Why Some Leaders Don’t Learn From Their Mistakes

Think of an actor on stage–as a member of the audience, you are focused on what he is doing, but if you’re the actor, you see everything but yourself.

“In prepared remarks before the
panel investigating the roots of the financial crisis, former Federal Reserve
Chairman Alan Greenspan blames the subprime crisis on foreign investors,
nonbank lenders, the spread of securitized mortgages and financial firms for
failing to manage their risk. The one person he did not blame was himself, or
his institution–the Fed.”
– Shahien Nasiripour, The Huffington Post, reporting
on Greenspan’s testimony before the Financial Crisis Inquiry Commission on
April 7, 2010

Despite the fact that the Federal
Reserve, as the nation’s largest bank, did not take any significant action to
curb the reckless lending that precipitated the Great Recession, Alan Greenspan
seemed to apportion blame everywhere but to himself. At one point in his testimony, he even appeared to blame the
fall of the Berlin Wall. (His
logic: seeing the truly awful job
the Soviets were doing running their economy brought about distrust of “central
planning” of any kind. So
evidently, the excesses of Capitalism are Communism’s fault.)


Alan Greenspan was instrumental in
determining U.S. financial policy for 19 years, but he doesn’t feel that he was
responsible for the failure of the policy he helped create, or that it’s
failure was to some extent avoidable.
Is he crazy? Actually, no. Did he consciously and willfully mislead the Commission (and
the rest of us)? Very probably
not. Without actually being Alan Greenspan, I can’t say for
sure, but the odds are good that he really does believe he’s not to blame. And as much as we might like to think
otherwise, many of us would feel the same way if we were in his shoes.

Psychologists call this the self-serving bias–the tendency to see
ourselves as responsible for our successes, but to see other people or the
circumstances as responsible for our failures. We reason this way to protect our self-esteem, and to
protect our image in the eyes of others. We also do it because it really feels right. Think of
an actor on stage–as a member of the audience, you are focused on what he is doing, but if you’re the actor,
you see everything but yourself. You see your fellow actors, the
scenery, the audience, but you can’t actually watch you. Because of what’s
called the actor/observer difference, it’s easy for Alan Greenspan
to look back over his 19 years at the Fed and see all the factors that played a
role in screwing things up, and harder for him to see his own role in it.

Psychologist Tony Greenwald’s 1980
American Psychologist “A. Greenwald (1980). The totalitarian ego: Fabrication and revision of personal history. American Psychologist, 35, 603-618. on this topic cited some very amusing examples of
the self-serving bias, taken from a San
Francisco Sunday Examiner and Chronicle
article on the explanations drivers
gave to their insurers after an accident.
You’ll notice that some of these people went to remarkable lengths to
deflect blame:


I approached the intersection, a sign suddenly appeared in a place where a stop
sign had never been before. I was
unable to stop in time to avoid an accident.

telephone pole was approaching. I
was attempting to swerve out of its way when it struck my front end.

pedestrian hit me and went under my car.


car was legally parked as it backed into the other vehicle.

Studies show that in fact, nearly
us fall victim to this kind of bias (though we tend to think that only other people do–yet another example of
the bias at work.)

The upside of all this self-protection
is that we don’t feel so bad when things go wrong, and can stay optimistic
about our future chances for success.
The downside, particularly for the leaders on whose judgment we must
rely, is that we don’t learn anything from our mistakes if we don’t recognize
that we made them in the first place.
How can you do a better job next time if you won’t even admit you did a
bad job this time?


From a motivational perspective,
the best way to handle a failure is to look honestly at how your own actions
contributed to the outcome, emphasizing what
you can change
so that your performance improves from now on. And even though, in his mid-80s, Alan
Greenspan is unlikely to serve a second round as Fed Chairman, he would
probably like to get an accurate handle on what went wrong–something he will
never do unless he admits that he was actually driving.

Heidi’s new book, Succeed: How We Can Reach Our Goals, is available wherever books are sold. Follow her on Twitter @hghalvorson.

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