I loved your post Eden, and completely agree with it. I just like to add that another key step to failing responsibly is being honest and transparent with all the stakeholders that believed in you and your business in the first place (investors, employees, customers, suppliers). Letting them know about the overall health of the business, the true risk they are subject to, the reasons for the eventual failure, and lessons learned post-mortem become critical to earn their trust and support not only in the current business, but in your future projects as well. If the founder fails to do this, it is very likely no one will support him/her in the future, and that will eventualy be considered a true failure.
Great post! I would like to add that founders should also focus on the survivors as well. As already pointed out, mass layoffs have a profound effect on employee morale, however uncertainty about their own future in the company is not all they have to face. Since there are now fewer employees left, survivors will often have to manage greater amounts of workloads, and even be able to solve for issues that are not within their area of expertise. Proper training is therefore critical to avoid overstressing an already affected workforce.
And in addition to proper training, they should also be given clear reasons why the layoff occurred in the first place, and why the firing decisions occurred as they did. This will help reduce the uncertainty and rumors that are so harmful for productivity. Good communication is key.
I would also like to add on the “surprising the employee” point by mentioning that open communication should be key and adequate and timely feedback should be more of a process than one-time events.
So why then do most of us tend to give performance reviews only once or twice a year? I believe in most cases, we are just trying to avoid having tough conversations with employees, either consciously or unconsciously. However, there shouldn´t be any tough conversations in the first place if issues are brought up and discussed regularly. This informal feedback should be more of a habit, and be given if not every week, at least every two weeks. Having good open communication is not only easier to do, but can even avoid us firing in the first place. It is also cheaper than spending our valuable money and time in hiring replacements.