Your Business is Throwing Money Away By Repeating Mistakes

One of the most frustrating things a leader can experience is to learn that a painful or costly mistake that happened in the past, continues to be repeated within the business. The pain of the mistake and the effort required to fix it should be enough incentive to ensure that the same mistake is not made again. However, that is rarely the case!

This was a big challenge I faced in leading a global business. How can lessons learned in one world area be shared efficiently and effectively with the other world areas? I can’t count the number of times I sat in a review in one world area to find out they just made a mistake that another area made 1, 5 or even 10 years prior. This is so frustrating for everyone involved and it costs the organization a lot of money!

Why are Mistakes Repeated?

Mistakes get repeated, not because employees are incompetent, but, because there is no system in place to document the lessons that were learned and communicate these lessons to the rest of the business.

Why Don’t Businesses Have a Lessons Learned System?

I have heard excuses from within many organizations as to why this sort of system is not implemented:

  1. There is an initial cost to build a system and a process
  2. There is an ongoing cost to maintain the system
  3. There is an ongoing cost for a person to be responsible for and run the system
  4. Who is going to own the system . . . Is this a quality initiative or operations?
  5. What happens if someone outside the organization finds out that we made this mistake in our business? We will look incompetent!
  6. The legal department will never allow this system. The liability is just too great!
  7. How can we possibly communicate all of these lessons globally?

There is a Much Larger Cost to Not Having a System

What is overlooked is the massive cost of not implementing a Lessons Learned system. Repeating the same mistakes in your business can cost millions of dollars and do irreparable damage to your brand! Many times repeated mistakes are “hidden” from the overall organization’s view because they are coded as normal project or product costs . . . but the organization is secretly leaking profitability like a sieve!

The cost of not implementing a Lessons Learned system is much greater than the cost of implementing and maintaining one.

Stop Leaking Profit by Building a Simple Lessons Learned System

Construction Industry Institute did a great job of defining a solid Lessons Learned system and process in their Research Summary 230-1. You can purchase the complete document from their website but I have summarized the process briefly below.

Lessons Learned Process

  1. Collection: Employees identify, document and submit Lessons Learned from projects, business experiences, product manufacturing, etc. Ideally, this Lessons Learned submission process should be standardized with the same tool and the same set of forms.
  2. Gatekeeper: A Gatekeeper receives and reviews each and every Lesson Learned submission, adjusts it for clarity, grammar and content, clarifies back with the submitter, where required, and forwards the Lesson Learned to all subject matter experts that may be required to validate the material.
  3. Analysis: The subject matter experts spend time analyzing and validating the Lessons Learned. Once the Lessons Learned has been validated, it is placed into the Lessons Learned database or repository.
  4. Communication: All new Lessons Learned should be communicated to the organization once a month in an email or newsletter. If the Lessons Learned is critical to the business, communication may require more active involvement of the business leaders.
  5. Culture: Every individual that is responsible for business results should periodically review the Lessons Learned database for any new Lessons Learned that may impact the way they do business. Because of this need for continuous review, the Lessons Learned system should be in a user friendly format that allows for easy searching and reading.

Your Lessons Learned system can be as simple as a manual process using part time people and Microsoft tools to capture and communicate the lessons or it can be as formal as a dedicated system with dedicated full time people. The system that you define and establish will be based on your budget but should, as a minimum, contain the five components defined above.

How much money is your business losing every month because of repeated mistakes? What can you do to stop this profit leakage?

One mistake will never kill you. The same mistake over and over again will.Harvey Mackay

Leave a comment below on how you have been affected by repeated mistakes or a Lessons Learned system that prevented repeated mistakes.

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Watch for the upcoming release of my two new books: 12 Steps to Business Transformation and The Thinking Business System

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