Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last Twenty-five Years
Author: Paul B Carroll
Welcome to Business Failure 101
In the 1960s, IBM CEO Tom Watson called an executive into his office after his venture lost $10 million. Watson asked the man if he knew why he'd been called in. The man said he assumed he was being fired. Watson told him, "Fired? Hell, I spent $10 million educating you. I just want to be sure you learned the right lessons."
In Billion-Dollar Lessons, Paul Carroll and Chunka Mui draw on research into more than 750 business failures to reveal the misguided tactics that mire companies again and again. There are thousands of books about successful companies but virtually none about the lessons to be learned from those that crash and burn.
Lesson One: The Cold Hard Facts
Between 1981 and 2006, 423 major publicly held U.S. companies with combined assets totaling $1.5 trillion filed for bankruptcy. Hundreds more took huge write-offs, discontinued major operations, or were acquired under duress. Again and again, companies follow the same wrong-headed strategies that brought down businesses in the past. The sub-prime mortgage crisis that cost companies tens of billions of dollars in 2007 and 2008 echoes the ill-conceived strategies that pushed Green Tree Financial and Conseco into bankruptcy years earlier. Tom Watson's executive's $10 million lesson seems cheap by comparison.
Lesson Two: Failure Patterns
Carroll and Mui found that the number one cause of failure was misguided strategy-not sloppy execution, poor leadership, or bad luck. These strategic errors fall into seven categories, including:
• Pursuing nonexistent synergies: Quaker Oats' purchase of Snapplewas supposed to capitalize on distribution synergies but instead led to a $1.7 billion write-off.
• Moving into an "adjacent" market that isn't really adjacent: Avon decided its "culture of caring" qualified it to operate retirement homes. Subsequent write-offs totaled $545 million.
• Buying more problems than efficiencies through misguided consolidation: Despite pioneering the discount department store years before Sam Walton came along, Ames Department Stores flubbed consolidation efforts, landing in bankruptcy twice before eventually liquidating.
Lesson Three: Avoid Making the Same Mistakes
But there's light at the end of the tunnel: Billion-Dollar Lessons provides proven methods that managers, boards, and even investors can adopt to avoid making the same mistakes. While there's no way to guarantee success, this book draws on vivid, off-the-beaten-track examples to help you avoid failure by showing you how to thoroughly assess potentially disastrous strategies before they bring your company down.
Required Reading
Think of Billion-Dollar Lessons as the flip side of Good to Great, but just as eye- opening and essential as that business classic. There's enormous value in learning from companies that lost millions (if not billions) in pursuit of strategies that led to spectacular flameouts. Everyone makes mistakes, but why make the same mistakes over and over?
Publishers Weekly
Carroll (Big Blues) and Mui (Unleashing the Killer App) collaborate to perform an autopsy on some of the most spectacular business failures and corporate disasters in recent times, hunting down the fatal strategies responsible. The authors examine more than 750 "inexcusable" corporate collapses, neatly cataloguing them into eight common "failure patterns": doomed practices, including the "Illusion of Synergies," as illustrated by the ruinous merger attempts by Sears and Dean Witter; "Faulty Financial Engineering," as conducted by Tyco and Revco; "Staying the (Misguided) Course Too Long," a sin committed by Kodak, which missed the boat on digital photography; and "Consolidation Blues," as depicted by U.S. Airways, which crashed as a consequence of buying up too many companies too quickly. While there are assuredly lessons in defeat and the authors' detailed analysis and bracing honesty is welcome, readers hoping for a more encouraging or inspirational business book might find Carroll and Mui's avalanche of disastrous failures, avoidable bankruptcies and destruction of shareholder value a depressing-if highly instructive-read. (Sept.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Table of Contents:
