Mistakes Are the Jewels
Expose consequential mistakes, extract lessons, and turn them into improvements
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 7
- Confidence
- 99%
Mistakes Are the Jewels is a structured learning loop that brings failures into the open rather than allowing defensiveness to bury them. During each review period, the organization identifies a consequential mistake, describes its impact, analyzes the conditions and decisions that produced it, and communicates the lesson to those it serves. Bridgeway applies the practice by publishing the worst thing that happened during the fiscal year in its annual report. A symbolic “Mistakes Ball” teaches incoming partners that errors are expected when pursuing an ambitious mission. The crucial distinction is between tolerating mistakes and learning from them: disclosure must lead to a corrective action, an accountable owner, and verification that the process actually changed. Transparency therefore becomes an operating mechanism for continual improvement rather than a ritual confession.
Origin
Bridgeway created the practice after an investor argued that shareholders, as the manager's boss, deserved to hear the bad news rather than only accolades. Extracted from Masters in Business.
Core principles
- 01Mistakes are inevitable in meaningful work
- 02Concealing errors prevents learning
- 03Stakeholders deserve to hear what went wrong
- 04Psychological defensiveness must be actively countered
- 05Improvement comes from converting errors into changed practice
How to run it
- 1
Normalize fallibility
State clearly that ambitious work will produce mistakes and that acknowledging them is expected. Separate honest errors from misconduct or repeated negligence.
Pro tip Leaders should disclose their own mistakes first.
Watch out Normalizing mistakes must not remove standards or consequences.
- 2
Choose the consequential error
Identify the mistake with the greatest stakeholder impact or learning potential during the review period. Resist selecting a harmless example for appearances.
Pro tip Ask which error would be most useful for the client or shareholder to understand.
Watch out A sanitized mistake signals that candor is unsafe.
- 3
Put the facts on the table
Describe what happened, who was affected, and what the organization expected instead. Use direct language without excuses or inflated self-praise.
Pro tip Distinguish observable facts from interpretations.
Watch out Protect confidential and legally privileged information appropriately.
- 4
Trace the mechanism
Examine the incentives, assumptions, controls, and decisions that allowed the error. Look beyond the individual closest to the incident.
Pro tip Ask what made the mistaken action seem reasonable at the time.
Watch out Blaming one person can leave the enabling system intact.
- 5
Extract the lesson
State what the organization now understands that it did not understand before. Translate that insight into a specific decision rule or process change.
Pro tip Make the lesson concrete enough to test later.
Watch out “Be more careful” is not an actionable lesson.
- 6
Publish and assign
Share the mistake and lesson with the appropriate stakeholders. Name the owner and deadline for the corrective action.
Pro tip Include the disclosure in a recurring report so it cannot be quietly skipped.
Watch out Disclosure without ownership can become performative.
- 7
Verify improvement
Review whether the corrective action occurred and whether it reduced the underlying risk. Feed new evidence into the next learning cycle.
Pro tip Track leading indicators instead of waiting for the same failure to recur.
Watch out Do not declare success solely because a policy document was updated.
In the wild
After an investor asked to hear what management had done badly, Bridgeway began including the year's worst event in its annual report. The practice deliberately challenged the implication that management was flawless.
→ Shareholders received a more candid account and the firm created a recurring trigger for organizational learning.
Montgomery recognized that his early preference for low costs and personally understanding every outsourced function had persisted too long. Bridgeway subsequently devoted more resources to improving compliance.
→ A founder's cost bias became an explicit lesson and prompted investment in stronger controls.
Common mistakes
Publishing a harmless confession
Choosing a trivial error preserves appearances but prevents stakeholders from learning what genuinely went wrong.
Stopping at disclosure
Candor creates little value unless the organization changes a process, incentive, control, or decision rule.
Punishing every admission
If honest disclosure reliably causes disproportionate punishment, people will hide the evidence needed for improvement.
Is it for you?
Best for
It is best for teams that need transparent accountability and continuous improvement despite reputational or legal discomfort.
Not ideal for
It is not ideal for disclosing privileged, confidential, or personally identifying details without appropriate review.
From the transcript
“spare me the accolades. Tell me what you guys messed up.”
“you can't learn from the mistakes if you don't get them out in the open and on the table.”
“mistakes are the jewels.”
From the episode
Bridgeway's John Montgomery Gives Away Half of Its Profits
John Montgomery