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The 10 Worst Business Ideas of All Time

The 10 Worst Business Ideas of All Time

By Dave Logan

"The problem with most organizations is that they are governed by mediocre ideas."  So says retired Hanover Insurance CEO Bill O'Brien in Dance of Change.  In my almost 20 years of studying and consulting to organizations, as well as teaching their executives, I'm astonished at how bad ideas keep flowing into companies -- and how resistant most people are to letting them die. These ideas make companies weak, encourage employees to "quit and stay," crush innovation, and create cultures of despair.

Like weeds, bad ideas crowd out actual thinking and need to pulled up from the roots. What follows are the 10 ideas I've found to be the worst for the health of an organization. Do any of them sound familiar?

Photo courtesy Hardleers, CC 2.0.

The 10 Worst Business Ideas of All Time

1. Challenge everyone to live by the company values.

1. Challenge everyone to live by the company values.

1. Challenge everyone to live by the company values.

There are two problems with this mediocre idea.  First, the assumption that people need to be "challenged" in order to live in accordance with company values is just wrong. The company values should be the values of the people you actually have, and so challenging people to live in accord with them is like challenging people to remain true to the color of their eyes. (It is true, however, that people need to be reminded of their values, especially during times of extreme change.) Of course, in most companies, the values were set on high and brought down from the mountain at the same time Moses brought the Ten Commandments. And so they aren't "our" values, they're "your" values. Challenging employees to live by someone else's values is both insulting and untenable.

The second problem here is that one set of people -- you know the group, the ones that are rude, mean-tempered and get to do anything they want -- get a free pass on being challenged. They are the ones who bring in the revenue or are so high up that, like the monarchs of old, they get to do whatever they want and are above criticism. They should meet a similar end to their monarch-ancestors: get their (career) heads chopped, because a company is not serious about values at all if anyone is exempt.

Photo courtesy Hardleers, CC 2.0.

The 10 Worst Business Ideas of All Time

2. Believe that the company is built to last.

2. Believe that the company is built to last.

2. Believe that the company is built to last.

I have enormous respect for Jim Collins and Jerry Porras, the authors of Built to Last. That said, studies my colleague and I have conducted found that companies set on the "great" path did not stay great forever. Instead, greatness today predicts nothing about tomorrow.

Companies are composed of groups of people talking -- in person, over email, in meetings, and in formal documents. This chatter isn't something the company has, it's what the company is. The discussion in a company can change in a very short period of time, and often does when: 1. tyrants take over,  2. the market hands the firm a shellacking, or  3. any mediocre ideas take hold.

A better analogy for companies is that of body builder. Ripped today? Eat donuts (the equivalent of embracing mediocre ideas for a few weeks) and you'll be falling toward average. Out of shape today? Work out, eat right, and it will change. No one checks off "worked out" and then is done with it -- except for future candidates of the lap-band.

Photo courtesy Ed Yourdon, CC 2.0.

The 10 Worst Business Ideas of All Time

3. Since times are tough, suspend training.

3. Since times are tough, suspend training.

3. Since times are tough, suspend training.

This one's tough. As an entrepreneur, I (and my partners) have floated company payroll on our Visa cards when clients were slow to pay. We've had times of feasting and times of famine. I say this so the following won't be dismissed as coming from an academic egghead who isn't rooted in the real world: you are judged by what you do during the hard times, not during the easy times. A company that's flush with cash doesn't prove its commitment to the employee by investing a little on training and development. But that same company does prove its commitment to shredding the culture and setting its principles on fire when it sacrifices these activities in tough times.

When times are hard, employees (and managers and executives) often don't know what to do. This is exactly when training and development (done well, not the ultra-lame stuff that's pre-packaged and devolves into simple and useless steps) can make the difference. Even more important, this is when company leaders are most closely scrutinized, so it's good to be seen doing the right thing.

Photo courtesy Silicon Beach Training, CC 2.0.

The 10 Worst Business Ideas of All Time

4. Believe that the one purpose of the company is to either make money or do good.

4. Believe that the one purpose of the company is to either make money or do good.

4. Believe that the one purpose of the company is to either make money or do good.

There are zealots of all sorts running companies these days, some focused purely on financial performance, and some arguing that a greater purpose must be served or the organization has no right to exist.

The problem with these single-focused answers is that, well, they're single-focused answers. A corporation has many of the same legal rights as a person. It can own property, it can hire employees, and it can enter into contracts. So let's extend the metaphor further.

A person who says his sole purpose in life is to make a lot of money is a lot like the evil Gordon Gekko. And often the person that just wants to make the world a better place does so at the expense of ignoring his family and is wanted by the IRS.

The point is that we are citizens, and we have lots of responsibilities: To raise families, to keep up our health, to help our community, and to help run companies that make money. It's the same for companies. (What if your family had a recycling manager take up permanent residence in your house?)

When we finally get this point through our heads, we won't need groups like corporate social responsibility in companies, because companies will be socially responsible -- as they also seek to make money and make a positive contribution to the global community.

