Everyone makes bad decisions sometimes -- especially entrepreneurs. After all, at the heart of entrepreneurship is change, and change always involves uncertainty. You will make bad decisions. All entrepreneurs do, and sometimes those decisions lead to criticism, controversy, and user revolt. Here are some recent controversial business decisions made by business icons that were later overturned, and what you can learn from them:
Apple and the Store Policy
Apple always is on the cutting edge, and has become a bastion of retail innovation. Its stores were no different. But Apple retail chief John Browett, who joined the company in 2012, implemented a slew of changes that the company would soon regret. Browett's efforts to cut costs would see employee events cut and staff training reduced, which in the end impacted how Apple retail store staff interacted with customers. It took the company more than six months after Browett's firing to reverse the changes.
Facebook, Instagram, and Selling User Photos
Just months after Facebook paid $1 billion for Instagram (and Instagram's 100 million users), Facebook changed the privacy conditions on Instagram use. Under the new terms and conditions, Facebook/Instagram would continue to host user images for free, but now Facebook/Instagram had the right to sell them as stock images. Later, Instagram's founder mitigated the damage by claiming it was not the company's intent to sell user images for profit.
Netflix and Qwikster
We all love Netflix. The streaming service has resulted in a sea change in how entertainment gets consumed (no more walking to the video store -- actually, no more video stores). Way back in 2011, Netflix proposed splitting its business into two. Going forward, the DVD-by-mail service would be called Qwikster, while the streaming service would keep the Netflix brand. Less than two months later, the decision was reversed, and a humbled Reed Hastings posted this on the Netflix company blog:
"It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology."
Things to Consider
So what should you do if your business policy is the subject of controversy? Here are nine steps to reverse a controversial decision:
- Revisit the original decision. Why did you make it? What were you trying to accomplish? Remember, you didn't make this decision haphazardly, so before reversing it quickly, you should consider the original objectives.
- Revisit your first principles. You started your business for a reason. You wanted to address an unmet market need, and hoped to serve a customer segment. Understand how this decision or policy failed to meet those objectives.
- Engage your critics. Don't be afraid to consult the naysayers and critics. Perhaps they have suggestions or alternatives that will meet your goals without the same level of controversy.
- Make a decision. Decide if you want to stick to your original position in spite of the controversy, or if you're open to a new way forward. If you are sticking with your first choice, prepare to address the controversy head-on. If not:
- Find a new way. Using the results of the prior steps, revise the policy or decision. Determine a better way forward.
- Announce the change. Thank your critics for their input. Admit the mistake. Reaffirm your first principles publicly and launch the policy or decision.
- Address all negative outcomes. Clean up any mess made by the original policy or decision.
- Revisit and reaffirm. Revisit the new policy in 7, 30, and 90 days. Confirm that your goals are now being met without the backlash.
- Move on. No one is perfect. You have addressed the issues and hopefully came out better for it. So move forward -- don't dwell.
Reversing course is not always a bad thing. In the world of startups, it is actually seen as a competitive advantage. As Steve Blank points out in his seminal text The Four Steps to the Epiphany: Successful Strategies for Startups That Win, all startups need to be agile, which means being willing to reverse decisions. So don't fear changing courses or overturning policies. Instead, see this an opportunity to pivot and fine-tune your business model. Negative customer feedback can be an indicia of passionate users. Embrace that.
In my experience, entrepreneurs are better prepared to change course than to work hard to avoid it. When -- not if -- your business makes a bad decision, own it. Be transparent, be accessible, and most of all, be honest. No one expects your business to be perfect (other than you), so instead of perfect, aim for responsive.