The rise and fall of Groupon, the coupon app innovator, has quickly become a symbol both the promise and excesses the second “Tech Boom.” This boom has been based on the rapid adoption of smartphones and the apps that go with them. It’s been led in part by entrepreneurs that grew up with technology and tech company culture. In some cases, that has kept them more in touch with their target markets. But in others, as in the case of Groupon, a youthful sensibility has not been enough to lead and sustain a successful business long-term.
Just a few years ago, Groupon was the darling of the media and the market. Millions adopted the app and almost as many wanted to buy the stock in its IPO. Today, the story of Groupon is one of loss: quarterly losses and a loss of stock value. Last week, the Groupon CEO lost his job. His final memo to his employees has now gone viral but, in case you missed it, here is the passage that was almost as shocking as the rapid collapse of the company:
“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. If you’re wondering why … you haven’t been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.”
It’s not every day that you see a failed CEO acknowledge the obvious. It shows an honesty and accountability that is rare, but required, in business leadership. Unfortunately for Groupon, it came too late. For too long, they believed their own press and assumed that whatever succeeded in the past would succeed in the future. Even when observers started asking questions and raising doubts, they failed to ask questions of themselves, to resolve their own doubts. If the risky and irreverent approach had gotten them where they were, they assumed it would get them the rest of the way, too.
Upton Sinclair famously wrote, “It’s impossible to get a man to understand something if his livelihood depends on not understanding it.” Often we get so invested in our own way of doing things that we are not open to suggestions about how they might be improved, or even why they might fail. We think that because it’s worked in the past, our success depends on it. We don’t want to hear or understand what the flaws might be. In this way, success is often “the first sign of failure.”
The honesty and accountability needs come at the height of our success. We already know what we’re doing right when things are going good. We need to find out what might be going wrong, what we could do better. We can’t afford to wait until it’s too late.
This week’s Berkshire Hathaway meeting is a perfect example of accountable leadership. The meeting is usually watched for the words and wisdom of Warren Buffett. But this year, rather than bask in his own glory, Buffett has invited a “bear” to the meeting, someone who is so down on Berkshire Hathaway that he’s put his money on it (in short stock positions). Buffett wants to hear the criticisms. “Think of tough questions,” Buffett told him, “See if you can drive our stock down 10 points while you’re here.” Even though times are good for Buffett and Berkshire, he wants to know what might be going wrong, from one of his toughest critics, even though everything seems to be going right.
What’s the lesson in these two examples? Leaders must practice honesty – with themselves – and accountability at all times. If you wait until your resignation letter to hold yourself accountable, you will surely have the opportunity to write one. Ask the tough questions when things aren’t tough.
Here are three easy ways to hold a mirror up to your leadership and your business – and don’t wait until it’s too late!
- Ask your staff and colleagues, “What are we doing wrong? What could we do better?” Make sure they know you want to hear the truth. You lead your business but they run it. They will see certain signs of trouble before you do.
- Ask five of your customers and/or clients, “What could we do better for you? What do we do that you really don’t like?” No one has a customer-eye view of your business but your customers. They can see problems that you would never be able to see yourself.
- Take a look at your three closest competitors and ask, “What are they doing better than us?” You may have a formula for success but they may have perfected it. A systematic look at the competitive landscape will shine a light on your shortcomings.
After all of these questions comes the most important part: listen and understand. Your livelihood depends on it.