If you try to minimize Errors of Commission, you will end up with Errors of Omission. And if you try to minimize Errors of Omission, you will end up with Errors of Commission
Vikas gives three examples of how these two errors are interlinked.
If you attend all phone calls, it’s an error of commission and you will end up wasting your time attending spam calls. If you avoid all calls from unknown numbers you might miss an important call – probably a family member or friend calling from an unknown number or from the passport office informing you of status of your passport application (happened to me).
Both errors have a cost and it is impossible to avoid them. So what could be a strategy?
Vikas provides Jeff Bezos as an example. Amazon committed an error of commission to develop Fire Phone which flopped. It had a cost.
But that mindset of better to make errors of commission than errors of omission is the same mindset that led Amazon to launch Kindle, AWS, Prime and so many other services.
Avoiding errors of omission is safe. Just don’t do stupid things. But as Ken Robinson shared in his TED Talk:
If you’re not prepared to be wrong, you’ll never come up with anything original
Jeff Bezos himself writes:
As a company grows, everything needs to scale, including the size of your failed experiments.
Another reason not to avoid errors of omission. You can’t analyse those mistakes. Your errors of omission are invisible. As Buffet wrote in his “Letters to shareholders” in 1992,
Typically, our most egregious mistakes fall in the omission, rather than the commission, category. That may spare Charlie and me some embarrassment, since you don’t see these errors
Do we have to live with this conundrum? Can we resolve it? As Vikas asks,
How can you want the upside of innovation but not the downside?
Vikas goes on to decipher a framework from Amazon’s play book.
cut down on projects that are not working out and double down on those that are working. Those that work out tend to payoff exponentially!
I follow this in stock market investing. I have a framework to analyse companies. Since I have fixed amount of money to invest, I have to allocate capital correctly. I have no crystal ball to look into the future.
I buy all the stocks that fit the framework. After that, I wait a year. I validate my hypothesis. If a stock is working, I double down and accumulate as much as I can. I get rid of stocks that don’t perform according to my hypothesis.
So I commit both errors of omission and commission with significant stress on commission.
I’ve done the same with my career. It’s been a long path for me being a people manager, consultant, startup founder, and software architect. I’ve taken as many chances as I can. Afterward, I pushed and doubled down on whatever worked and I loved, which led to a fulfilling career.
In summary:
- Both errors of commission and omission has costs
- Choose to commit errors of commission within a framework of hypothesis and validation
- Double down on what works