In 2006 Dr Ewan Kirk founded Cantab Capital Partners, a fund with close ties to the University of Cambridge. He prided himself on running it like a scientific research organisation and it became one of the top-performing investment funds in the UK. Kirk served as its CEO and CIO until it was acquired in 2016 by GAM Investments. An incident took place in his time there, which has stayed with him, he told me. It formulated his personal philosophy around failure. One day a computer programmer came to him and said he had a great idea. He wanted to change the software in a certain way that he thought would make everything run ten times faster–an attractive idea if you work in the world of financial information, where incremental margins can mean huge financial gains. Kirk said: ‘Absolutely, go ahead.’ It was a difficult, risky job. It was like trying to change a tyre on a car while it’s driving, Kirk explained to me….
Eleven months later, just before bonus time, when everybody does their best to impress their managers, the programmer returned to Kirk, with a sheepish look. He had a confession to make. ‘I’m sorry, boss,’ he said, ‘but I’ve found a problem in the code and this isn’t going to work after all. I will have to revert everything to as it was and the last eleven months have actually been a waste of time.’ Kirk considered carefully his response to this frank confession. ‘I gave him an extra bonus for that,’ he told me, ‘because it was a brilliant thing to do.’
The employee knew he had failed, but he was brave enough to be frank about it at a very sensitive time. Kirk admired that he had embraced failure and he wanted to show that, in the company culture he was fostering, failure was not something to shy away from and hide when you encounter it. It is something that has to be faced if you are striving to be the best in your field and trying new things. On top of that, the work wasn’t really wasted, in Kirk’s opinion, because the company did learn something from it, which it benefited from the next time it did a software architecture upgrade….
How do you change failure from its default setting, which is stigmatisation – and harness the resulting learnings for good? There are two main aspects to this, I would argue, which are in fact related. The best modern leaders learn to embed the values and attitude to failure they want to encourage, and commit personally to lead the charge on failure, by being open about their own failures and also taking a visible role in confronting failures in the business and interrogating them head-on. Secondly, when companies get beyond start-up size they increasingly rely on protocols, because the founding leadership can no longer shape behaviours through their sheer personal presence. So we’ll come to protocols shortly, but firstly let’s look at how the leader can personally and visibly exemplify the keen interest in failure by becoming the protagonist who roots it out, inspiring others. I’ve been amazed, as a journalist, to find out the lengths to which some leaders go to stare failures in their business directly in the face...
Founders often have to be very hands-on with every aspect of the business in the beginning. When a start-up is testing its idea, it is confronting a lot of failures. The founders of Airbnb in the early days of the business would take pictures of properties, for example, which helped them to understand how the platform interface should work. Likewise the founders of Motorway at the outset of the business delivered pictures of cars to dealers by WhatsApp, before they had a sophisticated platform. Howard Schultz, the former CEO of Starbucks, used to work as a barista, and this perspective gave him many insights that helped him to grow the business–and spot pain points. Those are great examples of a common phenomenon in early-stage start-ups. But sometimes leaders who appreciate the power of confronting failure can continue to get their hands dirty when businesses are more established. This demands the important character trait of humility, because the CEO is taking on lesser roles within the business. This is almost like a kind of ‘secret CEO’ or ‘undercover boss’–they go incognito in the business to see failure up close for themselves….
Hospitality entrepreneur Sarah Willingham is well known in the UK as a star of the Dragons’ Den TV show. As CEO of the Nightcap group she runs an empire of nightspots. She has worked at every level of hospitality, starting out as a waitress aged thirteen in cafes and bars, before taking management roles in companies like Pizza Express and Planet Hollywood in her twenties and thirties. So she knows how the industry works from the inside out, with shopfloor perspective. She calls herself a ‘born operator’.
In every business she runs she needs to understand the fundamentals, she told me. To do this, she gets involved on a practical level. When she took over Indian restaurant chain Bombay Bicycle Club, she wanted to understand how food delivery worked. So she took a bicycle test and became one of the delivery drivers. She spent three nights delivering Indian food to people’s homes by moped. She wanted to understand why the business was consistently receiving one piece of particular, negative feedback: ‘I feel like a faceless person is delivering my food.’ It was by working alongside the drivers and delivering the food herself that she began to realise what they were talking about. Drivers weren’t taking off their helmets when they delivered the food at people’s front doors. By asking them to remove helmets for delivery she could offer better customer service. ‘I had to live it and get into the nitty-gritty,’ she told me.
Interestingly, she’s not the only CEO working in this space to employ this method. Will Shu, the founder of food-delivery service Deliveroo, made a point of making deliveries himself once a month. He prides himself on being a leader who is deep ‘in the details’ of the business, he says, rather than a remote CEO who manages from a distance. By delivering food to customers, he’s learned first-hand things like the physical exertion involved for workers and the practical implications of using an electric bike for journeys–like when the battery fails.
Excerpted from Fail Smarter by Dougal Shaw with permission from Hachette India.
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