Making the Most of Mistakes

The past few months haven’t been easy for Netflix. The Qwikster fiasco coupled with a controversial price hike in July cost the company 800,000 DVD subscribers and 200,000 streaming service subscribers, according to BusinessWeek.

Clearly, Netflix has made some mistakes.

Mistakes are an inevitable part of business and life, and how we respond to our mistakes is often more important than the errors themselves.

Many top business schools require candidates to write essays about their setbacks, mistakes and failures—and admissions committees read these essays very carefully to glean how well candidates respond to their missteps.

Given the popularity of these mistake questions, I’ve developed a series of tips to help candidates tackle these essays, using how Netflix has handled its mistakes as illustration.

1. Own your mistake.

Defending one’s errors and deflecting blame will only make a mistake worse, so it seemed that Netflix was off to a good start when co-founder and CEO Reed Hastings’ Sept. 18 post on Netflix’s blog began: “I messed up. I owe everyone an explanation.” Hastings offered his “sincere apology” and acknowledged a need to be extra-communicative with customers in the future.

Reed Hastings

Unfortunately, the message only increased the ire directed at Netflix. Why? Because the second half of the post focused on how Qwikster would work. While he was communicative in letting customers know what to expect from future changes, this portion of the message detracted from the apology.

The lesson learned? A poorly handled apology can quickly turn into another mistake.

2. Demonstrate self-awareness.

Showing that you understand your mistake and its impact on others is paramount to recovery. Among the ways to demonstrate self-awareness is humor. In a Facebook post soon after the September 18 blog entry, Hastings noted: “In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them.” This remark humanized Hastings far more than his much maligned apology.

3. Show that you’ve learned from your mistake.

The announcement that the company had jettisoned Qwikster was terse, and though Hastings did not offer an apology, the message contained a strategy equally important to recovering from a gaffe—it clearly stated what had been gleaned in the aftermath of the mistake.

4. Demonstrate growth.

Netflix is working overtime to show renewed dedication to what originally attracted customers to the service: its ability to provide quick, direct access to movies and TV shows. In recent weeks, the company announced new content deals with the CW Network, DreamWorks Animation, the Discovery Channel and AMC Networks.

Even though Netflix has handled its mistakes fairly well, botched apology aside, the company is facing serious repercussions. Recovery from declining stock prices and massive customer departures will take time, and many wonder if Hasting’s days as CEO are numbered. However, if the company can learn from these mistakes and become better attuned to customer needs, its red envelopes will likely stay ubiquitous for quite some time.

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