Introduction Can Fatal Strategic Flaws Only Be Recognized in Hindsight? 1
Pt. 1 Failure Patterns
1 Illusions of Synergy: Succumbing to the Eighth Deadly Syn(ergy) 15
2 Faulty Financial Engineering: Taking a Shortcut Through the Numbers 37
3 Deflated Rollups: Buying a String of Rock Bands to Form an Orchestra 60
4 Staying the (Misguided) Course: Threat? What Threat? 86
5 Misjudged Adjacencies: The Grass Isn't Always Greener 116
6 Fumbling Technology: Riding the Wrong Technology 141
7 Consolidation Blues: Doubling Down on a Bad Hand 169
Coda 190
Pt. 2 Avoiding the Same Mistakes
8 Why Bad Strategies Happen to Good People: Awareness Is Not Enough 197
9 Why Bad Strategies Happen to Good Companies: Awareness Is Still Not Enough 216
10 The Devil's Advocate: Unleashing the Power of Conflict and Deliberation 231
11 The Safety Net: An Independent Devil's Advocate Review 258
Epilogue: Two Revolutions 273
Acknowledgments 275
Research Notes 277
Notes 292
Recommended Reading 299
Index 303
Go to: The Smart Travelers Passport or Eiger Dreams
How to Succeed in the Game of Life: 34 Interviews with the World's Greatest Coaches
Author: Christian Klemash
What would Super Bowl Champ Tony Dungy say is the most critical quality for a person to be successful? Would his advice differ from 4 time World Series winner Joe Torre's? What would each say to a young person just starting out in pursuit of their dreams? What is the best advice they were ever given?
Now you can find out! Author Christian Klemash has written How to Succeed in the Game of Life: 34 Interviews with the World's Greatest Coaches. It took the author more than three years of research, persistence, and original interviews, but now he's ready to pass on the best advice you'll ever get. Klemash gives fans a once-in-a-lifetime chance to learn valuable lessons from the most famous, intelligent, and victorious coaches ever.
These coaches teach about character and winning, how to manage pressure at crunch time, and how to bring out your best when it matters most. How to Succeed in the Game of Life shares their insights into sports, life, and the most vital keys to sustain success.
Featuring Exclusive Interviews with:
Red Auerbach, 16–time NBA World Champion
Bobby Bowden, 2–time National Champion
Scotty Bowman, 9–time Stanley Cup Champion
Bill Cowher, Super Bowl Champion
Tony Dungy, Super Bowl Champion
Dan Gable, 15–time NCCA Champion
April Heinrichs, Gold Medal Winning Coach of the U.S. Women's Soccer Team
Bela Karolyi, The World's Greatest Gymnastics Coach
Bill Parcells, 2–time Super Bowl Champion
Emanuel Steward, Boxing Trainer of 30 World Champions
Joe Torre, 4–time World Series Champion
Bill Walsh, 3–time Super Bowl Champion
Lenny Wilkens, NBA'sAll-Time Winningest Coach, NBA Champion
John Wooden, 10–time NCAA Champion
And More!
The New York Times
There is something for everyone in Christian Klemash's treasure trove of coaching insights into the game of life. This is must reading, a sort of bible that anyone--male or female, young or old-- can turn to when confronted with the hills and valleys of the journey. By getting so many great coaches to talk so candidly about their personal and professional highs and lows, Klemash has lifted the level of his own experience. A book to be savored on any number of levels--instructional, inspirational, intriguing and, above all, invigorating.Neil Amdur
NFL Network
I had never heard of a self-help sports anthology before I read How To Succeed In The Game of Life. Christian Klemash sat down with a veritable who's who coaching hall of fame, from Red Auerbach to John Wooden, and not only picked their minds, but also captured their souls. It's a perfect portal for anyone seeking a better way, and it is a quintessential must-read for any sports fan.
&3151;Rich Eisen
What People Are Saying
Martha Kushner
"Anyone looking for inspiration, either for their own life or to share with others, will find a gold mine of quotes here. This book isn't just for sports fans."--(Martha Kushner, Author The Truth About Caffeine)