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Why Smart Executives Fail:And What You Can Learn from Their Mistakes
Professor Sydney FinkelsteinSteven Roth Professor of ManagementTuck School of Business at Dartmouth
www.whysmartexecutivesfail.com
The Turnaround Finance GroupSpring Event at Kasteel Nyenrode
April 16, 2005
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Why Smart Executives Fail
ExecutiveMindsetFailures
Delusions of aDream Company
Confidential. Do not quote or copy without written permission. Sydney Finkelstein, 2003.
OrganizationalBreakdowns
LeadershipPathologies
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The Commission on the Intelligence Capabilities of theUnited States Regarding Weapons of Mass Destruction
March 31, 2005
Analysts did not question the hypotheses underlyingtheir conclusions, and tended to discount evidencethat cut against those hypotheses.
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Why Smart Executives Fail
ExecutiveMindsetFailures
Delusions of aDream Company
Confidential. Do not quote or copy without written permission. Sydney Finkelstein, 2003.
OrganizationalBreakdowns
LeadershipPathologies
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I. Executive Mindset Failures
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Executive Mindset FailuresStrategy gone bad: doing the wrong thing
Inaccurate view of reality
Negative transfer
One best way
Ignoring change
The Perfect StormFallacy
WebvanMotorola
NapoleonSnapple
Saatchi & SaatchiRubbermaid
Boston Red SoxBritannica
LTCM
Chrysler
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II. Delusions of a Dream Company
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Delusions of a Dream Company How Executives avoid facing reality
The Firm
Just Say No
Disrespecting competitors
Customers and suppliers arewrong!
EnronInternet Start-ups
Barings Bank Snow Brands
BarneysInternet Start-ups
SchwinnRubbermaid
Confidential. Do not quote or copy without written permission. Sydney Finkelstein, 2002.
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III. Organizational Breakdowns
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Organizational Breakdowns Tracking down the lost signals
Communication and control breakdowns
Break all the rules
No oversight
Inappropriate incentives
Boston Red SoxBlack Hawks 1994
Saatchi & SaatchiBankers Trust
WorldComSony
MotorolaLucent
Confidential. Do not quote or copy without written permission. Sydney Finkelstein, 2003.
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IV. Seven Habits of SpectacularlyUnsuccessful People
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Habit # 1: Illusion of PersonalPreeminence
Corporate ExamplesMartha Stewart
Mossimo
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Habit # 2: The Company is Mine
Corporate Examples
Adelphia
Tyco
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Habit #3: All the Answers
Corporate Examples:
Wang Laboratories
Rubbermaid
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Habit #4: My Way or the Highway
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Habit # 5: Obsessed with Image
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Habit # 6: Disregarding MajorObstacles
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Habit # 7: Inability to Learn
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Top 5 Takeaways
1. Test assumptions!
2. Teams win more than leaders win.
3. Make it easy to tell the truth.
4. Track warning signs like your business depended on it.
5. Only dead companies make no mistakes.
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