Academic journal article ABA Banking Journal

Go Ahead, Make a Mistake

Academic journal article ABA Banking Journal

Go Ahead, Make a Mistake

Article excerpt

AT ONE TIME OR ANOTHER, WE have all heard a boss say something like, "Don't be afraid to make a mistake." Sometimes, we actually took them at their word.

The reality, as we found out, is often less benign than the words, at least for anything beyond a superficial goof. Make a big mistake and we get reprimanded, demoted, don't get a raise, maybe even fired. After a while we come to believe that the real deal is more like, "Make a mistake, but not on my watch." Which leads to the tendency to blame others or cover things up.

That's unfortunate, because mistakes in truth are good.

An excellent explanation of that comes from an unexpected source: Richard Spillenkothen, the just-retired chief bank supervisor at the Federal Reserve. Bankers understandably may think that regulators aren't supposed to make mistakes. But they do. There are mistakes and then there are MISTAKES, like the ones that could destroy the reputation of a bank. To avoid those, to paraphrase Spillenkothen, you keep your mistakes small and make them early.

In Steve Cocheo's exit interview with him in this issue (p. 10), the regulator relates how he was discussing with a board member how Fed staffers developed good judgment. "That came from experience," he said, "and that experience came from bad judgment." Meaning, they learned from mistakes. "If you make some mistakes," he said, "and you can keep them contained, they can come in handy when you face some of the larger crises."

How true. No amount of training or studying completely prepares you to deal with real-life situations. Only experience does that. And the only way to become "experienced," is by making real decisions, some of which will turn out to be wrong, and then learning from the wrong ones. …

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