by Charlene Li
This post is part of HBR’s special issue on failure.
When it comes to business, we are incredibly unaccepting and fearful of making mistakes. And forget about admitting to our mistakes, as that may be construed as a sign of weakness.
But business and leadership is all about relationships. And in any relationship, things go wrong, mistakes are made, ups are followed by downs. The strength of a relationship is not how perfect it is, but how resiliently it deals with the inevitable failures.
In a world filled with real-time, tell-all social media, your ability to hide from your failures is, well, non-existent. You are much better off admitting that something is wrong and addressing it in as authentic and transparent a way as possible.
That’s what Domino’s Pizza CEO Patrick Doyle did in national television ads this past year. Domino’s is known for primarily one thing — delivering pizza to your door in 30 minutes. Domino’s gutsy move was to acknowledge that its pizza was far from stellar. In the ads, the company flashed quotes from customers like “Domino’s pizza crust is like cardboard” and “Microwave pizza is far superior.” One customer suggested, “I think Domino’s pizza should start over.”
That’s what Domino’s did. The company reconfigured its core product, testing combinations of dozens of cheeses, 15 sauces, and nearly 50 crust seasonings to find one that satisfied customers. In the ads, Domino’s admitted that its pizzas were terrible, explained that it redesigned them, and asked people to give them a try.
Viewers of these ads described them as “bold” and “refreshing,” and gave the company credit for acknowledging what everyone already knew. More important, people tried the pizza and found they liked it. The result: store sales rose and quarterly profits doubled.
Domino’s took a failure point — its horrible pizzas — and made it a rallying point. The company saw negative comments as a gift from customers, an opportunity to improve the product, rather than a liability.
How To Fail Successfully
Dealing with failure is part of being a leader. Rather than expend enormous energy to avoid it, you should build an organization that is resilient in the face of inevitable failures. Here are three steps that you can take:
- Create a culture of sharing failures as well as success. When then- new Ford CEO Alan Mulally held his first staff meeting, he asked members of his team to give an assessment of their businesses as a “green,” “yellow,” or “red” light. They all gave their businesses a green light — and Mulally challenged each of them to come back the next week with a more realistic assessment of their businesses. The first executive to stand up and say “I have a red light” received a standing ovation from the CEO. They then sat down to tackle the problem as a team. Mulally had to create a new culture that could admit when something was going wrong, and do so early enough so that the organization could still have an impact on the outcome. Creating this culture has to come from the top. As a leader, you have to think about how you will set the stage for failures to come forward.
- Reward the act of risk-taking. How many times have you heard a leader exhort, “We have to take more risks!” and then walk off the stage? In one organization, the executives decided that words had to be backed by action. They started highlighting when risks were being taken and showcased people who were sticking out their necks. They then came back and celebrated the results — regardless of whether it was a success or a failure. Without this, no one is going to take a risk that is meaningful — people will act only if they think there is a high chance of success.
- Define the limits. While the admission by Domino’s was refreshing, the company didn’t open the door to everything it was doing. To make transparency and risk-taking more palatable to risk-averse executives, create “sandbox covenants.” Figure out how what risks and failures are acceptable. Clearly define the walls of this sandbox and communicate the rules of engagement within those walls. Also explain what the consequences are if people step outside of the sandbox, both to them and to the company. By agreeing to these covenants in advance, there is greater confidence and security in knowing that the risks — and the failures — will be accepted.
Charlene Li is founder and partner at Altimeter Group, author of Open Leadership, and co-author of Groundswell.
Charlene Li is the Founder and CEO of Altimeter Group and the author of five books, most recently The Engaged Leader, as well as the New York Times bestseller, Open Leadership and the co-author of the critically acclaimed book, Groundswell. She is a sought-after speaker and advisor to many Fortune 500 companies. She is a graduate of Harvard College and Harvard Business School and lives in San Francisco with her husband and two teenagers.