And what you can do to learn from their mistakes? Author Sydney Finklestein
By Fareeha Qayoom
have always been interested in the anatomy of mistakes. Mistakes happen in all kinds of corporate cultures, across the board, globally. Mistakes are covered up and white washed. They are hidden so deep that sometimes it would take a combination of intuition, intelligence, time and persistence to uncover them. Most executives don’t have the luxury and mistakes are allowed to be filed away quickly with incorrect data and causes. Not only is this practice unfair, it also causes the underlying causes to remain undetected too long and it eventually destroys the whole organization.
Early this year, I came across a marvelous book by Professor Finkelstein that answers the greatest mystery in the world – why smart executives fail? It’s a hard-hitting yet entertaining book that gets to the heart of the matter. It’s instructive, smart, and by focusing his research and storytelling on the roots of corporate failures, Professor Finkelstein demonstrates a unique talent for identifying important business lessons that should be obvious but are not. “Despite the vast numbers of things that could go wrong in something as complex as business enterprises, the really devastating failures turned out to have a surprisingly limited number of causes. This is one of the major findings of the study. Patterns of failure emerged that could be applied not only to the scores of classic, almost common business breakdowns – think Rubbermaid, L.A. Gear, Barneys– but also to the internet one-year wonders and the rogue companies that have dominated the news over the past two years. The case histories and results from our research are laid out in three sections: ‘Great corporate mistakes,’ ‘The causes of failure,’ and ‘Learning from mistakes,’ ” asserts Finkelstein in his book.
“The seven Habits of spectacularly unsuccessful people” according to Finkelstein’s thesis are: “1. They see themselves and their companies as dominating their environments, not simply responding to the developments in those environments. 2. They identify so completely with the company that there is no clear boundary between their personal interests and corporate interests. 3. They seem to have all the answers, often dazzling people with the speed and decisiveness with which they can deal with challenging issues. 4. They make sure that everyone is 100 percent behind them, ruthlessly eliminating anyone who might undermine their efforts. 5. They are consummate company spokespersons, often devoting the largest portion of their efforts to managing and developing the company image. 6. They treat intimidating difficult obstacles as temporary impediments to be removed or overcome. 7. They never hesitate to return to the strategies and tactics that made them and their companies successful in the first place.”
“Perhaps the single most important indicator of potential executive failure is the one that is hardest to precisely define – the question of character. A person who has high ethical standards and deep competence, who desires to succeed by helping others to be better than they would otherwise be on their own, who can face reality even when its unpleasant and acknowledge when something is wrong, and who engenders trust and promotes honesty in the organizations they create and lead. That may sound like a tall order, but the real problem is that some of the executives at the helm of companies we’ve profiled in this book weren’t even close. Tony Galban, a D&O underwriter at Chubb, zeroed right in on this issue: ‘the three things behind every bad D&O liability situation are greed, cronyism, and denial.’ Even many of the scrupulously honest executives we studied – and there were many– stumbled when they couldn’t accept the reality of changed world. For these executives, the problem wasn’t of ethics, but of defensiveness,” declares Finkelstein.
It is a compelling thesis— a must-read for business leaders and corporate executives. ■
About the author: Sydney Finkelstein is Steven Roth Professor of Management at Dartmouth’s Tuck School of Business. His writing has appeared in the Harvard Business Review and other business journals. He lives in Hanover, New Hampshire, USA.