The Magazine of Corporate Responsibility

Failure, Leadership and Lessons Learned

by Gael O'Brien

In their groundbreaking book on failure, When Smart People Fail, written more than 20 years ago, Carole Hyatt and Linda Gottlieb talk about failure as a judgment about an event. “How well you cope with that event in large part determines what kind of person you become.”

Christ of Wall StreetHyatt and Gottlieb interviewed about 200 professionals in many fields, as well as celebrities, and business and industry leaders. They found most had experienced personal or professional failures. Common reasons included poor interpersonal skills, wrong fit, lack of commitment, self destructive behavior, poor management skills, and bad luck.

The way back from failure, the authors said, was to use the power of one’s mind to analyze what went wrong, reinterpret your story, re-label yourself, and expand your options.

Because men have dominated in business and political environments, they’ve had more opportunities to take risks and learn from the experience of both success and failure and how to interpret it, which enhances their self confidence. Women generally haven’t had the same exposure.

In a list of 50 famously successful people who failed at first,  Henry Ford, R. H. Macy, and Walt Disney are mentioned for having several unsuccessful business ventures before they figured out how to lead successful companies. They are three of 43 men on the list. Rounding out the 50 are only 7 women – Oprah, three actresses, two writers and a poet.

Women are also still developing their political metal. And as the late Geraldine Ferraro was often quoted as pointing out, “If you don’t run, you can’t win.” Abraham Lincoln, proof of that theory and the importance of resilience, endured seven political defeats, including losing the nomination for vice president in 1856 and his second run at being a U.S. Senator in 1858, before being elected president just two years later.

Very few of us will become president of the United States. Just as comparatively few will make it to the C-Suite, let alone become CEO. But for those who do, leadership skills are constantly put to the test.

What is the difference between someone who becomes a good leader and one who doesn’t? The ability to learn from mistakes, says Joel Kurtzman, a senior fellow at Milken Institute and executive director of the Center for a Sustainable Energy Future.

Leaders need to learn from their own failures as well as to create an environment where it is safe to fail, an environment that supports innovative behavior, he says. In a recent conversation, Kurtzman pointed to 3M as creating that kind of environment. Leaders ask employees involved in product innovations what they’ve learned from failure, he says. They ask if something is a total failure, or if it can be repurposed or used in a different form?

“If you have an environment where people are tolerant of failure, there are more new ideas, and more people embark on new paths, start new initiatives and break new ground,” he says. Entrepreneurship is low in Spain and parts of Europe, he points out, with failure seen as harming reputation, difficult to recover from. By contrast, there is a high level of entrepreneurship in the United States, Canada, Scandinavia, and Israel, countries more tolerant of failure.

I asked him about second acts for leaders who have initially failed. He referred to Steve Jobs, who failed at Apple the first time, and then at NeXT, the company he founded; when Jobs returned to Apple, Kurtzman says the climate had changed, and Apple’s share price had dropped to $4.00. Now the stock is around $350 a share. “You often get your second chance when no one else wants it,” Kurtzman says.

Second chances also come about because of the strength of one’s network.

It took John Thain, former chairman and CEO of Merrill Lynch, about a year to find his new role as chairman and CEO of CIT after being fired by former Bank of America chairman and CEO Ken Lewis. In the economic meltdown, Thain was a poster child for wretched excess, nailed for spending over a $1 million refurbishing his office at Merrill. He has since worked aggressively to repair his reputation.

Mark Hurd was hired as co-president of Oracle, reporting to his friend, CEO Larry Ellison, a month after being fired by HP’s board. Hurd lost the board’s confidence over how he handled his relationship with a marketing consultant.

It is too soon to tell how these second acts are going and the degree to which Thain and Hurd learned from mistakes.

Have ideas about failure changed in the last 20 years? I asked Carole Hyatt for an update since the publication of When Smart People Fail. She expressed concern about executive and professional women over 50 who have lost their jobs, calling them a new breed. It is harder for them to get their self confidence back, to have them remember how great and successful they were, she says.

These women, who often headed departments or divisions and made six figure salaries, were intrapreneurs, although they don’t think of themselves that way, she says. Meanwhile, corporate jobs are going to younger people and these women’s prospects are at smaller companies at less salary.

Unlike their male counterparts, who “usually have networks they have been in for a long time,” she says, “many women don’t have these networks because they were married to their jobs.” Often single, she says, they have supportive friends not likely to be in positions of power, given the comparatively small number of women in C-suites or on corporate boards.

Hyatt now runs The Leadership Forum and has worked with 2400 women leaders worldwide to advance their careers, almost 10 percent of whom are without jobs and over 50.

With all the challenges facing leaders with and without jobs, I asked Kurtzman what was an enduring quality of success? He responded that it was the capacity of men and women leaders to engage employees. He referred to entrepreneur Steve Wynn. It has been said of Wynn that if he were penniless and dropped into any major city, he would emerge a millionaire in a year. The reason why, Kurtzman says, is that “people who can create success know how to mobilize and motivate others.”

During crises or challenges, these leaders know how to relate to what employees are feeling, and get them to respond, focus and perform. They are resilient, says Kurtzman, because they understand how to work with others.

Gael OBrien_ID_CropGael O’Brien is a Business Ethics Magazine columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics.

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