I am not always right. I can admit this without embarrassment because it is true of all other business leaders and entrepreneurs. It can be a difficult thing for an executive or manager to acknowledge to employees—never mind put in print—but it is something that anyone who accepts a leadership position should keep in mind.

As a leader, your decisions will be carried out, but that doesn’t mean they will always be the best ones—or that changing circumstances won’t turn a good call into a bad one overnight.

My management team says 2003 wasn’t exactly a vintage year for our group. Around the time Apple Inc. introduced its iPod personal music player in 2001, a couple of very bright people from Palm sold me on their own funky version of the Mp3 player and a range of accessories. Virgin’s management team strongly argued the financial analysis did not stack up and that that we would have to sell a very high number of units to make it work. I insisted we push on and launch our very own Mp3 player, Virgin Pulse! I felt the product fit well with our brand, our music business and our heritage.

Also Read | Richard Branson’s earlier articles

We spent $20 million designing our Mp3 player and bringing it to market. Though that product and its successors were critically acclaimed in the US, the Virgin Pulse bombed, and we had to write off our investment.

Why didn’t our product work? Because Apple had an unbeatable strategy.

For Apple, 2003 was notable because it launched its iTunes store that year—as the company simultaneously pushed down iPod prices very quickly. If a company drives down the retail price of an innovative new product fast enough when it is still the dominant player in the new market, no one else can catch up because they can’t make enough money from their new products. When Apple introduced the cheaper, smaller iPod Nano, it slammed the door on anyone else trying to build a significant market share in the digital music business. And yes, I did freely admit that I was wrong; that helped us to exit the market within two years, before we lost even more money.

It can be very hard to own up to your mistakes when a big investment is not salvageable—especially when it is a cause you alone have championed. This fear of embarrassment prevents many chairmen and bosses from doing their jobs properly and addressing the situation when it is most urgent. If the business is disappearing, you must face your team and start looking into what is going on—and the sooner, the better. Only by leaving the safety of your office and sampling the product or service yourself, studying the competition’s offerings and generally turning your operation upside down will you get to the bottom of what has gone wrong.

When you have uncovered the problem, get the right people working on fixing it. In this situation, honesty is the only policy. If you speak openly and bluntly about why you had hoped a strategy would work, why this proved to be wrong, and how you and your team arrived at the solution you want to put in place, then your people will be better able to implement it. This is not the time to hold back information or pass the blame. This may be one of the more difficult moments of your career, but you will not lose people’s trust and respect by taking responsibility for the problem and admitting to your mistakes. People look for leaders to make informed decisions, not to be infallible.

If you discover that the problem was in the implementation of a service or product, do not make the beginner’s mistake of firing those responsible. Blame and recriminations may offer a spiteful sort of short-term comfort, but they will be toxic to your company and will stunt your recovery or the launch of future enterprises. It’s unlikely that you will even need to talk to those employees about where they went wrong; if you provide all the information necessary, they will know what they did and be very eager to prove that they can get it right. If you keep your team together, you will close the door on rivals who might benefit from your mistakes by hiring the very people who have just learned the lesson the hard way.

Innovation is about change—and when your plans to introduce a new product or service don’t work out, sometimes you have to adapt to changing circumstances instead of forcing your competitors to play catch up. As I’ve written before: move on. If that means taking a hit, then take it on the chin. Don’t even think about it again. Just move forward.

(Adapted from Business Stripped Bare, by Sir Richard Branson.)

By NYT Syndicate

©2011/Richard Branson

Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog

Your comments and queries on this column,which runs every week, are welcome at feedback@livemint.com