Since mistakes of omission don’t appear in financial statements, most People don’t Pay attention to them. We rub our noses in mistakes of omission. –WARREN BUFFETT
At some point of time, we all realize that we missed a big opportunity and it was a mistake. Even the best manager misses opportunities, and this often goes completely unnoticed.
In the world of investing and managing , I freely admit that I missed more Opportunities than I should have. But whenever I miss an opportunity, I like to spend a little time contemplating why it didn’t cross my radar screen or why I saw it but didn’t act. I do this with the hope that my reevaluation of the situation will enlighten me enough that I won’t repeat the same mistake in the future.
There are two basic kinds of missed opportunities: (1) ones we missed because they weren’t on our horizon; and (2) ones we saw but failed to act on. These are the most frustrating because they were looking us right in the face.
If the opportunity simply wasn’t on our horizon, the solution is to expand our field of search. There is a whole world of business brokers and investment bankers that are more than happy to show us potential opportunities.
As for the opportunities that we can see but don’t act on, the most common reason for missing one is that we erred in calculating the risk involved. These are opportunities that we would have liked to have acted on, but mistakenly deemed as too risky.
Mistakes of omission due to miscalculation of risk are the easiest to understand: We took in all the information we had available and made a judgment call based on that information. If we don’t have the right knowledge, we can’t competently make the judgment call.
This is why many successful businessmen let the managers of their individual companies make even the biggest decisions regarding the companies they run-they trust that they know their game better than them.
But mistakes of omission that occur because we didn’t have our eyes open to opportunity are errors that speak to our management ability and organizational skills.
A good manager is always looking for opportunity and has put the necessary infrastructure in place to assist him. The best managers examine the opportunities they missed and ask the hard questions as to why they missed them. Then the next time around they just might catch the brass ring instead of watching it slip through their fingers.