A Chinese philosopher once said that a smart man learns from his own mistakes and a wise man from the mistakes of others, but a fool never learns. Most of us would rather be smart and wise than foolish. In order to avoid taking the fool's path to potential disaster, it is important for companies to develop organizational processes that allow them to learn from their mistakes. Ideally, the same processes would also allow them to learn from the mistakes and the best practices of other companies.
There is no shortage of learning opportunities. It seems as if a major business disaster happens every few months, reminding us of the dangers faced by all enterprises. Organizations fortunate enough to avoid a major crisis often experience lesser problems or near misses which highlight underlying exposures to risk.
Left unchecked, these exposures could lead to a major loss or incident in the future. If these disasters are to be averted, an organization must be open to the discussion of past mistakes, and must be able to learn from them. Moreover, the same process should promote organizational learning about the costly mistakes made by other companies as well as about the application of industry best practices.
When I started Fidelity Investments' enterprise risk management program in 1995, the concepts of lessons learned and best practices were central to initiatives to raise risk awareness. In the early stages of the program, my team (Global Risk Management) organized ...