Commentary

The Fallible CEO

“After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today.”

In one of the most honest resignation letters in the history of CEO resignation letters, last week Andrew Mason signed off after four tumultuous years as the CEO of Groupon, the daily deals company that he founded. Mason handled a difficult situation well, admitting to serious errors in running the business and hoping that his departure would pave the way toward the company’s turnaround.

Others have not handled the pressure of a failing startup nearly as well. Sadly, there have been recent and very tragic examples where founders were so depressed from their struggles that they took their own lives.

The pressure on startups and their CEOs is significant. Today, startups are expected to have a product and happy customers right out of the gate. This leads to flatter and less hierarchical organizations, where everyone is racing to meet ambitious product milestones. These flat organizations put even more pressure on the CEO because s/he usually has more direct reports and a broader range of decision-making. Today’s CEOs might be intimately involved in product development, sales strategy, marketing plans, hiring decisions, fundraising and customer management --  but also minor things like securing office space and booking their own travel.

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Putting so much responsibility in the hands of a single person means that today’s startup CEOs will likely make more imperfect decisions than perfect ones. Despite this, if you ask almost any CEO how s/he is doing, the answer will always be “Great!” or “We’re crushing it!” How can this be, when 90% of startups are in the process of failing?

The answer, of course, is that CEOs need to remain positive to give their company the best chance at survival. People want to work with and invest in winners, so founders must project an aura of optimism at all times.

Maintaining a constant positive attitude can have its drawbacks, though. A startup is a roller-coaster with many highs and lows. The CEO job can be lonely, so a strong support system is essential. Fellow CEOs who have “been there” can be great sounding boards for when things don’t go so well.

Constant positivity can also make it hard for employees to relate to the CEO. A founder who is always right is either a narcissist or a liar. So an occasional acknowledgement that things didn’t go as planned can make a CEO seem more human. In turn, employees can focus on what needs to get done instead of holding themselves to a level of perfection that is counterproductive.

A CEO’s admitting fallibility is also important because it allows everyone to acknowledge a problem and then get to work fixing it. Most successful startups need to make dozens of major and minor adjustments along the way before they hit on a successful strategy. Even then, the process of trial and error must continue if the company is going to stay on top.

Remaining optimistic while acknowledging fallibility is essential for today’s CEOs.

1 comment about "The Fallible CEO".
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  1. Kurt Ohare from ohare & associates, March 4, 2013 at 4:20 p.m.

    I think there are many of us who wish we had a failing startup as successful as Groupon.

    Often the entrepreneur and business creater is a very different personality with a very different skillset than that of a successful CEO. So let's not judge Mason too critically quite yet.

    One of the problems entrepreneurs as CEO's often have is the inability to delegate but then that's part of what made them successful. An experienced CEO has a different talent and view of business that is necessary for that pesky transition from a startup to a running business.

    Would Steve Jobs have been as successful if he hadn't been fired from Apple when it was falling aournd his ears? Maybe - Maybe not.

    My best guess is that the experience away from Apple gave him insight and knowledge that enabled him to run the business much more successfully in v2.0.

    But we need to avoid the mistake phobia which makes us risk averse. Tom Watson, Sr., the founder of IBM was often quoted as saying, "The way to accelerate your rate of success is to double your failure rate."

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