Everyone makes mistakes. In our personal lives, mistakes tend to have a narrow impact. But when CEOs and business leaders make mistakes, they affect all of their stakeholders. Here is a look at some CEOs’ mistakes (followed by some solid advice). Consider these a pain-free way to learn.
“My worst decision was not investing earlier in international [commerce].”
Jim Donald, former CEO of Starbucks (Source: Fortune, June 9, 2008)
“Your most unhappy customers are your greatest source of learning.”
Bill Gates, Microsoft founder (Source: woopidoo.com)
“We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result, of course, consumers won.”
Edgar Bronfman Jr., CEO Warner Music (Source: gizmodo.com)
“I didn’t have time to update the board on everything. If you don’t, somebody else will. You have to be able to give them an accurate picture of what’s going on, or they develop their own perceptions and start creating their own stories. And then they make their decisions. How do you keep these people up to date and give the whole picture? That’s the job of the CEO, and I failed. When things start going south, communication should increase.”
David Neeleman, former CEO of JetBlue (Source: Fortune, June 9, 2008)
“In what I wish I had done differently, I wish I had been more public with everyone, especially our teammates around the world, in terms of leading this discussion of franchise. I think I was slow to recognize the need for doing that, and it’s partly because I was part of what we built. I was part of celebrating that.”
Chuck Prince, Citigroup CEO (Source: money.cnn.com)
“There was a very short period of time years ago when it was just me and I couldn’t afford 24/7 support personnel. I worked myself every second I was awake, but in order to cover shifts while I slept I chose to try outsourcing. This was by far one of the costliest mistakes I’ve ever made. The amount of money lost from customers leaving and [a] damaged reputation far exceeded any amount of money saved.”
Brent Oxley, CEO & Founder of HostGator (Source: hostjury.com)
“To launch my first company, I gave my investor more equity than I should have. We split the shares proportionately based on our initial cash investment, and in hindsight I undervalued my non-cash contribution to the start-up (the original idea, the unpaid work invested during the first two years, etc.). At the time, it seemed like I was giving up very little, but as the company became successful and valuable, this small mistake in negotiation became increasingly expensive.”
Vistage member Andres Jaramillo, CEO, Don Pedro’s Meat
“I had a board of directors from the outset, but ultimately I didn’t feel they had my best interests in mind. Subsequent to disbanding the board, I joined a small business CEO group. Within a year I had outgrown that group. Finally I discovered Vistage. While our group is relatively new, it has had a significant impact on my business by providing me with an excellent group of experienced advisors.”
Vistage member Jeff Gilmore, president, GFO Consulting LLC
As painful as they can be, mistakes are vital to the business process. Developing successful new products or services requires multiple attempts and learning from them. Companies that have cultures where mistakes are not tolerated have a much more difficult time becoming successful in new business or product development. Those leaders who admit to and learn from their mistakes create a culture of learning and innovation.
“When it comes our own mistakes as business leaders,” says Greg Geller, president of stationery and paper company, Boatman Geller, “We should ask these questions: What led to our mistakes? How do we identify them before they escalate? How do we resolve them? And, what controls should we put in place to prohibit them from recurring?”
One way for business leaders to avoid mistakes is to be sure to align their vision with realities, both within and beyond their company.
“CEOs often have a highly accurate perception of what’s happening outside the company (the marketplace, competitors, customer issues, etc.),” says executive development consultant Richard Hagberg, Ph.D. “But they have a far less accurate idea of the corporation’s internal landscape. They make decisions knowing why they made them, and assume that others will understand, when in fact, others don’t understand.”
To give new initiatives a greater chance of success, your vision has to become the employees’ vision as well. It’s particularly important to get the feedback and buy-in of your stakeholders. Communicating your vision in a way that employees can see themselves as a part of it, achieves both objectives.
Mistakes are part of the process of making change, creating new products, or expanding operations. “Be open with your own miscalculations and/or missteps,” says Hagberg. “Let people know you’re actively encouraging them to consider new ways of addressing new situations. You’ll ultimately get better results.”