Worst Practices: How to Learn From the Mistakes of Others (and Avoid Making Them Yourself)

The following is reprinted with permission from “You’re About to Make a Terrible Mistake” by Olivier Sibony, copyright © 2020. Published by Little, Brown Spark, an imprint of Little, Brown Books.

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Steve Jobs was such a genius

Years after his premature death, Steve Jobs continues to be universally revered. This veneration is sustained by hundreds of books that promise to teach us anything and everything we need to know about Apple’s founder: his innovation secrets, his design principles, his presentation techniques, his leadership style, his “zen,” his secret habits, even his style of dress.

While the cult of Steve Jobs is unique in its scope, revering business leaders and raising them to the rank of quasi-divine models is nothing new. Jack Welch, head of General Electric from 1981 to 2001, and Warren Buffett, the idol of investors, were among the first to acquire a cult following. Other business legends include Alfred P. Sloan (General Motors), Bill Gates (Microsoft), Larry Page (Google), and recently Elon Musk (SpaceX and Tesla). All these charismatic individuals have been, or are, presented to us as models.

The need for models is understandable. For any executive, questioning oneself by comparing one’s methods to those of other leaders is a good instinct.

Related: Founder and CEO of Career Contessa Lauren McGoodwin on Making Power Moves in Business

However, in our quest for models, we too often commit three mistakes:

  1. First, we attribute all of a company’s success to a single person
  2. Then, we see all the aspects of this person’s behavior as reasons for his or her success
  3. Finally, we’re too quick to think we should imitate the model

We have already seen how we instinctively create meaning through stories. To stick with the example of Apple, the story that we’ve heard hundreds of times—success beyond belief, following a fall and then a stunning comeback—nicely matches the structure of a heroic tale.

There is one problem, though: the hero in this tale is Steve Jobs, but the success is Apple’s. This, after all, is one of the largest companies in the world by market capitalization. While it’s certain that Jobs played a decisive role in its history, it’s also fair to say that many of Apple’s 60,000 employees (as of 2011, the year Jobs died) contributed in some way. Apple’s continuing performance after Steve Jobs’s death confirms this. Even if we focus only on the “creative” aspect of the Apple miracle—that is, the repeated invention of revolutionary products—Steve Jobs is certainly not the only individual who should get credit.

So why do the stories of Apple and Steve Jobs merge in our minds? Because the story we desperately want to hear is the story of a hero. The best stories are stories of archetypal characters. Then we attribute all the results to these archetypes. We underestimate the role of other players on the team; the effects of the environment and the competitors; and, of course, the impact of plain old luck, whether good or bad.

The second mistake occurs when our admiration for a model leads us to study his or her life, decisions and methods, and to find meaning in them. The American psychologist Edward Lee Thorndike described this mistake in 1920 and called it the halo effect. Once we have an impression of a person, we judge all that person’s other characteristics in the “halo” of our first impression.

For instance, tall men are considered to be better leaders (and, all else being equal, they receive higher salaries). Another example is the way in which voters judge candidates partly on their appearance: a politician must “look the part.” In essence, we use information that is readily available (height or appearance) to avoid making much more difficult evaluations (for instance, of leadership ability or skills).

Imitating “best practices” looks like common sense. By seeking inspiration from the outside, we hope to fight complacency and the “not invented here syndrome,” which leads companies to reject ideas generated elsewhere. This would be fine if the practices, methods and approaches we chose were the right ones. Unfortunately, they usually aren’t.

The reason is the halo effect. Typically, we first identify a successful company and only then choose one of its practices to emulate, on the theory that it contributes to the company’s overall success. But it’s not so easy to identify which of Apple’s or GE’s practices “explain” their success. Of all the things these companies do (or don’t do), which ones, if any, should be considered recipes for superior performance? From “In Search of Excellence to Built to Last,” countless management books have tried to answer this question. By studying the “best-run” or most “visionary” companies, they strive to isolate decisive factors (preferably under the control of managers, of course) that would account for their results. Sadly, the search for universal rules of success in business has so far been fruitless.

It is especially important to think twice before emulating others when we think they’re geniuses. This is the third mistake we make when looking for models. When I state that “Steve Jobs was a genius” and conclude “so I should imitate him,” I’ve forgotten to mention the second premise of the syllogism: “I’m a genius, too.” The current Formula One champion, for instance, is surely a driving wizard, but when you’re behind the wheel, you wouldn’t dream of emulating his “best practices.” You know that only a wizard can do it! The logical fallacy is obvious in this example, but it too often escapes us when we’re talking about the methods of a supposed business wizard.

The models whose success we admire are, by definition, those who have succeeded. But out of all the people who were “crazy enough to think they can change the world,” the vast majority did not manage to do it. For this very reason, we’ve never heard of them. We forget this when we focus only on the winners. We look only at the survivors, not at all those who took the same risks, adopted the same behaviors, and failed. This logical error is survivorship bias. We shouldn’t draw any conclusions from a sample that is composed only of survivors. Yet we do, because they are the only ones we see.

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Our quest for models may inspire us, but it can also lead us astray. We would benefit from restraining our aspirations and learning from people who are similar to us, from decision makers whose success is less flashy, instead of a few idols the whole world is striving to copy.

Better yet, why shouldn’t we study worst practices? After all, everyone agrees that we learn from our mistakes even more than from our successes.

Studying companies that collapsed may hold more lessons than focusing on those that succeed. Learning from their mistakes might be a good way to avoid making them ourselves.

“You’re About to Make a Terrible Mistake” is available now wherever books are sold and can be purchased via StartupNation.com.

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