The character traits and skills of the successful CEO — LEARNING FROM FAILURE

Big Red Car here.  Been a nice run of warm, sunny and delightful convertible weather.  OK, when the mercury flirts with 100F only mad dogs and Englishmen are out and about in that deadly sun but those cool mornings and those sultry evenings.  Ahh, on Earth as it is in Texas.

So The Boss is thinking about what makes a CEO successful and I, the Big Red Car, have been eavesdropping on him just a bit.  [Shhh, don't tell The Boss what I have been doing.  Haha, the devilish and scheming Big Red Car.]  So let’s talk about learning from failure.

Triumph and disaster

Successful CEOs are able to deal with triumph and disaster in equal measure and extract a bit of learning from each of them.

The lessons from disaster — learning from failure — are more dearly purchased and the tuition is a bit more searing and so, perhaps, the lessons are better learned.

Rudyard Kipling threw down the gauntlet and defined the boundaries in his great poem, If, when he said:

If you can meet with Triumph and Disaster
And treat those two imposters just the same;

Hey, go read that poem right here:  “IF” Rudyard Kipling.  Damn good one, eh?

The nature of disaster and failure

Failure comes in all types of wrappers.  Believe me, Old Sport, you will recognize that mean bitch when she comes calling regardless of what kind of a frock she is wearing.  You will need no introduction to make her acquaintance.

As a CEO, you will most definitely take a whirl around the dance floor more than once.  It is part of the job.

So, brilliant CEO, what will you do?

Reacting, pivoting from failure

The first and most obvious thing is to stop doing whatever has caused the failure, pick up the pieces, assess the situation and change whatever dynamic has brought failure to your doorstep.

Today it is vogue to call this natural reaction “pivoting from failure” and there is nothing wrong with that.

Know this — something must change and it must change lickety split.  [Haha, Big Red Car, "lickety split"?  Really, Big Red Car?  You crack yourself up, Big Red Car.  Now stop it.]

The ugliest color selection in the history of the world

Back in the day, The Boss was a big time real estate developer and investor.  He and his partners owned thousands and thousands of apartments in Austin, San Antonio and Houston and had an active business acquiring large — 300 – 600 units — apartment complexes and then renovating them.

The investment thesis was pretty damn simple — the oldest apartments were in the best locations because they had had first pick many years earlier, the total cost of acquisition and renovation was about 40% of the cost of new construction and the rents, post renovation, were 85% of newly constructed apartments.  A numbers driven value play which required one to master the renovation process which was no mean feat.

Each such acquisition and renovation was like a startup business by itself with millions of dollars being invested in an operating unit of some meaningful level of complexity.  This was finance, operations, marketing, human capital, community building writ large.  Failure was always a consideration.

Please note, Grasshopper, a business process to be mastered and perfected — often the driver of any successful business.  The Boss loves a process to be sure.

The Boss was working with a couple of truly brilliant colleagues — one could renovate the properties like Michelangelo and the other could run them like a wizard.  But along the way there were decisions to be made.  This series of decisions was cataloged and documented and made into a checklist long before The Boss read The Checklist Manifesto by Atul Gawande.

One of the decisions on the checklist was to pick all the colors of the to be renovated property.  Because this was all about change, the colors were always a different color palette than the original colors to add a note of drama by the striking and stark difference in colors.  Warm to cool; or, earth tones to water tones.  You get the idea.

Long story short — The Boss picked a color and it was the ugliest color selection in the history of the world.  Worst ever.

And that damn color chip looked so lovely — who knew?

Confronting failure or ugly on an ape

When The Boss and some of his top folks went to look at the freshly painted complex the reaction was immediate and visceral.  The Boss thought he was going to be sick.

It was truly so ugly that one could not keep from laughing including The Boss.

It was ugly on an ape.  It was about $50,000 ugly on an ape because that was the cost to paint the complex.

How to deal with failure and how to pivot

When dealing with failure, here are some rules to be applied:

1.  Admit the nature of the failure and take its measure immediately.

Don’t creep up on this bitch — admit it.  Bayonet the wounded and count the bodies.

Own the failure.  You are, after all, the CEO and responsible for everything happens or fails to happen.  Do not be blaming others.  That accomplishes nothing.  Take the blame and get on with the solution or pivot.

2.  Stop doing whatever has given rise to the failure.  When you are in a deepening and troubling hole, “stop digging” is always good advice.

3.  Identify why the failure has happened.  The underlying why not the what.

In the instance above, what the Hell was The Boss doing picking colors anyway?  [No offense, Boss, but you are not a trained designer and you have no business picking colors, dumbass.  That is not your forte.  You have people who have talents that you do not possess.  Tap into them.  Deal with it, Boss.  Haha, Big Red Car is screwing with fire here, Old Sport.]

