In the late 1990s, Brad Smith developed a bold idea for an e-commerce business. But it would take $40 million to implement.
To persuade higher-ups to authorize the investment, he presented ambitious growth targets that he believed would come to fruition. Brimming with confidence and promising that “clicks would eliminate the need for bricks,” he won them over.
Over time, however, the $40 million investment netted 18 online sales with revenue per sale averaging only $1,500. Devastated, Smith assumed he’d be fired.
Presenting the grim results to the board of directors, he decided to take full responsibility for his misjudgment. He walked the group through his experience: how he arrived at his initial vision, what wound up happening and how and why his assumptions proved faulty.
In closing, he identified lessons learned. He admitted in detail how he would act differently in the future based on the painful outcome of this botched initiative.
Fortunately, the board was forgiving. One member focused on the bright side, saying that Smith’s costly endeavor showed that the company’s bricks-and-mortar distribution model wasn’t as vulnerable as they feared. He cited other positives to come out of the debacle and then urged Smith to “go make a bunch of new mistakes.”
That same director looked Smith in the eye and quoted the French author Anatole France, saying he “preferred the errors of enthusiasm to the indifference of wisdom.”
Now CEO of Intuit, Smith says that he views the incident as a pivotal moment in his career. He strives to set a tone that encourages employees to test their ideas, make mistakes and learn from the results.
— Adapted from “What This CEO Learned From a $40 Million Mistake,” Brad Smith, www.fortune.com.