and how large the orders were. Then, see what changes, if any, your promotional discount created. See if you get an overall increase in revenue and profit. If there are no changes, talk to those high volume people and find out what’s on their mind. It may be that they already bring all of their dry cleaning to you and have no more volume.

Next Steps
If that’s the case, then try your promotion on the next tier of customers - the people who may bring you only pants and skirts, but who take their shirts to the 99 cent place around the corner. Offer a volume discount to this group of customers and see if they will increase their volume to get the discount. Talk to them and find out what’s important to them as you hand them a coupon for the next order.

If you run this experiment for a few months, you’ll begin to really see the effect (positive or negative) on your bottom line. At the same time, the only money you’ll spend on this effort is printing up some coupons to hand to customers. If this really works, then you might consider increasing your investment in this idea and advertising it through newspapers or coupon services.

Cheap Test Marketing Allows for Mistakes
Test marketing is a great way to test out all of your ideas on the cheap and limiting any possible negative effects. Sam Walton, founder of Wal-Mart and Sam’s Club, once said that if you keep your expenses down you can afford to make a lot of mistakes and still recover. That’s the very essence of test marketing! Good luck and have fun!

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Photo credit: hair

Tags: cheap marketing, Sam Walton, test marketing