For many of us, they are the four hardest words to say to others. For high powered billionaire CEOs – especially.
Shopify CEO Toby Lüttke issued a statement sharing the news of massive layoffs of 10 percent of Shopify’s workforce, primarily in recruiting, support and sales. Over the past 2.5 years, Shopify has benefited from a boom in the e-commerce space as lockdowns and shutdowns spurred an uptick in online purchasing behavior.
There were no physical stores. Online shopping was all the rage.
Lütke made a bullish prediction: The e-commerce space will jump 10 years ahead of pre-pandemic predictions and usher in the dawn of near-total online shopping. Shopify – and Lütke – went all-in.
Consumers are returning to pre-Covid shopping habits. I guess there’s still something to be said for throwing on a pair of pants and getting out of the house to shop. Looking for clothes in clothes is still a thing—for now.
“At the end of the day, making that bet was my decision, and I was wrong,” Lüttke said. “Now we have to adjust.”
A difficult situation, of course. But Lütke owned it—showing off with a quality of honest integrity, or what executive director Rasmus Hougaard calls “caring candor.” It’s one thing to lay off hundreds of employees at once. It’s quite another to do it while taking full responsibility for the bad outcome.
Therein lies the key to powerful leadership.
The Psychology of Apologies (The Right Way)
Apologizing is a daily occurrence for most of us. We say it, or are told it, as a part of ordinary life – ordinary and fleeting conversations between colleagues, family members and even strangers. But for high-powered leaders at Fortune 500 companies, an apology is much more than a casual “sorry about that.” They should be reserved for special occasions.
As Harvard psychologist Barbara Kellerman writes, “A leader’s apology is a performance in which every expression counts and every word becomes part of the public record.” According to Kellerman, an apology coming from a CEO should be carefully considered. It’s a “high-stakes move for themselves, their followers and the organizations they represent.”
In the case of Lütke and Shopify, there were probably dozens of senior executives at the time involved in the decision-making process. It’s not like Lüttke works alone and makes big strategic turns without the advice of his executive team.
In that case, Lütke could then point to the collective expression of regret – “We made a bet.” Or at the very least, he could have used the royal we in his statement: “We messed up.”
However, he did not. He owned it and put the blame squarely on himself. He chose not to drag his leadership team through the mud.
A wise choice, if not an ethical one. Being a leader means that you are not only responsible for your own behavior, but also for that of your team, followers, and the institution you represent as a whole.
When things are going well in the organization, you are the hero. And when things go wrong, you take the fall. That’s the job of a leader. Par for the course. You can’t always be a hero.
The opinions expressed here by Inc.com columnists are their own and not those of Inc.com.
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