EntreLeadership - The Key to Recovering From a Major Mistake

Starting point is 00:00:05 There's only one thing worse than making a mistake as a leader, handling it the wrong way. It's just a fact in business. You're going to screw up something. Often. That's part of the job. But how you respond will either build trust with your team and your customers or completely destroy it. So today, Entree Leadership's head coach John Falcons is walking through how great leaders handle mistakes without losing respect and credibility. Let's get to it. Thanks, Dave. Well, unfortunately, this reminds me of a story from early in my career at this company. We were building our coaching program and I was driving hard, being really decisive and getting

Starting point is 00:00:44 results and focusing on the vision. But the thing that I didn't focus on was taking care of people and being empathetic. I was burning people out and just honestly kind of seeing people as units of production. What I started to realize was people didn't want to work with me. It'd see me coming across the office and they'd say, what do you want? And that was kind of funny at first, but then I started to realize this isn't working. And actually, I didn't learn it fast enough because the truth is, I got demoted. I got taken out of leadership.

Starting point is 00:01:15 And that was one of the hardest things I've ever experienced in my career. It forced me to realize what had gotten me to that point wasn't going to get me to where I wanted to go. I get it. Messing up as a leader sucks. It can be a real shot to your confidence. It's hard on the ego. You're going to feel embarrassed and ashamed, humiliated. humiliated and it's not what you want your team to see you as. You want them to see you as capable

Starting point is 00:01:38 and competent, someone who's got it all figured out. But leaders don't lose trust when they make mistakes. They lose trust when they don't own them. The temptation is to self-protect or self-promote after you've made a mistake. And that's because shame and pride are the two sides of the same coin. Shame makes you hide the mistake. Pride causes you to excuse or pass the blame. So you avoid the mistake, you minimize the problem, you blame someone else, you try and cover it up. And that's not a lack of competence anymore. That's not just a mistake anymore. Now it's a lack of integrity. And if there's no ownership to the mistake, there's no trust. How you handle small mistakes is how you're going to handle big mistakes. It's like a muscle that

Starting point is 00:02:27 you train. You need to do it right. And what you put out is what you get back. A lack of integrity will infect the culture of your team. That will create a toxic culture where no one feels safe to make mistakes, problems don't get surfaced until it's too late, everyone promotes themselves or protects themselves. This has led to not only major failures, but major cover-ups, even illegal cover-ups, scandals. And it's happened to some of the biggest companies in the world. It reminds me of Wells Fargo in 2016, where their employees created millions of fake accounts and customers' names without consent to pad their sales numbers, and that cost customers millions and fees they never agreed to.

Starting point is 00:03:07 Wells Fargo got a $3 billion penalty to settle the incident. It was a huge hit to the company's reputation. Also, Volkswagen, they had a scandal in 2015 called Dieselgate. They knowingly installed defeat devices in several models that would cheat emissions tests. They were forced to spend $10,000. billion dollars to buy back or pay off the loans of affected vehicles and another four point seven billion dollars to deal with the pollution that they had caused a business with no integrity starts

Starting point is 00:03:41 with a leader with no integrity how you model making mistakes and how you handle them is how your entire company will handle mistakes so you've got to get this right great leaders do three things when they make mistakes and i can't think of another leader who's done that better than alan malali when he became CEO of Ford in 2006, the company was a mess. It had lost $12.7 billion that year, and that was its worst year in company history. The culture was toxic, leaders were blaming each other for mistakes. Leaders had glowing reports, even if the projects were losing money. Issues were downplayed or never brought up at all, and at the first meeting with executives, they all told Alan, everything was great, everything was green. But later on, one of the executives,

Starting point is 00:04:29 did something no one had done before. He admitted his department was failing. And what was Malali's reaction? He cheered. He literally clapped in the meeting. And he thanked him for his honesty. It was a total cultural shift to celebrate owning a mistake. That move completely turned Ford around. Just three years later, when GM and Chrysler declared bankruptcy, Ford posted a $2.7 billion profit. So what can we learn from Malali? What are the steps to recovering from a mistake? Well, the first and the hardest part is to just own it, just own it. As a leader, that's going to require courage. You have to admit the mistake to yourself first and then admit it to your team. Don't diminish it or make excuses. And don't over-own a mistake and fall on your sword. People are going to know that's

Starting point is 00:05:23 not honest either, but own your part and move on. Don't wait. until the stakes are high to do this because you won't. Remember, how you handle small mistakes is how you're going to handle big mistakes. So practice when the stakes are low. For example, if you unintentionally hurt somebody's feelings in a meeting, handle it the right way. Say, hey, I messed up. I'm sorry about that. Intentionally practice courage until it becomes muscle memory. Malali set up a weekly performance meeting with senior leaders and it had one rule. No blaming for servicing problems. He made it really clear that nobody gets shot for telling the truth. The fancy way of saying that is he created psychological safety within his leadership team.

