Hugh Fletcher on mistakes and outcomes
Fletcher Building, one of New Zealand’s most prominent companies, marked its 100th anniversary this year. As part of the coverage, Hugh Fletcher, grandson of the founder and a prominent businessman in his own right, was interviewed by Radio New Zealand on Saturday morning. It’s become fashionable to disparage Hugh Fletcher in recent years, but he points out that, in his 20 years as deputy CEO or CEO, shareholders achieved an average 16% annual return; that beats most investments anywhere in the world. However, he freely admits he was “tired” at the end of his tenure. I’m not commenting on Fletcher’s career, but I will pick up an interesting distinction he made between mistakes and bad outcomes. A decision, a strategy may be the right one, but sometimes the outcome is bad. Maybe it was bad execution, maybe bad timing, maybe just bad luck. That doesn’t make the original decision a mistake. You might argue that this is equivocation, but Fletcher makes a valid point. Do you become risk averse and do nothing to avoid the possibility of mistakes? Clearly not. All business involves some degree of risk, and good businesses like Fletchers tend to boldness. However, in an era where many media commentators and shareholders are eager to demonstrate their superior 20/20 hindsight (from positions of much lower personal risk), I doubt many will take it on board.
Leave a Reply