Leading Workplace Change™

…actions are more important than words in times of turmoil

Admitting to a mistake is never easy.  And as a leader, it is both an important capability as well as an action that needs to be done thoughtfully.  In late October, when I read in the papers about former Federal Reserve Chairman, Allan Greenspan admitting to a fundamental flaw in his thinking about the self-correcting power of free markets, I sat up and took notice. This was not just an expression of regret about a day-to-day action, it was an acknowledgement of a flaw in one of his own fundamental beliefs that directed his decisions in guiding the U.S. economy.

Notice in the following statement made by Mr. Greenspan before the House Committee on Oversight and Government Reform that he includes a personal reference and an emotional response to his mistake…”Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief…”  He did not go into elaborate detail at the Congressional hearing, but he took responsibility for his mistake and later in the hearing, briefly noted an idea for corrective action.

In the world of organizational culture, how current and past leaders respond to mistakes has profound implications.  In cultures where adaptability and innovation are engrained, leaders regularly model both consequences and learning from mistakes by doing it themselves and rewarding others who do the same.  It is a natural part of how they lead to encourage creativity and make it safe for people to commit to stretch goals and hold themselves accountable for achieving them.

The learning for leaders is that their capability to openly acknowledge a mistake is a powerful tool.  It allows for people within an organization to move forward more quickly past blaming to action.  No one ever promised that being a leader would be easy, but no matter how you feel about Allan Greenspan’s policies, following his lead in a time of turmoil is something to think about.

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