Photo courtesy AMagill, CC 2.0.

The 10 Worst Business Ideas of All Time

5. Think that systems and checklists are the key to high performance.

5. Think that systems and checklists are the key to high performance.

5. Think that systems and checklists are the key to high performance.

This one isn't that hard, but it's amazing to me that many companies are flopping around caught in this net of several bad ideas at once. I'm talking about the difference between management and leadership.

Management is about systems, processes, checklists, and formulas. It produces, as John Kotter noted, predictability and order. If you want more predictability and order, then don't let a leader around your company.

Leadership is about alignment, vision, setting direction (again, thanks to John Kotter here), and it produces change, often to a dramatic degree.

High performance requires reinventing what the company does (leadership and change) with great management (steps, milestones, deliverables). Management alone produces a wasteland of despair where people chase the numbers and try to make plan -- and burn themselves and everyone else out.  Management without leadership never produces high performance, at least not for long.

Photo courtesyJ Dueck, CC 2.0.

The 10 Worst Business Ideas of All Time

6. Read the latest management books and do what they say.

6. Read the latest management books and do what they say.

6. Read the latest management books and do what they say.

The problem here is that most management books provide simplistic solutions that are not up to the complex challenges of running a company. What's needed is thought, debate, and reflection, leading to a collective understanding of what to focus on, and then relentless execution. Replace the "thought, debate and reflection" part with what's in the latest management book, and you might as well post your resume on monster.com now, to avoid the rush.

Photo courtesy Olando7, CC 2.0.

The 10 Worst Business Ideas of All Time

7. Incentivize people to perform.

7. Incentivize people to perform.

7. Incentivize people to perform.

"Do x and I'll give you y" doesn't make people do "x," as least not for long.  Adding more "y" only gives people a bigger badge of honor for not doing it. Some groups (like most salespeople) will respond to the "x" and then "y" formula, but that's because the system plays to their values.

And that's the point. Instead of approaching employees like hamsters who want more and more food, you have to get to know the people you work with as individuals and discover what they value. Build jobs around their core commitments and pay them so that its fair, and you'll get good performance. Ask them to work against their values for lots of extra cash, and you'll make them feel like prostitutes.

Photo courtesy Tracy O, CC 2.0.

The 10 Worst Business Ideas of All Time

8. Streamline operations to make the company more competitive.

8. Streamline operations to make the company more competitive.

8. Streamline operations to make the company more competitive.

Streamlining is great, and most companies can do much more of it than they are doing. But streamlining alone is not likely to make a company more competitive.

Greater competitive advantage requires knowing the market, the changing tastes of customers, and the price points of products and services, and then finding a value proposition that's good for customers and for the company. This is a tough process, and it gives some people a headache to try to figure out. So pop a Tylenol, get back to work, and find an offering your company can make that will make everyone happy. (And a little streamlining is a nice thing to do, sort of like a stocking-stuffer for investors.)

Photo courtesy Intersection Consulting, CC 2.0.

The 10 Worst Business Ideas of All Time

9. Set new strategy and expect employees to feel empowered to make it happen.

9. Set new strategy and expect employees to feel empowered to make it happen.

9. Set new strategy and expect employees to feel empowered to make it happen.

The fundamental problem here is that planned change and empowerment cancel each other out. Planned change relies on an external source of change: do this because I said so.  Empowerment says "find your passion and do that." So combining them in this way is just mumbo-jumbo. (Thanks to Chris Argyris for pointing out this disconnect.)

What's the better idea? Anne Mulchahy got it right in the dark days of Xerox. Start by listening to what everyone wants: customers, employees, suppliers, and partners. Then put it all together so that when you announce the new strategy, people say "that's right!" Of course they say it's right -- it's their idea, packaged with other ideas and weighted against what makes sense for the business. Then you don't have to ask people to be empowered, because empowerment is baked into the strategy. For people who say "that takes too long," my response is: It takes less time than launching a strategy that has no chance of success. And for people who say "but people don't understand the marketplace," either you've done a rotten job of hiring, or maybe your view of the market is a tad limited.

Photo courtesy RambergMediaImages, CC 2.0.

The 10 Worst Business Ideas of All Time

10. Stick to what made the company successful in the past.

10. Stick to what made the company successful in the past.

10. Stick to what made the company successful in the past.

This is the death wail of a company just before it stops breathing: We're not succeeding, so we're going to return to what made us successful a decade ago (or more), only we're going to redouble our efforts to get it right this time. One of the more famous examples of this mediocre idea at work was the no-frill airline People Express. A few executives believed what made them great was training and passion, and so they were going to train and train and train -- while the industry adopted a new pricing model that put them out of business.

What a company should never change is its core identity. Apple shows what happens when a company gets this right, and the years before Jobs' returns shows how bad it can be when they get it wrong. A company's operations, strategy, and everything else need to radically reinvent itself every few years, or else the competition will put it out of business.

Photo courtesy Ed Yourdon, CC 2.0.

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