Four Errors That Can Bring Down Any Business

“Error is a hardy plant; it flourishes in every soil.”

Martin F. Tupper

As a long-term analyst of business and industry, I’ve witnessed the good, the bad, and the ugly in regard successes and failures in enterprise. Human beings are prone to error by nature, and successful entrepreneurs know this and are wary of their own fallibility. This knowledge and wariness are both invaluable tools for avoiding disaster in a competitive and rapidly changing economy.

The problem of human error

During my early years as an industrial engineer in manufacturing, it became apparent to me that the great enemy of the enterprise I worked for was human error. Sure, we were contending with our competitors, but the keys to our success lay in getting the best out of ourselves.

One basic proposition I developed during those years was that thriving in a competitive market was in part dependent upon each person involved making a commitment to identifying and addressing his or her human propensity for error relative to their role in the organization in which they work.

The pervasiveness of the problem

Variations on this basic proposition apply in virtually any aspect of business: Planning, production, sales, supervision, service delivery— you name it. It’s also applicable regardless of the size of the enterprise in question.

Although error at any level takes its toll on the growth and integrity of any business, it’s particularly vexing at higher levels, since it tends to “trickle down” and degrade other crucial functions. And as much as we hate to admit it, as human beings, our only alternative to declaring ourselves perfect is to face and deal with the fact that we’re all prone to error.

Learning from business disasters

The four patterns of error that I’ll discuss below are distilled from experiences with a vast array of business systems. The few that are presented were chosen because (1) they are common, (2) their effects are particularly destructive, and (3) they’re all avoidable.

While success is often defined in terms of doing a lot of things right, the flip side of “getting it right” is avoiding identifiable errors. And identifying and admitting them is the first step toward eliminating their effects on the bottom line.

Error #1: Failures in the “listening” department

A lot of people whose hearing is just fine have massive problems when it comes to actually listening to others. In business, the consequences of this can be devastating.  “Hearing” is the ability to discern the words people say, but “listening” is so much more— it’s the result of actively dedicating ourselves to understanding how others see things.

Experts on success such as John Maxwell and the late Steve Covey often refer to “empathic listening,” to stress the importance of truly understanding the thoughts, needs, and feelings of those with whom we interact. 

Expertise regarding technical matters is important, but business is still about building and maintaining functional, trusting human relationships. Consider a few of the business functions for which trust and good communication are crucial.

Sales: We’ve all had noxious experiences with sales people whose ability to talk far exceeds their ability to listen. They may let us finish a sentence, but their responses show that they’re neither aware of nor concerned about us as persons. Such people never succeed to the extent that they could, if they succeed at all.

In contrast, highly productive sales people are great listeners. Those that are most successful apply the “80/20 rule,” which is listening 80 percent of the time and speaking 20 percent of the time that they’re with a prospect. Of the 20 percent, much of it is spent asking key questions regarding what the prospect thinks, needs, and wants.

Leadership: The most effective leaders invite input and feedback from those whom they lead. By listening, they enhance their own understandings of the situations that they preside over and therefore have much better information on which to make decisions. 

At the same time, they build trust and respect among their subordinates. Listening to others expresses respect for them, and this is returned. Listening is a very cost-effective means of getting more out of those you employ because they feel that they’re genuinely appreciated.

Error #2: Complacency and overconfidence

Businesses with long histories of success often suffer from this syndrome, because it frequently results in a tendency to relax and go into cruise mode. Success tells us that we’ve been doing the right thing, and the temptation is to keep on doing it.   

But in an economic environment characterized by rapid and ever accelerating change, this can be deadly. As we used to say when I was a kid, “when you snooze, you lose.” 

The history of big business in this country gives us example after example of some of the evils that can result from success. Some of the best companies in history found themselves in desperate struggles to reinvent themselves after being on top of the world for long periods of time. Here are just a few examples.

IBM: The original kingpin of the information technology business, IBM made the critical error of sticking with its long-standing formula for success. For the few who remember that far back, this was the sale and service of large mainframe computers.

The advent of personal computing during the 1980s and 1990s was a sudden shift that changed our whole way of life. It ushered in the age of PCs and laptops and IBM stood by dumbfounded, as smaller, more flexible and fleet-of-foot companies appeared on the scene to exploit the new market. The company survived, but is now a tiny fraction of its former size.

Dell Computers: Dell was one of those flexible, fleet-of-foot companies that dethroned IBM. But now Dell is in trouble because its management didn’t see the implications of the emerging market for smart phones and mobile computing. Apple and Samsung did.

What is striking about both IBM and Dell is that they had all the resources and access to expertise necessary to avert this problem, but did not. Furthermore, tens of thousands of other businesses of all sizes and kinds have fallen prey to the complacency trap.

History tells us that this is not just a business problem— it’s a human problem so destructive that it’s brought down entire civilizations. Our susceptibility to complacency is simply astounding, and we can bet on seeing more of its effects in the future.

Error #3: Blind reliance on technology

We’re rapidly replacing human brains with those of machines, often assuming that it’s all about improvement. But warning signs are appearing, and shouldn’t be ignored. The complexity of it all is leading to problems that would have been unheard of in the past.  A few noteworthy examples:

Knight Capital Group: In August, 2012, this company, which mediates trades in the New York Stock Exchange via an automated system, developed a glitch and ran amok. To simplify the story, the system began multiplying each transaction by astronomical amounts, which disrupted the entire exchange and required that trading be suspended for a time.

“Knight” lost virtually all its credibility and clients as a result, but that’s not all. It took weeks to find the explanation for the glitch, and its own stock price plummeted by 90 percent. It’s a truly tragic story.

Super Bowl 2013: We all know this one— the lights went out, for reasons that no one was able to explain for days afterwards. Befuddled tech experts now think they know why the incident occurred.

Our dependency on technology is making some things easier, but that’s only half of the story. Accompanying the conveniences is the fact that more things can go wrong, which is disturbing, but true.

The hackers are at work, so we now have problems with “cybercrime” and “cyberwarfare.”

There’s no going back. But a blind reliance on technology can be just as destructive in business as attempting to cling to the past. It’s something that we’ll just have to find ways to deal with.

Error #4: Failure to upgrade ourselves

Human fallibility is an inevitable fact of life. Ignoring it or denying it only makes it more of an obstacle to the success of our businesses. Research on error in human systems shows that it has a nasty way of increasing if left unattended. 

This means training and various other “continuous improvement” measures are essential at all levels of our business organizations. The most successful leaders have always been those who see that all persons, including themselves, are committed to finding ways to increase their accountability to one another and to customers.

In actuality, it all comes down to attitudes that emphasize service, driven by three questions: (1) “how can I serve?” (2) “how can I serve better?” and (3) “how can I serve more?” When these three concerns are manifest at every level of a business, destructive human error is minimized, customer satisfaction increases, and the bottom line improves.

The value of humility

Misguided obsessions with self-esteem have run amok in recent decades. Although well intended, they’ve provoked increases in defensiveness and narcissism and shrouding the value of humility as a vehicle for improving ourselves, and our businesses. 

Truly healthy individuals accept that they’ll never be perfect and are always in search of ways to improve. One highly successful woman, a CEO, summarized her strength in the following way, “If I have a knack for leadership, it’s to make all of my mistakes up front and get them out of the way. Then I can get on to the things that really matter.”