Wednesday, August 26, 2009

Failure Lessons

I interviewed a high-profile, high-powered entrepreneur and business book author recently for my podcast.

The topic of his book was leadership lessons from top CEOs. As we were chatting before the podcast taping began, he mentioned that he'd always wanted to tackle the opposite topic - lessons from failed companies and CEOs - but his publishers would never let him pursue the idea.

Apparently these geniuses are taking a cue from Hollywood producers in figuring that the public can't handle a downer.

But I told him about a book whose author I interviewed a year or so ago called "Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years."Authors Paul Carroll and Chunka Mui believed that you really can learn a lot if you study not just what to do, but also what not to do.

Well, it turns out that the book is just coming out in paperback. From the new preface, Paul and Chunka write:

"When the economy fell off a cliff as our book was coming out in 2008, any number of friends, colleagues and reviewers suggested we should quickly update it and incorporate the lessons from the mistakes that caused this crisis.

So what are those new lessons?

The short answer is: there aren’t any.

It turns out that the strategy mistakes that caused 423 major publicly held companies to file for bankruptcy since the beginning of the 1980s are the very same strategy mistakes that are bringing down huge companies now.

Many of these companies followed precisely the same strategies that others had already shown to be wrong-headed. The authors also found that the No. 1 cause of failure was not sloppy execution, poor leadership, or bad luck - it was misguided strategy.

These lessons apply equally to small firms as well as to larger ones. I really think this is a terrific read and highly recommend it.

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