In business, as well as in personal life, people make mistakes. In fact, some of the world's most successful companies have made more than one. Yet for leaders, the wrong decision often comes with a big price tag and it can be tough to pick up the pieces financially after a colossal mistake. While no one can avoid mistakes entirely the good news is it's possible to safeguard your decisions and more importantly bounce back after a blunder. How do you mitigate risk from a poor decision? Here are two great examples.
Think Strategically With Business Partners
Chances are your business works with a variety of different vendors, suppliers, etc. Thinking strategically about how these relationships can help mitigate the risk of a poor decision. Years ago I worked for a company that decided to invest in what was at the time a state-of-the-art printing press. We spent millions of dollars on this item and we wanted a way to ensure our decision wouldn't come back to haunt us later. After thinking through our options we decided to build quality assurances directly into the purchasing contract guaranteeing certain production capabilities and metrics. For us, that meant we could rely on a certain number of pages or impressions per minute. If these quality controls were not satisfied we could return the printer. After a few months of the printer not living up to its expectations even with the manufacturer's technicians trying all sorts of "fixes", we returned it. Buying the printer was a poor decision that ended up costing us time and money. But it was nothing close to the loss we would have endured had we not safeguarded our decision in the first place.
Be Prepared to Shift Gears: Keep Your Options Open
In the 1980s Coca-Cola made a risky decision when they decided to change the formula of their most popular product Coke. The company spent millions of dollars on advertising and packaging as it rolled out "New Coke" to its consumer base. Much to its chagrin its customers were not happy and were vocal about how much they disliked the new product. Because Coca-Cola was smart about keeping its options open it was able to quickly shift course and reintroduce Coke "Original" holding on to its loyal consumer base actually becoming stronger in the process. There were a few blunders of this magnitude by a Fortune 500 company that year but by staying nimble, quick, and responsive Coke was able to avoid catastrophe. Despite expertise leaders in every industry will make mistakes. However, the key to bouncing back after a blunder is to thoroughly evaluate and quantify risk while understanding there are always multiple stages on the path toward a decision for modifying tweaking, and improving for a better result.