Own Your Failure
I recently watched on CNBC an extremely interesting interview with former EBay chief Meg Whitman and Jeffrey Katzenberg, former CEO of Dreamworks Animation. Whitman and Katzenberg were the leaders of the short-form video streaming platform Quibi, which was launched in 2018. The interview focused on their recent decision to shut down the company, maximize the value of any remaining assets and return the money to investors.
The interview was impressive, as it struck me as one of the best examples I have seen of truly owning a business failure. They both came across as genuine, smart and talented executives who had tried something new and exciting but failed to deliver success. I suggest you watch the interview or read the transcript of it. I have extracted its key lessons to share here.
Own the failure. Both Whitman and Katzenberg took full ownership of the failure and did not blame others in their team. In fact, they complimented their teams and partners on the high quality of the video content produced for the platform. They also highlighted other aspects of the venture that they felt went well, such as the quality of the launch.
Identify external circumstances as appropriate, but don’t use them as an excuse. Often there exist some extenuating circumstances that contribute to failure. However, these circumstances are rarely the full cause of the failure, as either they could have been anticipated—and a risk mitigation plan developed—or a shift in strategy could have been undertaken to set a successful course.
In the case of Quibi, the unexpected circumstance was the pandemic, which would have been difficult to anticipate. Whitman states in the interview that the pandemic itself wasn’t the issue, but rather that the Quibi service was designed for people to stream “on the go,” such as in the car or on the way to work. The work-from-home phenomenon undermined Quibi’s value proposition. The interviewees didn’t blame the pandemic completely for the business failure but rather cited it as a contributing cause.
Ensure you have tried all sensible options to address key deficiencies. In the Quibi example, the key business deficiency was that they spent large sums of money to develop original content, but the business wasn’t scaling sufficiently quickly, and they were going to run out of money. Some actions the company tried include changing marketing strategy, free trial periods for the service and working to find new strategic partners, acquirers and additional financing. None of these actions were sufficiently successful to continue.
Show how you have cut your losses. The Quibi leadership made the decision to “fail fast” and close up the business while they still had assets that could be returned to investors, rather than raise more money and try to keep the business afloat longer. This seems a brave and honorable decision to me and generates some good will and trust in these leaders for future endeavors they may undertake.
Be clear about what’s next. Whitman clearly laid out that her priorities are to assist the 200 people working in the business in transitioning to new opportunities, to maximize the value of the assets (primarily the high quality content that has been produced) and to return money to investors. When asked about their personal next moves, Katzenberg bravely stated that this failure has hurt him personally and he wants nothing more than to “get back on that horse.”
Identify lessons and how they will be codified in the system. Perhaps this is an area in which the interview comes up a bit short, as the business is being closed down and any learnings will belong to the employees and the leadership rather than the institution. If you experience a business failure, looking back and identifying learnings and finding ways to modify processes and training is key so the failure is not replicated. I would have liked to hear more about the market research they did to inform their decision to launch the service and what they might do differently in the future.
These are the key aspects of owning and learning from failure that I took away from this excellent example. However, another key aspect of dealing with failure involves the corporate culture in which you are operating. We all know that everyone experiences failure many times in a career (and in life as well), but in some corporate cultures failure is not accepted and is dealt with through punishment and derision. Jeff Bezos has famously said, “If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle.” I urge you to take a hard look at your company culture and your own way of dealing with failure in your organization.
Of course there are some types of failure that indeed may deserve to be treated more severely or even punished. For example, failures related to ethics violations or disregard of safety rules cannot be tolerated. Failures that start small and grow slowly into expensive or dangerous situations tend to indicate lack of management awareness, attention or action and need to be addressed.
In addition to the nature of the failure, a key consideration with regard to a specific employee is how many significant successes that employee has racked up compared to the frequency and size of his or her failure. You certainly wouldn’t want to keep or promote an employee whose batting average for success is only 50%, for example; nor would you want to reward an employee who has had some small successes followed by a business-threatening or significant customer-affecting failure.
Consider how you can model and encourage “owning failure” appropriately in your company in order to personally grow and put your company on a trajectory to bigger successes.
Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Contact her at email@example.com or (908) 400-5210.