Leaders Always Learn in Failure

Did you have an HTC phone?

I did in 2007, and was very fond of it. A high end product that had fantastic memory, speed and was the most relevant for my business.

Fast forward to today, the products are nowhere. From No.3 behind Samsung and Apple, it is no longer a mobile company but dealing in virtual reality products and other areas. Phil has since invested in a raft of technology businesses as well as Taiwan's leading basketball club.

So what went wrong?

I learnt a very small part of the story with Phil Chen who was instrumental in the spectacular growth of HTC, as well as the acquisition of the Beats headphone business.

In short, Phil outlined 3 key things that HTC did which caused its demise.

• Misreading the market
• Not spending enough on marketing and its inability to communicate the WHY of the business to the masses
• Changing the original culture through the acquisition of BEAT

MISREADING THE MARKET

When you have a business that is growing very fast, it is very easy to not only get the hubris feeling of doing no wrong, but also get very complacent on keeping close to the customers.

HTC's raison d'etre was supplying high end high performance mobile phones. Fast for business and great data transfer.

I was a fan, but the business sector is limited. Blackberry fell into this trap and the one key thing (amongst others) that changed the game was the conversion of Samsung and Apple phones to having great camera features. HTC and Blackberry fell behind massively. With the Chinese products copycats coming on stream, market share fell rapidly.

The lesson is, that in a fast consumer environment. It is critical to:

• Either keep super close to customers to evaluate changing needs
• Have fast internal processes (production and marketing) to be able to react to market needs

NOT SPENDING ENOUGH ON MARKETING

Phil was incredibly honest about the culture within HTC. His Taiwanese business was very reserved, wanted to focus on making fantastic performance products and looked at marketing and the ability to blow ones own trumpet as an unnecessary evil.

This meant that HTC (although at one time the third biggest mobile firm manufacturer) spent 10% of Samsung's budget on marketing.

The 'Iron Man' video in 2013 was an attempt to communicate the product to a wider market. The campaign failed to deliver the message - what does HTC stand for, who is it for.

So the message is be very clear on the solution that you are solving in the market place. Unfortunately HTC became the quality phone that no one wanted to buy. It was a pity for me as I was a huge fan.

CHANGING THE CULTURE OF HTC THROUGH THE ACQUISITION OF BEAT

The biggest eye opener for me, (and for those who know me, a topic I talk about extensively) is the power of culture to build and sustain businesses. As mentioned before, the HTC business was one of fairness, excellence, trust and integrity. If they said the product did 'x' then the product performed 'x'.

The acquisition of BEAT demonstrated that they had acquired a product that was more 'smoke and mirrors'. The marketing was fabulous, using influencers and the 'cool' factor' but the marketing avoided communicating the performance feature of the product but created a narrative that if you did not have this product you were certainly not 'cool'. It was a viral product NOT a performance product.

This 'Hollywood' approach to marketing was diametrically apposed to the culture of HTC and created a lot of disquiet within the company.

When culture suffers, then the business loses its own 'Why' and 'Purpose'. The smoke and mirrors of marketing was counterculture to the straight integrity approach that HTC employed.

The big lesson here is to always review the culture of an acquisition (or the values or a new employee). Having people that have a different set of values and expectations to that of the company can cause massive upheavals in not only working relationships but decisions making.

The final discussion of the interview focussed on how Phil Chen dealt with running the business during its demise. It was super interesting and humbling to hear him say that he learnt more as a leader in the difficult and demise of the HTC phone brand, than he did when the business was achieving double digit growth.

Yes, as leaders we learn a lot about ourselves, the people around us and the business more than you can ever do during the good times of growth and success.

If your business is in a difficult time then I would encourage you to demonstrate the following attributes:

• Leaders second guess themselves during difficult times, so get good people around you who will tell you EXACTLY how things are and who are solution minded
• Bring others in the business with you. A problem shared is a problem halved. You will need to communicate at least TWICE as much to your people. They need you to give them the confidence that you are leading from the front.
• Do not be wedded to the strategy. If you need to change it, change it. Customers are key here. An agile company has a chance to pivot and survive.
• Keep super close to customers, understand, reassure, encourage, support.... Do anything that ensures that customers do not leave you
• Keep a journal. You will find out a lot about yourself and your leadership capabilities.

Phil Chen is a better man, but mainly through pain and not success. This is something that is a factor of this life and the story of all great business leaders.

If you want to talk to someone about the difficult business situation that you find yourself in, then please reach out on the link here. We have the tee-shirt too and willing to share and encourage you on your journey.