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6,362 posts
msg #42720
Ignore TheRumpledOne
4/3/2006 12:46:59 PM

"We forget the little things, so it's no wonder some of us screw up the big things."

- Neil Cavuto

When You Screw Up, Big Time, Twice in One Week

By Michael Masterson

Last week will go down as a memorable one in my journal. I made two major mistakes that stirred up some dust and made me wonder if I was fit to run a business.

The first was a classic e-mail snafu. For several weeks, I was having confidential discussions with the Chairman and the CEO of a business about compensation for the four top executives, including the CEO himself. My job was to help come up with a new plan that would be fair to everyone now and into the future, so we wouldn't have to revisit the issue every year.

I'd been having private discussions with everyone involved and then getting back to the Chairman and CEO for their reactions. Finally, I thought I had something that would work well for everyone. In response to a message about the program from the CEO, I attached my plan and asked for his thoughts. If he liked it, I'd show it to the Chairman. If he approved, we'd present it to the other execs.

That was the plan. What happened was this: In sending the attachment to the CEO, I hit the "reply to all" button instead of the "reply to sender" button. My attachment, with all the personal income proposals, went to everyone at the same time, including a senior executive who wasn't even part of the program.

The moment I sent it off, I realized what I had done. But it was too late. By the time I'd verified that it had indeed been sent to six people instead of two, they had all read it.

Everyone assumed it was the final draft. But there were two propositions that the Chairman didn't like. So then I had the unpleasant task of telling people that they wouldn't be getting as much as I had suggested. Needless to say, this was a difficult conversation. What should have been a very gratifying experience for everyone involved became an anxious, urgent problem.

My second mistake was more serious.

I wrote an ETR message that was sent out to all of our readers without careful editing. The result was that I publicly shamed someone I greatly admire.

ETR's philosophy is to draw our articles from actual experience. We like to think that our readers want to get their advice from someone who's walked his talk. Because of this emphasis on inductive reasoning and "erfahrung"-based (primary) knowledge, we try to write about things that happen in our daily working lives.

To keep the original story straight in my mind when I write my articles, I use the actual names and situations. But to protect the innocent, we change lots of insignificant details during the editing process to make the story/people unrecognizable.

Several times in the past, we unwittingly embarrassed or upset someone who felt we were criticizing him or her in public. So now our policy is to write the essay as a journal entry first, and then edit it so that it retains the big idea but loses the identifying details.

I wrote such an essay a couple of weeks ago about someone we hired recently. In telling the story, I attempted to analyze why we were lucky enough to hire her. My theory was based on little bits of information I had picked up here and there, but it was ultimately a speculation.

The point I was making was a good and valid one. And since I knew the story and the people were going to be disguised beyond recognition, I felt at liberty to drive my point home ... even if it wasn't entirely fair.

You can guess what happened. The article was published in its first draft.

It was my fault. I assumed this and assumed that and never bothered to check the copy before it went out. The result was that my colleague's employees and competitors might have read what appeared to be a mean combination of pot shots and boasting.

Needless to say, I haven't been sleeping too well since then. Although I try to rationalize my mistake by reminding myself that most of what I said was positive and approving, I know that the net effect was negative. I am very sorry for that.

Two big mistakes in one week. Makes me wonder if I am no longer capable of operating as a senior consultant to so many great, top-notch companies.

Over the weekend, I told my neighbor what happened. She said that whenever her husband screws up, he asks himself the same question. (When I asked him if he'd ever done two things as stupid as I had done in a single week, he just smiled.)

Roughly speaking, business leaders fall into one of two categories. There are the entrepreneurs who start businesses from scratch and do everything necessary to get them strong and profitable. And then there are the corporate executive types who take over when the business is up and running and use their management and communication skills to keep it operating smoothly.

I am - I'm sure this won't surprise you - the entrepreneurial type. I've spent almost all my business life starting businesses from scratch and working with them on a daily basis until they were big enough to be run by someone else. For the most part, it has meant taking them from zero to about $10 million in sales with a 10 percent to 15 percent profit.

Counting the businesses I've owned, directed, and advised, I've done this at least 20 times. Starting a business from scratch and making it profitable is something I believe I can do with my eyes closed. But running it once it's gotten big and profitable - well, that's another story.

The kind of mistakes I made last week are the kind that wouldn't matter all that much to an entrepreneur getting his business off the ground. Starting a business from scratch takes a great deal of pushing and shoving. You've got to be willing to step on a few toes.

But when a business is up and running, it needs a more careful, polished hand. With substantial sales and a significant profit stream to protect, the CEO's job becomes as much about protecting the existing asset as it is about making it bigger.

Rather than try to convert myself from hard-boiled entrepreneur to polished corporate exec, it might be wiser to continue to do what I do best, but in the context of businesses I've already started. In other words, instead of trying to be the guy who manages the whole enterprise, let someone more thoughtful and careful do that and throw myself back into the war zone where I have won so many medals.

That said, I've learned three lessons this week:

1. Before hitting the "send" button, double-check to make sure my e-mail is going to the right person/people.

(The last thing you want to do is have someone read comments that could be misinterpreted or cause upset. I've warned ETR readers many times about this common trap - and I fell into it myself.)

2. Give everything I write a final proof before I let it be published.

3. Accept the fact that when it comes to leading businesses, I can be fish or fowl ... but I can't be both.

I hope, after hearing my embarrassing confession, you can avoid getting yourself into similar predicaments.

