Louis Guelette, cited in:

We decided to make him responsible for the revenue target of the SMB sector in South Africa, an area with limited resources that needed cooperation with business partners - a complex world that he didn’t know very well. Complex because such relationships can be with both partners and competitors and very much depend on the right deal being struck. Such management requires maturity and diplomacy and I was surprised to find these qualities and characteristics in a young man with little practical experience of the business.

Stockdale embraced a Genius of the AND in his leadership: You must retain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time you must confront the most brutal facts of your current reality, whatever they might be. You must believe you can survive the camp and will live to see your loved ones again, and at the same time you must stoically accept that you will not be out by this Christmas or the next Christmas or even the next Christmas after that. Never fall into the leadership trap of creating false hopes soon to be destroyed by events. Yet equally, never capitulate to despair and lose faith that you will prevail in the end. You need the Stockdale Paradox to go from start-up to great company. You need the Stockdale Paradox to lead a company from good to great. You need the Stockdale Paradox to navigate turbulence and disruption. You need the Stockdale Paradox to reverse decline and engineer a return to success. You need the Stockdale Paradox to continually renew a successful company so that it might endure. Level 5 leaders confront the brutal facts before they set vision and strategy, and they create a climate where the truth is heard. Failure to confront the brutal facts is a precursor to catastrophic decline, always. (Directed reading: Good to Great, Chapter 4.)

Often a failed project is a critical step in getting to success. Once or twice a year, at our product meetings, I ask all of our managers to complete a simple form outlining their bets from the last few years, divided into three categories: bets that went well, bets that didn’t go well, and open bets. Then we break up into smaller groups and discuss the items in each category and what we’ve learned from each bet. This exercise reminds everyone that they are expected to implement bold ideas and that, as part of the process, some risks won’t pay off. They see that making bets is not a question of individuals’ successes and failures but rather a learning process that, in total, catapults the business forward. It also helps newer people get used to admitting publicly that they screwed up on a bunch of stuff—as we all do.

2. DON’T MAKE A BIG DEAL ABOUT IT

If you make a big deal about a bet that didn’t work out, you’ll shut down all future risk-taking. People will learn that you preach but don’t practice dispersed decision-making… Reed’s reaction is the only type of leadership response that encourages innovative thinking. When a bet fails, the manager must be careful to express interest in the takeaways but no condemnation. Everyone in that room left with two major messages in mind. First, if you take a bet and it fails, Reed will ask you what you learned. Second, if you try out something big and it doesn’t work out, nobody will scream—and you won’t lose your job.

3. ASK HER TO “SUNSHINE” THE FAILURE

If you make a bet and it fails, it’s important to speak openly and frequently about what happened. If you’re the boss, make it clear you expect all failed bets to be detailed out in the open… It’s critical that your employees are continually hearing about the failed bets of others, so that they are encouraged to take bets (that of course might fail) themselves. You can’t have a culture of innovation if you don’t have this. At Netflix, we try to shine a bright light on every failed bet. We encourage employees to write open memos explaining candidly what happened, followed by a description of the lessons learned.

Most likely you have more time than you think to develop your strategic agenda. While people expect fresh perspective from a new leader, a new style, and probably a new energy level, most do not expect a wholesale new direction, at least early on.

There’s a lot to be said for effective listening and for not sharing plans prematurely. Not only does it tamp down the amount of potential distraction within the organization, it also nips public scrutiny and second-guessing in the bud. The last thing a new leader needs, especially in a crisis situation, is to have the media and industry pundits questioning, analyzing, and deconstructing your plans even more than they already will be doing. Big pronouncements, especially early in your tenure, make big impressions that can come back to haunt you. “If you’re going to make big calls, you better be right,” counsels Steve Bennett. “Because if you come in early and you make big calls and you’re wrong, the whole organization is going to lose a lot of confidence in you.”

Vision for vision’s sake is counterproductive. Determining a course for the organization is a process that usually requires more time than most people foresee. It should be iterative, building off your strategic agenda, sharpening and clarifying the path based in experimentation and feedback.

New leaders tend to want to focus on the problem areas and figure out how to solve them. That’s commendable, but not if it comes at the expense of sustaining your success in existing areas of strength. Dan Kelperman, who skillfully avoided that trap after joining Kodak, offers some helpful advice: “If you come in and discover that one of your growth businesses is struggling, give it big-time attention. But don’t ignore your cash cow, which may also be struggling. The key is to keep all the plates spinning simultaneously. In other words, devote ample time to all the key businesses to ensure greater success.”

The same warning applies to people. It’s natural to concentrate on getting your bottom people up or out, but you must remember to focus on retaining, motivating, and developing your top people, too. Spend as much time on your winners as on your problem children.