Setbacks can sap the energy and optimism of a new year. But leadership isn’t about avoiding challenges—it’s about responding to them with reflection, collaboration, and decisive action.
The first month of the year can be brutal. Just as plans are set in motion, challenges strike. A key client unexpectedly terminates a partnership. A top-performing team member resigns just as you launch a critical project. A new initiative fails to gain traction. Add economic instability, geopolitical tensions, and natural disasters and even the most seasoned leaders can feel their confidence shaken.
Setbacks can sap the energy and optimism of a new year. But leadership isn’t about avoiding challenges—it’s about responding to them with reflection, collaboration, and decisive action. These early roadblocks don’t have to define your 2025. Instead, they can be catalysts for growth, equipping you with the insights needed to navigate uncertainty with greater clarity and confidence.
Here are three proven strategies to turn setbacks into stepping stones for success.
1. Reflect and Learn: See the Lesson, Not Just the Loss
When a setback hits, the instinct is to react fast—fix the problem, reassure stakeholders, and move on. But rushing past reflection leads to missed insights and repeated mistakes. Strong leadership starts with pausing to ask the hard questions and extracting meaningful takeaways from adversity.
Keep a failure journal to document key setbacks. After each challenge, capture what happened, why it happened, and what needs to change. Use these five prompts to extract valuable lessons:
- Check in with yourself. Ask, “How do I feel about this setback?” Naming emotions—frustration, guilt, uncertainty—helps you process the situation with self-awareness and empathy. Understanding your emotional response also prevents knee-jerk decisions driven by stress.
- Map the chain of events. Document the sequence that led to the setback. What decisions or actions contributed? Were there warning signs you missed? Did you make any wrong assumptions? Identifying patterns helps prevent future missteps.
- Identify controllable factors. Was the setback due to execution errors or external forces? If internal, what can you adjust immediately? If external, how can you better prepare next time? This analysis enables proactive problem-solving rather than reactive firefighting.
- Categorise the failure. Dr. Amy Edmondson, an expert on organisational learning, identifies three types of failure. Intelligent failures stem from thoughtful risks that provide valuable insights, such as testing a new strategy that doesn’t pan out but reveals useful customer feedback. Execution failures result from preventable mistakes, like miscommunication leading to project delays. Systemic failures indicate broader organisational issues, such as unclear goals or flawed decision-making structures.
- Extract actionable lessons. Translate your insights into tangible actions. For example: “Our product launch failed because we skipped focus group testing. Next time, we’ll validate messaging earlier.” This ensures setbacks become learning opportunities rather than repeated mistakes.
2. Connect and Collaborate: Don’t Solve in Isolation
Leadership isn’t about having all the answers. Tackling setbacks alone can amplify blind spots and delay solutions. Instead, engage your network—both internal and external—to gain fresh perspectives and share ownership of solutions. Strong networks foster innovation, resilience, and support during difficult times.
Here’s how to turn collaboration into a problem-solving superpower:
- Seek support from peers and mentors. Reach out to peers who have faced similar challenges. Be specific: “I’m navigating [specific challenge]. I remember you dealt with something similar—how did you approach it?” Trusted advisors can offer insights and emotional support. Even informal conversations with a mentor can yield valuable strategies.
- Hold a team post-mortem. Create a safe space to review setbacks. Start by sharing what you, as a leader, could have done differently. This fosters trust and shifts the focus from blame to solutions. Ask your team, “What worked well that we should continue? What didn’t go as planned? What’s one change we can implement immediately?”
- Get outside your echo chamber. Seek feedback from unexpected sources—a junior team member, a client, or even friends outside your industry. Fresh perspectives can reveal overlooked solutions and reframe your thinking. A simple question like, “What do you see that I might be missing?” can uncover transformative insights.
3. Reignite Momentum: Focus on Small Wins
Setbacks can feel paralysing. The key to regaining control isn’t sweeping changes but small, deliberate actions that rebuild confidence and re-energise your team. Taking intentional, manageable steps restores a sense of agency and direction.
Here’s how to restart momentum after a setback:
- Identify one immediate action. Instead of overhauling everything at once, pick a single step forward. If sales are down, don’t rewrite the entire strategy overnight. Start by reconnecting with one key client or refining one aspect of your sales pitch. If a project is stuck, clear a bottleneck—revise timelines or reassign tasks. Tackling one issue at a time builds traction and prevents overwhelm.
- Track and celebrate progress. Use visible tools—checklists, Kanban boards, whiteboards—to showcase incremental wins. Publicly acknowledge progress in team meetings. Highlighting success keeps morale high and reinforces that setbacks are temporary. Recognising effort strengthens team cohesion and motivation.
- Reinforce a learning mindset. Encourage a culture where setbacks are seen as learning opportunities rather than failures. Share stories of past challenges that led to major breakthroughs. This shift in perspective fosters innovation and prevents risk aversion.
Leadership Is Defined by Your Response
Setbacks are inevitable. But they don’t have to derail your goals. The way you respond defines your leadership. Developing a structured approach to overcoming obstacles ensures long-term success.
Leadership Reset Checklist:
- Reflect and Learn: Identify emotions, map events, categorise failures, and extract lessons.
- Connect and Collaborate: Engage your team and external allies to gain fresh insights and share solutions.
- Reignite Momentum: Take small, targeted actions to restore confidence and drive progress.
As I often remind the leaders I work with: Being a leader isn’t about being superhuman—it’s about embracing your humanity. It’s not the setback that defines you, but how you pick yourself up, adapt, and lead forward.
So, what’s one step you’ll take today to turn things around?
May Samali is the Founder and CEO of Human Leadership Lab, a global leadership development company. As a speaker, facilitator, coach, researcher, investor and board director, May wears multiple hats to unlock leadership potential in organisations, teams and individuals.
Forbes Women is mobilising a network of female business owners, entrepreneurs and changemakers who support and empower each other. Become a member here.
