My mistakes have been one of most important sources of my learning, See some stuff  here

Today let me give you another example from my personal experience for you

In year 2010, I learned about this technique and in a minute you will know where it came from

The scuttlebutt technique is inquiring and asking questions to various people with mutual interest or are involved with a certain company or industry. Asking suppliers, vendors, customers, competition, trade association executives, research scientist from universities or in government and previous employees may all be intangible sources of qualitative information.

Phillip Fisher had first coined the “scuttlebutt” technique when he wrote Common Stocks and Uncommon Profits

Now eager to use this technique, I went ahead and started applying this on HDFC bank,

Context

Our family business had recently started dealing with a new branch of the bank and our industry is famous for squeezing the last dime out of bank in terms of service. I thought it was a perfect opportunity for me to find about culture of the bank and how it operates through its employee and fellow customers. What unfolded over next few months really surprised me; I was a great admirer of Mr Parekh and HDFC bank but what I was seeing was really discomforting – here was our RM (Relationship Manager) who has using every loophole in the system to get more business out of us and offering innovative services like allowing us to draw cash same day on a high value cheque deposited, No other private / public bank did this. This RM was winning over all other small businesses in our locality. He was a hero who could get anything done just over a call, Cutting corners and winning customers

I took this RM and business operations run by this branch as proxy for HDFC bank and concluded

It would be a dreadful thing to own a bank which has such aggressive (almost bordering on illegal) behaviour

Short story Now tell me

What were my mistakes?

Two that I can definitely think of

  1. I extrapolated a branch and RM’s behaviour and equated with that for whole company – A company of size which has 1000+ branches across breadth & depth of the country
  2. I learned and applied something (Scuttlebutt) but didn’t knew ground rules before applying it, Scuttlebutt works best for unknown and small companies and more importantly if one has acquired a piece of information from one source it has to be ratified with some other source in the industry / company for consistency

What was my biggest learning? – Not to repeat above mistakes in future

Post script

Btw, HDFC bank zoomed from Rs 350 to Rs 950 in 4.5 years a 3 bagger and that RM was not with bank after a year 🙂

Had similar experiences to share please do so in comments !