A CEO explains how making a $40 million mistake made him more valuable to his company

Brad Smith

Growth is about learning - not being perfect, according to Intuit CEO Brad Smith (pictured).

Bouncing back from a $40 million mistake might seem easier said than done.

But, before becoming CEO of Intuit, Brad Smith did just that.

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It was in the midst of the dot-com bubble, when Smith worked in the internet division of a different company. He predicted developments in e-commerce would ultimately eclipse human-driven sales forces.

"I allowed myself to buy into the spin and the hype," he told Business Insider. "I felt like it would be all digital, and no human interaction would be required."

So he convinced his company's board to drop $40 million on two e-commerce deals.

But the plan turned out to be a bust.

"That quite frankly didn't produce a whole lot," he said. "I thought I was going to get fired."

When it became clear the e-commerce deals weren't going to pay off, Smith went to meet with the board, expecting to lose his job.

But that's not what happened.

According to Fortune, Smith started off the conversation by rehashing his "original hypothesis" and owning up to what had gone wrong with his assumptions.

The board's response surprised him.

"They basically said, 'You're more valuable to us now because you won't ever make this $40 million mistake again,'" he said. "'What we want you to do is go out and make a bunch of new mistakes. That's how you learn and grow.'"

Smith said the lesson has stuck with him ever since.

"The lesson for me there is to treat failure and success equally the same - as a chance to learn," Smith said.

At Intuit, he says he strives to extend the same opportunity to his employees.

"I tried really hard to create an environment that does what that board member did for me," he said. "Don't punish people for mistakes. Ask them what the lesson was that they learned and give them a chance to build on top of that."