Resilient Leadership: How CEOs Can Overcome Setbacks and Thrive

In 2011, Reed Hastings, the co-founder of Netflix, made a decision that nearly derailed the company. He announced that Netflix would split its streaming and DVD rental services into two separate entities, a move that would require customers to manage two separate accounts with separate billing.

It resulted in an overwhelmingly negative response from customers and the market. Subscribers felt confused and betrayed, and many cancelled their subscriptions. The company’s stock price plummeted, losing nearly 77% of its value, and the backlash caused Hastings to reverse the decision, abandoning the plan entirely.

Yet despite the severe setback, Hastings used the experience as a valuable lesson. He acknowledged his mistake and focused on better understanding the needs and preferences of Netflix's customers. This period of introspection and learning helped Hastings and his team to realign their strategy with a renewed emphasis on improving the user experience and expanding the streaming service.

This is a powerful lesson to learn from. 

Below we explain how CEOs can overcome setbacks and thrive.

Classify the setback

When faced with a setback, the first step for any CEO is to classify its severity. Is it truly career-ending, or merely frustrating? It is easy to ‘catastrophise’ and magnify the impact of the setback. Careers are long journeys and setbacks are inevitable. By adopting a long-term view and a mindset geared toward learning and growth, CEOs can reframe the setback as minor obstacles on their journey.

Understanding the true severity of the setback is also vital for planning an appropriate response. CEOs can achieve this objectivity by simply asking themselves how they would advise a friend in the same situation. It’s far easier to determine the true impact and best course of action when maintaining emotional distance and with a clear mind.

Communicate transparently

It’s crucial for CEOs to communicate effectively with their colleagues. 

But this should be done calmly and selectively; the leadership team is not a crutch, and over-sharing can be counterproductive.

CEOs should also consider who else needs reassurance during this time. Setbacks often impact others in ways we don’t initially realise. It’s important for CEOs to acknowledge and address these effects to maintain leadership team morale and cohesion.

Phone a friend

Most CEOs have a network of friends and allies they’ve developed over the course of attaining leadership. During setbacks, this network should be leveraged for support. This involves reaching out to those who understand their journey and won’t define them by the setback.

Additionally, a setback can also be an opportunity to build a new network. Executive search professionals, mentors and career coaches can offer valuable perspectives and assistance in navigating a comeback. This can lead to fresh insights and potential opportunities that aid recovery and growth.

Plan the next steps

Overcoming a setback requires CEOs to establish achievable short-term and long-term goals, enabling them to recover momentum. Part of this is about determining what actions will help in regaining a sense of control. This might include setting out a detailed plan, seeking guidance on learning from failure, or updating their CV.

Importantly, CEOs need to accept they don’t always have the right answers and stay open to solutions and ideas from others. 

Reflect and assess

A necessary step for CEOs to overcome a setback is critically reviewing the actions that contributed to it occurring. When reflecting, they should resist the urge to blame external factors and try to understand what they could have done differently to help prevent future issues.

CEOs can also use this time to reconnect with their network, seeking feedback from trusted individuals to gain perspective. It is also important for CEOs to manage their stress and find ways to relax during this turbulent time to avoid compounding the problem. They should try to celebrate small wins.

Maintain a growth mindset

At the heart of overcoming a setback is a growth mindset. This means viewing the setback as an opportunity for learning, personal growth and to develop resilience. CEOs should see failure as progress rather than a defining moment, and something that is temporary and provides invaluable feedback. This enables them to remain resilient and inspire their teams.

The most successful CEOs go further by using failure as a springboard, not a stop sign, and embracing the discomfort as a chance to develop. This enables them to reframe failure in an empowering way. 

This is exactly what Hastings did, and by 2013 Netflix’s subscriber base and stock price was growing again, and by 2015, it was on its way to becoming a global powerhouse.

Odgers Berndtson specialises in helping CEOs and their teams develop mental resilience and agility. Through our leadership advisory services, we elevate the capabilities of leadership teams, equipping them with the tools and perspectives necessary to navigate challenges effectively, ensuring they have the mindset to overcome any obstacles.

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