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Seven Ways To Fail Big

by David Brock on September 2nd, 2008
I’m still rolling the conclusions of Paul Carroll’s and Chunka Mui’s HBR article: Seven Ways To Fail Big, around in my mind. The article is very interesting, based on research they have done on 750 business failures.

They claim that nearly half could have been avoided (not surprising), and that the avoidable failures were primarily the result of flawed business strategies, not poor execution (somewhat surprising).

They summarize seven key reasons: The Synergy Mirage, Faulty Financial Engineering, Stubbornly Staying The Course, Pseudo-Adjacency’s, Bets On The Wrong Technology, Rushing To Consolidate, Roll-ups Of Almost Any Kind. Each reason is accompanied with case studies illustrating the point.

The article is provocative and stimulates thinking. While, it is worth reading and there are good lessons to be learned, I questioned the research methodology somewhat. It appears to be primarily based on secondary research (news coverage, case studies, other document) rather than primary research (interviews and in depth original research).

For several of the cases they highlight, we have some insight that would not be readily available in public information. In those cases, extremely poor execution, lack of commitment to the strategy, and other factors were also key factors to the failures. However, I may be nit picking with a “chicken-egg” argument.

In spite of being slightly troubled with the analysis, the article is certainly worth reading.

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One Comment
  1. David Locke permalink

    The accepted story of Kodak’s demise revolve around their failure to go with the digital photo technology. There were other reasons. Trying to retain their laggard customers was one. Not understanding Moore’s gorilla game in their search for a subsequent technology another.

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