Billion-Dollar Lessons

Learning From Others’ Failures—So They Won’t Happen to You

Strategy Is Key

• 46% of Failures Stemmed From Bad Strategies—Not From Bad Luck or Poor Execution

Seven Main Failure Patterns

• 1. Illusions of Synergy• 2. Faulty Financial Engineering• 3. Deflated Rollups• 4. Staying the (Misguided) Course• 5. Misjudged Adjacencies• 6. Fumbling Technology• 7. Consolidation Blues

The Main Red Flags

• 1. Underestimating the Complexity That Comes With Scale

• 2. Overestimating the Power That Comes With Size

• 3. Assuming Loyal Customers• 4. Overpaying• 5. Playing Semantic Games• 6. Not Considering All Options

The Solution: Agree to Disagree

Constructive Contention• 1. Informal Devil’s Advocate• 2. Smooth Management Ruts• 3. First, Decide How to Decide• 4. Find History That Fits• 5. Bet on It• 6. Stare Into the Abyss• 7. Construct Alarm Systems• 8. Always Have Escalation Systems• 9. Hold Second-Chance Meetings

Contention: A Formal Process

• 1. Establish a Clear and Limited Charter• 2. Organize for Success• 3. Focus on the Strategy, Not the Process

That Produced It• 4. Deliver Questions, Not Answers• 5. Come to Closure

Biography• Paul Carroll has spent nearly three decades writing, lecturing and

consulting on business issues. He spent 17 years at the Wall Street Journal, which twice nominated him for Pulitzer Prizes. He wrote the best-selling Big Blues: The Unmaking of IBM (Crown, 1993). He founded and edited Context, the first of what became known as “new economy” magazines; the magazine helped senior executives think about the strategic implications of information technology. Paul is also a former partner with Diamond Management & Technology Consultants. His latest book is Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years (Portfolio, 2008). A companion article, Seven Ways to Fail Big, appears in the September 2008 issue of the Harvard Business Review. More information is available at www.billiondollarlessons.com