Last Updated Sep 11, 2008 1:15 PM EDT
- The Find: Lessons that promise to save your company a billion dollars from the authors of a new book examining what went wrong with some of the most notorious business fiascoes.
- The Source: Famed venture capitalist Guy Kawasaki's interview with Chunka Mui, one of the authors of Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years, on the American Express Open Forum blog.
- Overestimating the power that comes with additional size.
- Underestimating the complexity that comes with additional size (US Air in the 80s).
- Overestimating their hold on customers. (80 percent of executives think their products are better than the competition; 8 percent of customers agree.)
- Playing semantic games to convince themselves that they have something that matters in a new market (Avon gets into retirement homes).
- Failing to consider all their options.
It turns out that we're wired to be overconfident, to come to conclusions too quickly, and to not learn from mistakes. There are also all sorts of institutional issues. People are afraid to challenge the CEO... The CEO is in a tough spot because he can't bounce ideas off much of anyone. He can seem indecisive if he talks out loud in front of his executive team. The same holds true for the board.Part of the antidote to these very expensive foibles is creating a culture that values dissent such as the one that exited at GE under Jack Welch. Mui recounts the comment of an executive who joined GE from RCA: "what passes for conversation at GE would be considered a mugging at RCA." How can companies assure they're executives are getting a healthy amount of disagreement? Emulate the Persians who rules for three centuries and made decisions twice- once sober, once drunk. Before you place an order for a case of whiskey, Mui clarifies:
Most corporations make major decisions in a state that, while not drunk, is certainly emotional. Companies don't need to have executives pop a few martinis and reconsider their thinking. Executives need to find a thoroughly sober, dispassionate environment in which to give their emotional decisions a second look.Interested? The interview offers much more including the verdict on Steve Jobs, what Yahoo! should have done and when to stay the course in a market versus when to abandon ship.
The Question: How do you encourage employees to play the devil's advocate when it comes time to make big decisions?