6,362 posts
msg #42724
Ignore TheRumpledOne
4/3/2006 4:07:00 PM


"Euclid taught me that without assumptions there is no proof. Therefore, in any argument, examine the assumptions."

- E.T. Bell

Inferring With Caution
By Robert Ringer

To a great extent, our lives are guided by the inferences we make, yet most of us never give this critical process a passing thought.

A good definition of inference is "the act of deriving conclusions from premises known or assumed to be true." There is, of course, a big difference between knowing something to be true and assuming it to be true.

The serious seeker of truth always looks to his own experience first, to reason (inference) second, and to authoritative sources third. Though experience is clearly the most reliable method of verifying facts, life is filled with illusions. Which means that even our firsthand experiences can be deceiving.

For example, I would be willing to wager that not every one of the thousands of people who claim to have been abducted by aliens have actually experienced such an encounter. Yet, when you hear them talk about it, all of these people appear to believe that it really happened to them.

Hey, who am I to say that someone wasn't actually abducted by an other-worldly being? On the other hand, I feel totally comfortable in saying that it hasn't happened to every single person who has ever made such a claim.

My point is that a person cannot always be 100 percent certain when it comes to verifying a fact, even when he relies on his own experience. Worse, most of our actions are not even based on experience. They're taken as a result of our inferences, because we can't possibly possess firsthand knowledge of every situation we come up against.

For example, if you're driving down the street and see a huge billowing of smoke in the distance, you will probably draw the inference that there's a fire somewhere. You could be wrong, but, based on your firsthand experience and reasoning powers, you would be likely to draw such a conclusion - and likely to be correct.

On the other hand, if a person assumes that the stock market or real estate market (or any market, for that matter) will continue to go up simply because he has observed firsthand that it has risen for a long period of time, his observations would have led him to a false premise.

This is precisely what occurred with the infamous dot-com collapse of the late nineties and early 2000's. Contrary to what stock-market "chartists" would have you believe, the past movement of a stock is not a reliable indicator of whether it will go up or down in the future.

So, even when you have been able to observe something firsthand, you must still employ your powers of reason. In the stock-market example, a detailed knowledge of a company's industry and its products, profit margins, earnings, management, etc. are much more important when it comes to drawing an inference about the future performance of its stock.

Thus, the greatest obstacle when it comes to drawing solid inferences is the avoidance of false assumptions. It's interesting to note that, by definition, an assumption is something taken for granted or accepted as true without proof.

In other words, an assumption is a supposition. Which is why, if you rely on your reasoning powers to draw an inference, you have to make certain that your reasoning isn't based on one or more false premises or assumptions.

False premises and assumptions come in many forms, but the absolute worst is the a priori argument. Ideologues love to begin their arguments with an a priori statement (a statement not supported by facts). You have undoubtedly noticed that most political debates are saturated with suppositions based on false premises.

Put another way, politicians are masters when it comes to positing a conclusion as a premise - i.e., a starting point. I include this cute little tactic in my list of the "Ten Dirty Tricks of Debating," And I highly recommend that you steer clear of people who employ it as it can lead to the dismantling of sound judgment.

It has been my observation that most of the blunders made in the business world are due to unfounded assumptions. Not just major mistakes, but those little day-to-day irritants such as packages failing to get mailed ... or getting mailed to the wrong address ... or getting mailed with the wrong contents.

But assumptions go way beyond simple business mistakes. They can, in fact, lead to fatal errors. If you cross the street at an intersection and assume that the driver of an oncoming car can see you, you may not live to realize that you were wrong.

On a macro scale, an example of a false assumption leading to a false inference would be the near-unanimity of opinion that computers would dramatically reduce the amount of paper we use. Virtually everyone held this view in the early years of the "Computer Age," based on the assumption that people would not be inclined to print out much of their work.

But this widely held assumption turned out to be dead wrong. Instead, computers have had the exact opposite effect and have drowned us in a sea of paper beyond anything we could have previously imagined.

You can't do anything about such macro inferences. The only inferences you can control are your own. And when it comes to drawing inferences, your success ratio will be pretty much in line with the accuracy of your powers of reason and the soundness of your intuition.

Intuition is a "gut" feeling - or "sixth sense" - that you have about something or somebody. Reasoning power and intuition are your best allies when it comes to drawing an inference, whether it involves love, finances, spirituality, or just about any other aspect of life.

Again, the three methods of verification - in order of preference - are experience, inference, and authoritative sources. But, like it or not, inference is the source of verification you must rely on a majority of the time.

That being the case, you would be wise to make it a habit to constantly question your inferences. Are they based on firsthand experience? If so, your success rate is going to be very high, provided you mix that experience with a generous dose of sound reasoning. Or are they based on reason alone? If so, your success rate will pretty much coincide with the accuracy of your powers of reason. And that accuracy will often be dependent upon how addicted you are to relying on premises based on assumptions.

Making unfounded assumptions is a hard habit to break, but so is smoking ... and both of them can kill you.

If all this sounds a bit confusing, don't worry. It confuses me as well. Experience, inference, authoritative sources, premises, assumptions ... and how they all fit together. It's very heavy stuff. It's a lot to think about, but well worth the effort because it plays a major role in how your life will turn out.

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