In Just 4 Words, Shopify’s CEO Taught a Leadership Lesson to Every CEO

For many of us, they are the four most difficult words to say to others. For high-powered billionaire CEOs — especially so.

Shopify CEO Tobi Lütke issued a statement sharing the news about a sweeping set of layoffs to 10 percent of Shopify’s workforce, mainly in the recruiting, support, and sales departments. Over the past 2.5 years, Shopify capitalized on the boom in the e-commerce space, as lockdowns and closures spurred an uptick in online purchasing behaviors.

Brick-and-mortar stores were out. Online shopping was in.

Lütke made a bullish prediction: The e-commerce space would leap ahead 10 years from pre-pandemic predictions and usher at a dawn of near-total online shopping. Shopify — and Lütke — went all in.

Consumers are reverting to pre-Covid shopping habits. I guess there’s still something to be said for putting on a pair of pants and the house to do our shopping leaving. Browsing for clothes in clothes is still a thing — for now.

“Ultimately, placing this bet was my call to make and I got this wrong,” said Lütke. “Now, we have to adjust.”

A difficult situation, to be sure. But Lütke owned it — showing up with a quality of honest integrity, or what CEO Rasmus Hougaard calls “caring candor.” It’s one thing to let go of hundreds of your employees at one time. It’s a whole other thing to do so while taking full responsibility for the bad outcome.

Therein lies the key to powerful leadership.

The psychology of apologizing (the right way)

Saying sorry is a daily occurrence for most of us. We say it, or have it said to us, as part of ordinary life — common and fleeting exchanges between colleagues, family members, and even strangers. But for high-powered leaders in Fortune 500 companies, an apology is so much more than a casual “sorry about that.” They have to be reserved for special occasions.

As Harvard psychologist Barbara Kellerman writes, “A leader’s apology is a performance in which every expression matters and every word becomes part of the public record.” According to Kellerman, an apology coming from a CEO must be carefully thought out. It is a “high-stakes move, for themselves, for their followers, and for the organizations they represent.”

In the case of Lütke and Shopify, there were likely dozens of senior leaders at the time involved in the decision process. It’s not like Lütke was operating solo and making big strategic pivots without the counsel of his executive team.

In which case then, Lütke could have pointed to the collective expression of regret — “We made a bet.” Or, at the very least, he could have used the royal we in his statement: “We got this wrong.”

He didn’t do that, though. He owned it and put the blame squarely on himself. He chose not to drag his leadership team through the mud.

A wise choice, if not an ethical one. A leader’s position means that not only are you responsible for your own behavior, but also for that of your team, followers, and the institution you represent at large.

When things go well at the organization, you are the hero. And when things go poorly, you take the fall. That’s the job of a leader. Par for the course. You can’t always be the hero.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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