How Businesses Can Recover From Setbacks

By Ken Gosnell,
business.com writer
|
Jul 06, 2020
Image Credit: wavebreakmedia / Getty Images

Businesses go through a series of phases when recovering from a failure.

Many leaders struggle with how to move forward after a failure or a setback, which is why a finish line is so valuable. Finish lines help to overcome failures. Times of difficulty can often define a leader — often for the worse. Trying times test a leader’s character and ideas. Leaders who succeed are leaders that know how to see and continue to work toward the finish line that they know is critical for them to cross. To learn how to reduce recovery time can often propel a leader forward and create a competitive advantage in finding new models and processes to serve the customer more effectively and productively.  

Failures and setbacks happen to every leader. And the success or failure of a leader is often determined by how they recover from adversity. The truth is that every successful leader has learned how to navigate setbacks and mistakes. 

Every leader must learn how to navigate missteps because the leader and the organization depend on how well the leader recovers. 

There are five phases that a person or a business will work through as they seek to recover from difficulties. Consider each stage and examine it from the perspective of how well you and your company performs.

Phase 1: The rest phase

The first phase after a setback is to rest. Businesses and leaders closely resemble well-trained athletes. In the same way, Olympians train, leaders often go all out as they seek to build their business and their team. However, just as a high performing athlete competes at their best by resting after a competition, leaders must also follow this process of rest after effort. 

Rest and recovery are essential for athletes to perform well. 

Rest enables leaders to replenish their strength after they have emptied themselves during difficult times. Rest can include various forms of relaxation, taking days off from work, an enjoyable hobby, or a day-long retreat that disrupts the regular routine. Rest days are critical at all times, but even more so in stressful times.  

Every leader needs to rest after a failure to recover well. This truth is especially crucial for leaders who have experienced a significant setback. Scheduling rest time to recover in such instances should be at the top of your to-do list or win list.  

Many leaders are often hesitant to rest because they fear that if they stop, they will fall behind. However, it is often only when a leader rests, that they are released to move forward.  

Phase 2: The review phase 

After a setback, the Well Done CEO will determine what happened in that situation and determine what behaviors and actions to avoid. Again, athletes offer a good illustration. Top competitors review competition videos to assess their performance. It is essential to do this kind of analysis to improve since it allows leaders to look at a situation with a fresh set of eyes. The review process can help leaders discover new information, which will enable them to design new systems and approaches to avoid repeating past mistakes. It is important to review to improve.

Companies often have an established review process for their employees, but they should also have a thoroughly thought-out plan for review for when the business underperforms. 

CEOs can and should establish a time limit for reviewing the setback. A good rule to follow is the more significant the issue or setback, the longer the review time. A typical review should only last a few days and consider what happened, why it happened, what should be done, and identify other areas where this setback might impact the organization.  

Phase 3: The reduction phase 

The third phase of recovery is to reduce what is unnecessary. A key question for the leader to consider during this phase is: what changes need to be made because of the setback and, consequently, what can be left behind. Crisis and significant changes bring about creativity and innovation. Sometimes a new normal is not all that normal; it's just new.  

During the reduction phase, a leader must reset expectations about what they can or cannot accomplish during the phase. This phase is also a pivotal time to set new boundaries and behaviors for the leader and the organization.  

Leaders often find that when they go through a test or trial, the test often helps them to let go of something that stops them from moving closer to their destiny. The reduction phase allows a leader to let go of some things so that they can grab ahold of the new things that will help them achieve their dreams and goals.  

Phase 4: The renewal phase 

The fourth phase of recovery is to renew the vision of where you want to go. All companies and CEOs have had to overcome difficulties. Each leader will have defining moments where they have to renew the vision for themselves and their company. A component of the renewal process should be in asking two critical questions of yourself and your team:

1.  Why do you exist? Why are you called to do what you are doing?

2. What if this vision was not able to be completed? What would the world look like if you did not fulfill the vision that you desired to create?

Setbacks can be the foundation for breakouts. After a setback; a leader should consider their dislikes, desires, and dreams. This review will help the leader to have a renewed purpose and vision. Consider those activities that you dislike and wish you no longer had to do. Then consider the desires or those activities that you enjoy doing. Finally, consider those activities that you wish you could be doing if you were able.  

Successful business leaders and entrepreneurs understand the value of recreating themselves and their companiesThe renewal phase is a time to heed the lessons of failure before you restart or relaunch.

Phase 5: The restart phase

The fifth phase of recovery is to determine the first steps of a restart.  The first steps are critical steps. And the first steps back after a failure are crucial to building momentum and progress.  The first steps should be considered carefully. A starting point and time should be determined, and a new plan should be developed.

The most important step after a setback or failure is the first one. It's also where many executives get stuck. Because they are paralyzed and unsure of that first step, they end up being unfocused and ineffective. Part of an excellent recovery is to narrow focus and determine that first step. Namely, the most essential action they need to take to move the team and the organization forward. Sometimes this first step can take the form of apologizing for making a mistake in the first place. Other times it can be in laying out a clear strategy for increased productivity. 

After failures, many people give up, but leaders startup. The leader determines what new starts they need to invest in so that their organization can move forward.  

Many leaders have learned the value of recovery. A Chinese proverb says: "Failure is not falling down, but refusing to get up."  Recovery is getting up after a failure. When a leader recovers well, they often reach new heights of unexpected success.

To recover after a setback, the leader must commit to key metrics for success and then get to work, trying to achieve them. For the team to move forward, they must have complete buy-in to these key metrics. These metrics might be in terms of new revenue to replace money, which was lost, action steps to complete a project or new product. Here is the point: Do not move back from your recovery time until you have firmly committed to the key next steps to be completed. 

For many CEOs, this process can occur in the space of one or two focused days. Leaders should work to develop the habit of having recovery days scheduled regularly into their calendar. Many executives find a recovery day to enhance their ability to recover quickly because the recovery process brings clarity amid confusing times. 

Leading a business can be difficult and demanding. The hours can be long, and the setbacks many. Companies can have many highs and lows, and sometimes all in the same day. Every athlete who performs hard must take time to recover after their times of effort. The same can be said of executives who are exhausted after giving it their all. 

CEOs and executives are called on to stay fresh, engaged, and ready for the new obstacles and opportunities they face each new day. As a leader, one key secret to learn and apply is how to recover quickly from setbacks, stressful situations, and mistakes. If you can reduce your recovery time, you can increase productivity, enhance decision making, and accelerate performance. 

Ken Gosnell is the CEO and Servant Leader of CEO Experience (CXP). His company serves CEOS and leaders by helping them to have great experiences that both transform them and their organizations that enable to go further faster. Ken is the publisher of the CXP CEO Executive Guide that is designed to help leaders learn faster by encouraging to give themselves a monthly learning retreat. His monthly CEO retreats have helped thousands of CEOs and their leadership teams to enhance strategic, operational and people accomplishments. He is an author, keynote speaker, executive coach, and strategic partner with CEOs and successful business leaders. Connect with @ken_gosnell on Twitter.
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