Communicating Failure in the Age of Social Media

Failure has cachet. Harvard Business Review devoted its April 2011 issue to the subject, with many authors agreeing on its importance to the running of successful, innovative enterprises. Since Steve Jobs’ death, observers have catalogued his missteps—he never graduated from college; he was fired from the company that he himself had started—and ranked them as a vital part of his legacy. A Babson College study recently concluded that entrepreneurship was “a series of failures.”

It seems okay to fail—indeed, more than okay. But there’s another question. Is it okay to talk about our failures?

Charlene Li, in a posting entitled “The Art of Admitting Failure,” observes that “[w]hen it comes to business, we are incredibly unaccepting and fearful of making mistakes. And forget about admitting to our mistakes, as that may be construed as a sign of weakness.” She argues that in the age of social media, businesses’ can’t hide, so they might as well not even try. That’s true internally, too: Lu advises that companies embrace a “culture of sharing failure as well as success.”

One company that’s done well talking about its failures is Domino’s Pizza. In 2010, after Domino’s famously acknowledged in an ad campaign that some people thought its pizza “sucked,” U.S. sales ramped up 14% over the previous year, breaking company records. Of course, Domino’s did more than merely acknowledge what customers might have been thinking: The firm embraced accountability, improving quality, establishing a website where customers could upload their own photos of the company’s food, and offering money-back guarantees.

Small, everyday companies can also benefit incredibly from talking openly about their miscues. Remember Nick’s Pizza, which we profiled some months ago? In October, when the company ran into a financial crisis due to a bad real estate deal, the founder, Nick Sarillo, took an extreme step: In a last-ditch attempt to save the company, he wrote a brutally honest letter taking full responsibility for his poor decisions and asking customers to show their support by eating at Nick’s. Then he sent the letter in an email blast to sixteen thousand customers. “The results,” Nick says, “exceeded my wild dreams. I mean, I’m literally blown away.”

Within minutes of sending out the email, Nick’s phone was ringing off the hook. Someone posted the email on Facebook, and it went viral. Nick received hundreds of emails of support, including offers of investment money. Facebook groups devoted to “saving Nick’s” were created, with hundreds of members. Revenues at Nick’s two restaurants were roughly double normal numbers for the week following the email, and although they’ve since declined, they are still running twenty to thirty percent higher than before. The PR value alone has been significant; NBC News and Fox News both did stories about Nick’s unusual appeal, and they were joined by a number of local and regional newspapers.

Nick is adamant that customers will tolerate failures, and that they will even go so far as to reward companies that own up to shortcomings honestly and without being asked. “We don’t know the value of our relationships until they’re tested. As businesspeople, we’re so used to being afraid of openness. But there’s nothing to be afraid of. I really do think that surrendering to truth produces the best results over the long-term. After what happened to us, I swear by it.”

Of course, you have to back up truth with real actions. In Nick’s case, the company spent years building up goodwill in the community, which it can now leverage. The communications lesson here might thus be that sporadic honesty regarding failures won’t produce a doubling of revenue overnight, but a consistent policy of honest, transparent engagement with customers just might, and when a company needs it most.

We put it to you, then: What are you advising your clients who might be in similar positions? And have you personally ever owned up to a failure and been rewarded for it?

Let’s get talking, about the risks and rewards of speaking the truth, even and especially when the truth hurts.

6 thoughts on “Communicating Failure in the Age of Social Media

  1. Great blog, Matt. I’ve always been all about admitting fault (and, or, mistakes). Between us, my business partner, Ed Moed and I have made more mistakes than we can remember. But, we’ve always been open and honest with our staff about the mistakes. In fact, we make light of them. That levity, in turn, empowers our people to feel they can take risks, fail and not suffer any negative consequences. But, they MUST learn from their mistakes.
    As far as advising clients to admit mistakes, that’s a far more slippery slope since such an admission impacts multiple audiences (especially with a publicly-traded corporation). That said, I believe showing vulnerability, and possessing the ability to admit mistakes, are two traits of great leaders. But, as we all know, America has few great leaders, either in the public or private sectors.

    1. Thanks, Steve. We considered using the many “teachable moments” produced over the years by the team of Cody/Moed but decided on pizza instead. Joking aside, I hope the examples in today’s post, especially Nick’s, can teach us a little bit about the power of being honest and forthright, in good times and in bad.

  2. Bravo Peter.
    Yes, every crisis ressponse begins badly, how could they not?
    Yes, silence in any contentious or crisis situation is toxic to the perpetrator (even if only alleged).
    Yes, bad news ripens badly, every time, for a time.
    Yes, Every crisis response fails in most respects,
    for a time.

    Look ma, no twitter.

  3. Pingback: The Follow Up
  4. Another good example is how Salesforce dealt with failure when they had problems with their hosted CRM services. They put up a special page to show the availability (and failures) of their services, so that everyone can see.
    Openness works when failure is an isolated incident which gets addressed and fixed quickly.


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