It seems to me that about 80% of being a great CEO is not shooting yourself in the foot.
When you combine basic human nature with the pressures of corporate leadership, you get a set of predictable “failure modes” the CEO is likely to fall into. As much as we like to think that leadership is about being a brilliant visionary—and certainly vision and creativity are part of the equation—simply sidestepping common failure modes is a vastly underappreciated factor in CEO success. As Shane Parrish of Farnam Street observed, “It can be difficult to appreciate how much simply avoiding the standard ways of failing dramatically increases the odds of success."
Sometimes those “standard ways of failing” lurk right in our own corporate history. Case in point: Red Lobster, subject of today’s Crash Report.
Twenty years ago, Red Lobster was reeling from a notorious seven-week “endless crab” promotion. The company underestimated how many snow crab legs customers could eat, how much wait times would be impacted, and how volatile seafood prices could be. There was a ton of waste, too. According to one former staffer on Reddit, some stores were throwing out five to six 50-gallon trash cans of uneaten crab per day due to customers who would only eat the large leg joints before reordering more crab.
That promotion lost Red Lobster about $3.3 million in less than two months. President Edna Morris resigned.
You’d think Red Lobster leadership would have felt déjà vu as they considered adding “endless shrimp” to their permanent menu in 2023. But they went forward with it—and posted an $11 million loss in a quarter. Going all-you-can-eat was just one part of the chain’s broader failure, but it was an expensive, avoidable mistake that served as the nail in the coffin.
The lesson for CEOs is to become a student of past failures: your own, your company’s, and those of other CEOs. The better you get at spotting failure modes, the more you will synthesize them into your own catalog of pitfalls. And the more able you will be to spot and avoid them in your own leadership practice.
Ask yourself questions like these, and record your answers:
What are the major lessons from my own organization’s history? What missteps do we need to avoid repeating?
What am I doing right now as CEO that would appear unwise to an outside observer?
What are the notable recent failures in my industry or among my competitors, and what can I learn from them?
This type of reflection, done consistently, casts light on your blind spots—and keeps you from shooting yourself in the foot, as so many before you have done.
Crash Report: Red Lobster
What can we learn from the crash of a casual-dining institution? It’s about more than the shrimp.
Click Here to Get the Crash Report
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