“I was wrong” are three of the hardest words for anyone to utter, but many CEOs seem to have a particularly hard time admitting when they have made a mistake.
So it was refreshing when departing Kohl’s CEO Tom Kingsbury last week recognized that some of his moves, such as carrying much less inventory for some of its leading clothing brands and dialing back its fine jewelry business, were key factors in its recent 9.3% slide in quarterly comparable sales. That was one of the worst performances of any major publicly traded retailer in the third quarter and continued a long trend of decline for Kohl’s.
“We thought, ‘We can do more with a lot less,’ and that didn’t work out for us,” Kingsbury told Wall Street analysts on a call last week. What a novel concept that he didn’t blame the macro-environment, however much that was a legitimate factor in making shoppers more careful about spending. Target fared much better than Kohl’s last quarter, but its results lagged Walmart’s substantially. Yet Target’s CEO pointed to macro factors with little attention to the chain’s own errors, which analysts said included execution problems that led to out-of-stocks and merchandise that wasn’t all that compelling.
A CEO acknowledging his mistakes is rare in an industry notorious for having executives trot out odd excuses. Many will blame the weather for their woes in one quarter as if their stores operated in their own microclimate, even as a direct rival contending with the same weather thrived. And in one famous instance many years ago, former Gap Inc. CEO Art Peck blamed poor numbers on “product acceptance issues,” seemingly blaming consumers who had the temerity not to buy its clothing, rather than saying plainly that the clothier’s products flopped.
When CEOs make such dubious claims, they risk suggesting that they don’t quite have a handle on a problem. So while admitting fault can be painful to the ego, it does send a clear message to underlings that CEOs, too, are accountable for their mistakes. That fosters trust and allows for companies to more quickly address the problem. “That signals through the organization that it’s okay to make mistakes,” says Stephan Meier, a professor of management at Columbia Business School in New York.
While Meier says he’d love to see more CEOs own up to their mistakes, he does think a cultural shift among CEOs could bring that about. A few years ago, Microsoft CEO Satya Nadella spoke of moving from a “know-it-all” approach to leadership to a “learn-it-all” approach, which he has said is crucial to desired workplace culture. “Part of what makes it so powerful to admit mistakes is that you can learn from those mistakes,” says Meier.
Which brings us back to Kohl’s Kingsbury. His mea culpa aside, he stood by the overall lines of Kohl’s strategy despite a business that has deteriorated in the two years under his watch. “It’s up to us to fix it,” he said. Perhaps saying so was made easier by the fact that he is leaving Kohl’s in January, to be replaced by Michaels CEO Ashley Buchanan, on whom it will fall to “fix it.”