Founder’s Corner: If You Screw Up, Own It — And Then Make it Right

In a perfect world, building and growing your business would be smooth and predictable. But face it — you’re going to experience setbacks and you’re going to make mistakes. The key is how you respond. In this week’s Founder’s Corner, Instructure CEO Josh Coates explains why tackling hurdles head-on with transparency can win you customer loyalty and trust.

Downtime — the word alone is enough to send shivers down the spine.
The fact is, if you’re at the helm of a cloud or SaaS company, unscheduled downtime is a fear (and a reality) that you’re going to have to deal with at some point. In the case of open-source learning management solution Instructure, it unfortunately couldn’t have come at a worse time. Heading into the 2012 school year, just as many of Instructure’s clients — grade schools and universities across the country — were beginning to ramp up their usage, the company’s platform Canvas stumbled. For almost half a day, customers experienced slow page loads and timeouts.
“It was really bad,” admits Instructure CEO Josh Coates. “Typically in our market segment, when competitors experience downtime, it’s usually on premise and no one hears about the outage. Because we’re a cloud-based company, we had hundreds of schools (experiencing the outage at the same time). And even though they were accustomed to downtime from previous vendors, the expectations were higher with us.”

Responding to Downtime: How Transparency Builds Loyalty and Trust

So, how did Coates manage the crisis? In the video below, Coates recalls how the response was really guided by the company’s culture, and how one of his first steps was reaching out to customers with a blog post to openly and publicly address the technical issues head-on.

“The way our culture works at Instructure, it’s really a culture of openness,” Coates says. “So I put out a blog post that said, ‘Hey everyone, we screwed up. Let me tell you how we screwed up and how we’re going to fix it. And let me set your expectations.’ We just really owned it.”

Key Takeaways

Honesty Really is the Best Policy
Coates says the response to his post was overwhelmingly positive, largely because Instructure’s customers weren’t accustomed to that level of corporate transparency. But Coates argues that having that relationship with your customers — and prospective customers — is imperative.
“If you know what the problems are and how you can fix them, why not own it?” Coates asks. “Now, our customers still wanted us to be reliable, so we had to follow through. Since (the outage), we’ve had incredible uptime — the highest uptime in our industry. So, our response wasn’t lip service. We really felt it. I really felt it. I was embarrassed.”
Culture Dictates How You Manage Mistakes
Unfortunately, there’s no business book or class that can teach founders the right way to handle every mistake. But Coates says there is one constant that can remove much of the uncertainty when stuff hits the fan: your company culture.
“Every PR guy is going to have a different opinion. Every CEO is going to have a different idea. Every founder is going to have a different gut reaction, but your culture can dictate how you respond to crisis,” Coates says. “You have to be very conscientious about that culture and how it will affect the way you respond to these types of issues.”
Openness Can Pay Big Dividends
Since Canvas’ bad day, Coates says Instructure is actually experiencing even greater customer loyalty and advocacy. The reason? Coates believes it points back to the company’s willingness to be open and honest about the situation.
“Whatever story you make up, people will see through it,” Coates says. “They can tell when what you’re saying is a cover up for what actually happened. Similarly, when they hear a story that’s true, they can feel it. They can see that you’re really letting it all hang out there, and that’s refreshing.”
Ultimately, Coates recommends other founders take that lesson to heart.
“Err on the side of openness,” Coates suggests. “Even though it’s scary and it can hurt, you’ll only cry once instead of over and over again.”

More Insights into Why and How to Get Transparent with Your Customers

Intronis CEO Rick Faulk on Why Total Transparency is Good for Business Corporate transparency has its share of risks, but Intronis CEO Rick Faulk says the pros far outweigh the cons. In fact, revealing your secrets and company’s inner workings can have a powerful impact on employee performance and morale. Read more.

Ryan Hoover on the Power of Getting Real with Your Customers As a startup or expansion-stage company, you’re probably eager to scale your marketing. But before you get wired on automation, consider why you should stop obsessing over scalability and start getting real with your customers. Read more.

Photo by: David Goehring