4.  Catalog all the alternatives and thoughtfully assess the attendant costs and benefits.  Chat them through with your team and get their input — you are also trying to get their fingerprints on the murder weapon and to get their buy in.

5.  Completely document the plan — better than the original plan.  The original plan was apparently not that good, so make a better plan to replace the original.

6.  Communicate the change or pivot to all involved and make sure they understand the new plan.  Overcommunicate.

7.  Execute like a magician.  Make it dance and make it work.  Do your best work.

8.  Learn the lessons attendant and never forget them.

One note of caution — many failures will not be as simple as an ugly paint color selection, they will be systemic and the pivot will be a complete change of the company’s vision, its raison d’etre.  In these instances, there are no quick fixes and it may take months to make the pivot work.  That is perfectly fine, just know the size of the lizard you are dealing with.  Try to kill off the lizards when they are little creepy crawlies and don’t let them grow into Tyrannosaurus Rex proportions.

Outcomes

A failure and pivot will often result in a stronger long term performance and can be an extraordinary team building exercise in its resolution.

The ugly on an ape color became a bit of the company’s  folklore and provided lots of mirth at The Boss’s expense.  This story was told at the company’s campfire many a time and its lessons were learned, relearned and reinforced.

The Boss was the most mirthful of them all and learned a number of great lessons about delegation and talent and the appropriate role of a CEO.  Great lessons.

The company learned that The Boss was a pretty genuine guy and was not taken to putting on airs of invulnerability and had a damn good sense of humor.  And, obviously, was not to be trusted with a color wheel under any circumstances.

Twenty years later, the folks involved in this still laugh with reckless abandon.  You had to see the damn color — it was U  G  L  Y.

The resolution of things was, in fact, lovely.

So, Grasshopper, there you have it.

But, hey, what the Hell do I really know anyway?  I’m just a Big Red Car.  Let’s be safe out there and have a great weekend.  You deserve it.

 

 

 

 

  • http://www.justanentrepreneur.com Philip Sugar

    I love this post. First I love the term “ugly on an ape” I haven’t heard that one in a long time.

    But the lesson the take-away is that:

    “The ugly on an ape color became a bit of the company’s folklore and provided lots of mirth at The Boss’s expense. This story was told at the company’s campfire many a time and its lessons were learned, relearned and reinforced.”

    This is classic what happens at the top flows down, I have said it a million times. No different than your kids.

    People could learn two lessons:

    1. If you make a mistake burry it and blame those below you, which will screw the entire organization.

    OR

    2. Own it, fix it move on.

    Since you know my theory is that the biggest advantage you have as a small company is that you can make a decision realize it was a mistake and learn from it three times and get it right before a big company can even make a decision you know which one I believe in.

    And the last piece the campfire wisdom is so right. People love to be able to recount a story where the boss screwed up and have everybody including the boss belly laugh. Again same as kids. When everybody knows you are fallible they don’t worry about their own insecurities.

    Best regards

    • http://www.themusingsofthebigredcar.com/ JLM

      .
      Great comment, Philip. Nothing is as funny as laughing at The Boss especially when he joins in the laughter.

      BRC
      .

  • http://www.pointsandfigures.com/ pointsnfigures

    like this. people have asked me why i am taking on partners. it’s because they are better than me at what they do. great leaders follow sometimes too.

    • http://www.themusingsofthebigredcar.com/ JLM

      .
      The notion of hiring excellent folks is a critical consideration for a successful and confident CEO.

      Hire folks who are better than you are or were at that age whenever you can.

      It will pay huge dividends in the long run.

      BRC
      .

  • Scott

    Another BRC true classic! This is probably my most favorite post to date as “pivoting from failure” is so key. And the Boss did one hell of a job articulating all of the nuances! Don’t creep up on the bitch, bayonet the wounded and count the bodies! Too funny!

    The Boss must be one hell of a man to work for!

    Thanks again!

    • http://www.themusingsofthebigredcar.com/ JLM

      .
      The Boss has his moments. We all face failures, even a Big Red Car.

      Though to be honest with you who cares about that crap when you ARE a Big Red Car but that’s a topic for another day.

      Stay strong.

      BRC
      .

  • http://pashagivesback.com/ William Mougayar

    Great post.
    Post-mortems and win/loss reports are very insightful if you take them seriously and diligently. They provide you the insight you need for the next thing.

    • http://www.themusingsofthebigredcar.com/ JLM

      .
      The after action debriefing is a critical element in charting where we have been as a basis for where we are going in the future.

      This is a sure fire way to prevent moving in a circle.

      BRC
      .