Once someone taught me that “you are as good as your last show”. He meant that you are to remain humble and not let any past success get to your head. He meant that any decision needs to be approached with an open mind and based on its own merits after carefully considering the present and likely future circumstances and carefully analysing the effects of a worse case scenario.
Yet, I still see many business leaders who believe that what they say should be followed just because they got things right in the past. Business leaders who operate under the false premise that what worked in the past will have to work now and in the future, ignoring the fact that circumstances change and such circumstances have a great say as to whether things will work out or not. Normally such business leaders are those that base decisions solely on their instinct, which is greatly influenced by their past experiences, without giving due weight to the present external circumstances and a proper analysis of the data at hand.
In the past weeks, the world has experienced various big names in the Tech world, having to take difficult decisions. On the 9th November, Mark Zuckerberg, the self made billionaire and one of the founders of facebook, had to eat humble pie. In an announcement to his Meta employees he had to admit that he got things wrong. He had to admit and I quote “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.” In his announcement he informed everyone that Meta needs to layoff some 11,000 employees as a result of him getting things wrong.
Two days ago, the Financial Times ran an article that Amazon was planning to cut about 10,000 jobs from its corporate workforce as part of its effort to cut loose lossmaking or underperforming units of its business. The planned cuts come as Amazon faces soaring costs and slowing growth in its online stores business. The reasons behind this are similiar to the ones outlined by Zukerberg’s Meta. Amazon is now experiencing a pullback in consumer spending amid broader macroeconomic pressures, while overeager expansion during the pandemic has left Amazon with wasted logistics capacity.
So my message is simple. If the likes of Zuckerberg and Amazon can get things wrong, so can you. You need to remain humble. You need to make sure that you do all your homework right. You need to challenge the assumptions you are basing your decisions on. Do those assumptions find backing in data? What if those assumptions do not materialise? Have you really analysed the effect of your decisions on the background of a worse case scenario where the assumptions you did, do not actually happen? Are your decisions being influenced by people who have their own agendas, rather than what is actually beneficial for the business, backed by proper data analysis and scenario planning?
Make sure that your last show is a good one. Amazon and Zuckerberg’s Meta will likely survive their last abysmal show, while your business may not be so lucky if it needs to contend with a number of wrong last shows.