Let's Unpack Effective Leadership

Article #7: Embrace Your Mistakes  

“You’ll never be fired for making a mistake. You’ll be fired for not making a mistake, because if you are not making a mistake, you’re not trying anything new.” 

This seems like sage advice for the dynamic world in which we live and work, and comes from the founder of Warner Communications, Steven J. Ross. 

Leaders who cling to traditional ideas, however successful they may once have been, often witness their companies being marginalized by those who defy convention and innovate.  Blockbuster Video, Polaroid, and Toys R Us are a few recent case studies that quickly come to mind. Those can be contrasted with companies such as Netflix, Lego, and The Disney Company, who have demonstrated that evolution, and even reinvention, are necessary for survival.

Successful innovators will be the first to say however that the process doesn’t typically occur quickly or smoothly.  The familiar adage “two steps forward and one step back” is certainly appropriate, as there are numerous examples of missteps and outright failures that eventually led to “overnight” successes.

Do you know how the household product WD-40 got its name? It is precisely because of 39 earlier design failures. The product acronym literally stands for “Water Displacement—40th Attempt”. 

The tremendously popular video game “Angry Birds” was actually Rovio’s 52nd attempt at game creation over a period of eight years. That’s 51 failures before success!  

Mistakes and failures can take many forms. A personal story that I’d like to share isn’t one of lack of innovation, but rather a lack of decisive action. It involves a hedge fund partnership that I assisted in forming in 2008. On paper, our team and its capabilities looked very promising. We had strong financial backing, recognized investment expertise, and an impressive list of contacts that would serve as our initial prospect list. 

Our timing wasn’t ideal though, as we launched the firm just months before the onset of the global financial crisis that significantly altered the investment industry and landscape. 

To make a long story short, after roughly two years of being unable to scale the business, we ultimately suspended our operations and relinquished control of the fund’s assets to our primary financial backer, a European bank.

While the financial crisis certainly contributed to our not sufficiently building the firm, the primary drivers for our underachievement were within our control. There was ongoing disagreement among the firm’s principals regarding the aggressiveness of our investment strategy. In addition, our sales efforts were too diffused among various sectors of the market.  We therefore lacked the focus necessary to effectively raise assets. 

As the firm’s operational leader, the responsibility for the partnership meeting its goals was largely mine. We didn’t succeed though, and while I couldn't have anticipated the financial crisis, I later realized that I should have been more decisive in addressing the internal challenges that we faced.  

My most comfortable leadership style is one of collaboration. I enjoy building consensus among my team and our important constituents around strategy and execution.  As our monthly sales results and investment performance continued to disappoint, I naturally went to my “leadership comfort zone”. However, despite repeated attempts to build consensus around optimal portfolio management and asset gathering strategies, I was unable to do so, and the business lost valuable momentum that we never regained. 

In hindsight, the better approach would have been to gather the disparate viewpoints of our principals, trust my experience and instincts to decide upon the best course of action, and clearly communicate its rationale to the firm. Although my decisions wouldn’t have been met with universal agreement, my associates would have had the opportunity to either respect the decisions and get on board, or to pursue a role at another firm whose business philosophy was more in line with their own. 

This experience taught me an important leadership lesson. While collaboration and consensus building can often benefit an organization, such an approach can also be ineffective in circumstances that call for more immediate resolve. While it may be my most comfortable leadership style, collaboration couldn’t continue to be my only approach if I was to successfully lead organizations through a variety of scenarios. 

The most effective leaders are able to adapt their style and approach to the current environment. They may even have the self-awareness to step aside and encourage others to lead if they realize that their own skills aren’t what are critically needed in certain circumstances. 

I’m convinced that I became a better leader as a result of what I learned from this experience. Later in my career I felt much better equipped to liquidate underperforming segments of our business in order to focus finite resources on more promising opportunities. Those decisions were not always popular with everyone, but I was determined to act decisively, having witnessed firsthand the results of hesitancy.

I share this experience in order to promote thinking about events in your own career that didn't go as well as planned. Were you too reliant on one particular style or approach? Were you uncomfortable moving outside your leadership “comfort zone”? Did you actively seek fresh perspectives from others?

Individuals rarely improve through their successes. Those events should be celebrated, but we should also realize that growth is more often borne from overcoming setbacks.  

Let’s also accept that it’s easier to blame failures on others or on uncontrollable circumstances. That may temporarily soothe the ego, but it won’t enable personal or professional development.  True leadership involves taking responsibility, no matter what. Once you do so, you are better positioned to learn from your experiences and apply those lessons in the future. Accepting responsibility also trickles down and creates a more trusting and respectful environment within which people can flourish.