Starting point is 00:06:09 They got comfortable sharing their mistakes because Malali helped them understand they had a problem instead of they were a problem. That's what your team needs to hear. That's what you need to hear. I'm going to give you a chance right now to practice this. What's a recent mistake you've made as a leader. Drop a comment below. This is a no blame comment section. Owning the mistake is the first step, but that's not all. It's not enough to say, I'm sorry, and hope everything goes away, hope everybody forgives you and forgets. You'll never regain trust that way. A mistake means some damage has been done, and the next step is to repair it. You need the discipline to take action. Action speaks louder than words. You say, here's what happened and here's what we're

Starting point is 00:06:55 to do to make it right. Starbucks is a perfect example of this. In 2016, two black men were arrested for trespassing in one of their stores. Only problem was they weren't trespassing. They were waiting for someone and hadn't ordered anything. The public went ballistic. Starbucks didn't just apologize. They took action to make sure it didn't happen again. They closed over 8,000 stores for an entire day to run racial bias training for their employees. And then there's the Johnson and Johnson Tylenol story where in 1982, seven people died after taking Tylenol laced with cyanide. The company issued a nationwide recall pulling 31 million bottles of Tylenol from the shelves. $100 million was invested to develop a tamper-proof packaging that we still use today.

Starting point is 00:07:45 They weren't even the ones who made the mistake, but they did whatever it took to make it right. You see, great leaders ask three questions after a mistake. What happened? Why did it happen? And what needs to change so it never happens again? These are the same questions you want your team to ask when they mess up too. Owning and repairing your mistakes is 80% of the effort. But if you don't do the last part, you'll restart the cycle over and over again. But before we keep going, I want to talk about culture. A healthy company culture always starts with its leaders, aka you. If a leader with no integrity creates a team with no integrity, then overworked, overwhelmed leaders create

Starting point is 00:08:27 overworked and overwhelmed teams. That's how that works. And that's what my friends at Belay see happen all the time. If you're buried in your inbox, running from meeting to meeting, and constantly reacting instead of leading, eventually your team feels that pressure too. And over time, that stress becomes the culture. That's why Belay matches leaders with executive assistance who can take those repetitive day-to-day tasks off their plate and help them create some margin again. When leaders finally have space to think, communicate clearly, and cast vision, healthy culture gets built on purpose, not by accident.

Starting point is 00:09:03 And look, I know the people at Belay. I've worked with their CEO and their leadership team for years. They truly want to help you. And if you want to fix your stressed out, chaotic company culture and learn how an assistant may be able to help with that, Belay has a free resource for you. It's called Culture Clarity. You can download it for free by texting Entree to 55123.

Starting point is 00:09:26 That's E-N-T-R-E to 55-12-3. Okay, the final and arguably most important step to recovering from a mistake is learning from it. The best leaders aren't the ones who always get it right. They're the ones who don't get the same thing wrong over and over again. If you set your benchmark for being okay at perfection, you'll never stretch yourself. You'll never try anything. You will get stuck in a rut. But when you set the benchmark to getting better every day, it changes the culture of your business.

Starting point is 00:09:58 Malali was honest, vulnerable, and he openly admitted he didn't have all the answers. He asked a lot of questions. He was willing to learn. Your vulnerability will show your team they don't have to be perfect either. This will create a culture that values progress over perfection. So own it, repair it, and learn from it. Those are the steps. They all come back to you as a leader having integrity.

Starting point is 00:10:23 Leaders with a fanatical amount of integrity tend to be the most successful. They're the ones who bounce back from mistakes stronger and wiser. When you own your mistakes with courage and humility and discipline, you don't lose respect. You earn it. Failure in business is inevitable, but it's rarely fatal. recover from almost any mistake, but you can't recover from the mistakes you don't even know you're making. Every leader has blind spots. Wise leaders put people around them who will hold up a mirror and tell them the truth before those blind spots turn into disasters. That's why

Starting point is 00:11:00 we built our coaching team. To help business owners like you see the problems you can't see on your own. So if you want help getting unstuck, schedule a free 30-minute consultation with one of our coaches using the link in the description. And if you enjoyed this episode, be sure to like and subscribe for more real-world leadership content. I'm your host Dave Ramsey and this is Entree Leadership.

EntreLeadership - The Key to Recovering From a Major Mistake

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