Also I think it's a tad naive to think one can possibly know the enumerable circumstances that would force your hand. Suppose you are a company dependent on logistics. Bam, Iraq war. The price of a barrel of oil skyrockets. Your shipping costs have quadrupled. You can keep to your principles and vow to not lay off a single employee, because as you said, this would "demonstrate failure", or you can keep your business and regrettably let go of a few workers in order to keep up with costs. You can try rising your prices, but pretty much a forgone conclusion that a 4x price increase will net you a significant decrease in customers, unless you are a rare unicorn, some good or service one cannot simply be without.
(the above scenario is basically what happened to my father's small business in 2005. Could not keep up with the rise in transportation costs, and cheaper, less quality competitors moved in. Consumers went with the cheaper option. It happens.)
Unfortunately, things go wrong. Sometimes you lose your job without warning and your house burns down at the same time. Sometimes, things go wrong no matter how hard you try.
The same is true of companies. Sometimes, you just can't plan your way around things going wrong.
Given enough businesses and enough trials, it's a certainty that some leaders will drive them off a cliff.