By Bill Lawrence
Over the past 20 years in leading successful turnarounds and receiverships, my colleagues and I have seen hundreds of companies in distress, all for a multitude of reasons. However, there is almost always one constant: they are typically guided by CEOs who do not have the experience to execute a sustainable business strategy, who repeatedly make critical errors in judgment, or were incompetent and should not have been hired for that position in the first place.
The consequence of these managerial missteps not only has a significant negative impact on the chief executive’s career, but it also impacts employees, customers, vendors, and other stakeholders — including attorneys. In some cases the business fails. In many other situations, the CEO is fired and replaced by someone with more experience who can right the ship and return it to profitability. The key question we are often asked at that point is, “What could I have done differently?”
The Gift Wrapped Inside a Problem
When a CEO fails, they are often looked upon as weak, incompetent or, possibly, way out of their league. This narrow perspective commonly focuses on the negative aspects of why the chief executive failed. The more enlightened approach is to view failure as a learning experience which can show the leader the path to future success.
The fallen leader should not necessarily view defeat as a byproduct of their character flaws. The reality is they could experience failure once or many times. That said, those experiences do not make one a loser. Those experiences should simply be viewed as temporary setbacks.
The most important variable in any success equation is what does one learn from failing previously? The annals of business are filled with stories about successes that followed painful failures.
Comeback Stories
Walt Disney failed early in his business career when his former newspaper editor told him he lacked imagination and had no good ideas. Undeterred, Walt went on to create an international business and became a cultural icon with the business that today still bears his name.
Disney’s take on failure was: “I think it’s important to have a good hard failure when you’re young. . . because it makes you kind of aware of what can happen to you. Because of it I’ve never had any fear in my whole life when we’ve been near collapse and all of that. I’ve never been afraid.”
JK Rowling, the famous author and successful entrepreneur, was on welfare and a single mother when many publishers rejected her Harry Potter novel. She is now one of the richest women in the world, and reflects on her early failures, “It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all — in which case, you fail by default.”
Flipping the Script
Handling professional failure in business takes effort, acceptance and action. It also requires a change in mindset and attitude. The more enlightened leader and their circle of trusted advisors see failure as a tool or perhaps an opportunity to innovate rather than being a deterrent to success — strategies that can help one accept and use failure to their advantage.
One should also view failing differently than failure. Failing is the act of trying something you learn that doesn’t work so that you can try again, with a different approach and achieve success. Failure, on the other hand, is giving up and not continuing to try.
Another important change is to redefine what success means. Knowing what you want to achieve and how to measure that success can help determine the CEO’s outlook on what defines failure and how to move past it.
Finding Your Way Forward
Taking responsibility for failing and owning up to one’s mistakes is a difficult, yet essential part of the CEO’s playbook for success. Moving forward and working on correcting mistakes can be a positive motivator and help you achieve better future outcomes faster than continually dwelling on what went wrong.
It is equally important to take a break and gain perspective on lessons learned from a previous setback. After that, set new specific goals on how best to move forward. While it is not always possible to recover from a business or professional failure, your newfound knowledge and insight puts you on a more sure-footed path to future success.
Bill Lawrence is a Principal at Seattle-based restructuring and corporate advisory firm Revitalization Partners, which has served as a receiver in more than 30 cases in the Pacific Northwest. He and his partners write regularly about the operational and financial challenges in successfully restructuring companies. Learn more in the firm’s blog as well as its e-book, “Insights to Grow, Build or Save Your Business!”
