ORLANDO, Fla. — In September, Rent the Runway was letting customers down and it needed to figure out how to keep them satisfied. 

Founded in 2009, Rent the Runway's subscription fashion service had grown to 11 million members with partnerships with over 650 fashion designers. It even runs the largest dry cleaners in the U.S. and is a company entirely built on logistics. 

"We were going through an enormous software transformation in one of our warehouses," which has improved warehouse availability by 35%, said Jennifer Hyman, co-founder and CEO of Rent the Runway, speaking Tuesday at the Gartner IT Symposium/Xpo in Orlando, Florida. 

But during the upgrade process a bug delayed 5% of shipments for customers. Rent the Runway's homegrown software was having difficulties communicating with a third-party, which helped run outbound automation.

When customers experience order delays, they don't see the complexity of a third-party software provider integrating into a vast technical network. Nor do they see Rent the Runway's technical team scrambling for a fix. Instead, customers see order delays and cancelations, throwing plans about what to wear for a special occasion into a fritz. 

Rather than point fingers and push "blame" on the third party, Rent the Runway called it a "software issue internally," said Hyman. To fix the bug and meet fulfillment demands, for 10 days Rent the Runway decided to stop accepting new customers and preemptively canceled event orders.

For canceled orders, the company offered a full refund and paid customers $200 via PayPal so they could purchase an outfit for their planned occasion. Amid the turmoil, Marv Cunningham, chief supply officer at Rent the Runway, announced plans to step down. 

Often, when companies mess up, they are not completely authentic about what was happening, according to Hyman. "We felt it was our responsibility" to get trust back with customers, building their relationship on complete authenticity and not perception. 

While some investors considered the move a risk, it resulted in no customer churn and thousands of people signed up for the waitlist, Hyman said. 

Technology at Rent the Runway

Part of operating a technology company is understanding, and accepting, the role risk plays in business. Overcoming tech flaws requires transparency. But it also leans on a close-knit relationship with technology leadership. 

Hyman expects Joshua Builder, Rent the Runway's CTO and head of product, to work with her as a partner in business innovation. 

Rent the Runway is built on technology and most of the company's employees are engineers, Hyman said. The "CTO has to be as innovative in terms of customer experience and logistics as I am." 

While she pushes for products, the CTO has to fight for technology, stability of infrastructure, security of systems and scalability, sometimes over growth and feature development. 

Builder's job is to say, "no, not the right time. We need to shore up infrastructure, for example," Hyman said. 

To remain competitive, the technology organization has to also be given permission to fail, not as a separate "innovation team" unit, but within the line of business.

"Innovation inherently means risk taking and a certain portion of your revenue and systems are going to go down," Hyman said. Failure and risk taking have to be encouraged in an organization.