When it feels like everything in your company is going wrong, as the founder, all the weight of the challenges in front of you will fall on your shoulders.
This serves to increase that sense of doubt in your mind. Imposter syndrome. You start to think you were never cut out to be a CEO. You’re not qualified to make the right decisions, and your inexperience has led your company down the wrong path.
You scan the latest headlines of success in Business Insider, where every founder is ‘CRUSHING IT’, and the sense of dread only increases.
So, just to remind ourselves that even the CEO”s of some of the biggest companies in the world can misread a rapidly changing market at critical times, let’s review five examples of famous business missteps.
- Steve Ballmer, CEO of Microsoft: In 2007, this was Steve’s take on the iPhone: There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them,
thanI would to have 2% or 3%, which is what Apple might get.
- In the year 2000, AOL merged with Time Warner in a deal valued at almost $400 billion. It’s now widely considered one of the worst deals in corporate history. The company’s valuation fell off of a cliff and never recovered. Presumed corporate synergies never materialized. It took more than a decade before Time Warner would unwind the deal and spin AOL back out at an implied valuation of $3.2 billion.
- Kodak held the original patents for digital photography. They created the first digital cameras. They understood that this was the future of photography. Steve Sasson, the Kodak engineer who invented the first digital camera in 1975, said that the reaction to his invention was “that’s cute, but don’t tell anyone about it.” Kodak had fallen into the trap of the Innovators Dilemma, more worried about sustaining outsized profits in their film business than they should have been about new technologies destroying their business. We now know how that turned out.
- New Coke. I’ll just leave this here. At least it got a bit of a comeback in the latest season of Stranger Things.
- I view Ron Johnson’s short tenure at JC Penny as one of the great failures in retail. In an effort to turn the company around, he threw away everything the company stood for in the eyes of the customer. He tried to shift the image of the brand, and the target customer, all at the same time. Everything from the logo to pricing and merchandising strategy was changed. It was a spectacular disaster. Ron became CEO in November 2011. Q4 2012 same store sales were down by 32 percent, and the company was bleeding cash. The company still hasn’t recovered from his missteps.
Bonus round: I’m keeping my eye on Walmart’s acquisition of Jet.com in 2016 for $3.3m billion. There were no other bidders for the company, and at the time, Jet had minimal revenue or market share. But Walmart was getting desperate in its attempt to close the gap with Amazon. Jet.com’s CEO, March Lore, had previously founded Diapers.com and sold it for a fortune to Amazon. Walmart hoped Marc had the playbook that could help Walmart turn their commerce efforts around. And while since that deal e-commerce at Walmart has dramatically increased as a share of overall sales, the unit is now losing over $1 billion a year. Restructuring is coming, and there is now talk of spinning out some of the digital-first retail brands that Marc had been buying to bolster his efforts. This story is far from over.
The fact is, markets today move faster than ever. We make the best decisions we can. We’re always balancing the pull of the Sunk Cost fallacy, our best guesses as to where the market is going, and conflicting advice from each of your well-meaning board members.
We’re going to get it wrong sometimes. Hopefully, we’ll recognize the mistakes in time to recover. The biggest failure isn’t
Mistakes shouldn’t shake your confidence to the core. Recognize them. Take action. Move forward. That’s the sign of great leadership.