| Average Customer Rating: |  4.5 |
| Release Date: | 2008-09-11 |
| Publisher: | Portfolio Hardcover |
| Author | Paul B. Carroll; Chunka Mui |
| Number of pages: | 310 |
| ISBN: | 1591842190 |
| Language: | Original Language: English; Unknown: English; Published: English; |
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Product description
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Welcome to Business Failure 101
In the 1960s, IBM CEO Tom Watson called an executive into his office after his venture lost $10 million. Watson asked the man if he knew why he’d been called in. The man said he assumed he was being fired. Watson told him, “Fired? Hell, I spent $10 million educating you. I just want to be sure you learned the right lessons.”
In Billion-Dollar Lessons, Paul Carroll and Chunka Mui draw on research into more than 750 business failures to reveal the misguided tactics that mire companies again and again. There are thousands of books about successful companies but virtually none about the lessons to be learned from those that crash and burn.
Lesson One: The Cold Hard Facts
Between 1981 and 2006, 423 major publicly held U.S. companies with combined assets totaling $1.5 trillion filed for bankruptcy. Hundreds more took huge write-offs, discontinued major operations, or were acquired under duress. Again and again, companies follow the same wrong-headed strategies that brought down businesses in the past. The sub-prime mortgage crisis that cost companies tens of billions of dollars in 2007 and 2008 echoes the ill-conceived strategies that pushed Green Tree Financial and Conseco into bankruptcy years earlier. Tom Watson’s executive’s $10 million lesson seems cheap by comparison.
Lesson Two: Failure Patterns
Carroll and Mui found that the number one cause of failure was misguided strategy—not sloppy execution, poor leadership, or bad luck. These strategic errors fall into seven categories, including:
* Pursuing nonexistent synergies: Quaker Oats’ purchase of Snapple was supposed to capitalize on distribution synergies but instead led to a $1.7 billion write-off.
* Moving into an “adjacent” market that isn’t really adjacent: Avon decided its “culture of caring” qualified it to operate retirement homes. Subsequent write-offs totaled $545 million.
* Buying more problems than efficiencies through misguided consolidation: Despite pioneering the discount department store years before Sam Walton came along, Ames Department Stores flubbed consolidation efforts, landing in bankruptcy twice before eventually liquidating.
Lesson Three: Avoid Making the Same Mistakes
But there’s light at the end of the tunnel: Billion-Dollar Lessons provides proven methods that managers, boards, and even investors can adopt to avoid making the same mistakes. While there’s no way to guarantee success, this book draws on vivid, off-the-beaten-track examples to help you avoid failure by showing you how to thoroughly assess potentially disastrous strategies before they bring your company down.
Required Reading
Think of Billion-Dollar Lessons as the flip side of Good to Great, but just as eye- opening and essential as that business classic. There’s enormous value in learning from companies that lost millions (if not billions) in pursuit of strategies that led to spectacular flameouts. Everyone makes mistakes, but why make the same mistakes over and over?
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Customer reviews
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Can't Wait for the Next Edition
»
How ironic that just as this book was published in late 2008, the world economy commenced its greatest meltdown since the Great Depression. New chapters will need to be written to cover the disintegration of the investment banking industry, not to mention what's going on in Detroit as we speak. In light of all this, the book's title: "Billion Dollar Lessons" probably doesn't seem as provocative as it was originally intended.
This book provides an excellent historical recap of famous business failures, in a well-written narrative that is sure to bring back memories (nostalgia?) for long-forgotten hypes. My favorite is Iridium. These stories grab your attention much like watching an episode of "Mega Disasters" -- you know what the ugly ending is at the outset, but it's all the more fascinating to watch the gruesome details leading up to it.
The basic premise of this book is truly outstanding. It's so gratifying to see a book like this occupy the same shelf among the multitude of self-proclaiming "success my way" strategy books. So for this reason alone Billion Dollar Lessons is a worthy addition for any business library. File this under: "Cautionary Tales 101" or "Big Ideas Gone Bad." Every strategy practitioners should know these stories.
Beyond the interesting case studies, the authors do a good job in dissecting the root-causes for these business failures. In many cases, failure stemmed from poor judgment, either in underestimating risks/costs or overestimating benefits/revenue. In other cases, poor timing was the culprit. The analyses are sound yet also a beneficiary of 20/20 hindsight. I'm left wondering if there were other similar situations where companies were headed for certain disaster, yet were able to succeed either through leadership or just plain luck.
Part two "Avoiding the Same Mistakes" gets at the heart of the book's value proposition, which can be restated as "Save millions of dollars and years of your life by spending $26 (or less) and a couple hours reading this book." So what is their prescription? It essentially boils down to one key theme: the vital role of the dissenting voices, i.e., "the devil's advocate." The authors devote four chapters to exploring this theme and provide helpful details of how to implement this role. Even so, the authors admit in the last chapter that even this is not fool-proof solution, and discuss another variation of the devils advocate role called the "safety net." No doubt this is sound and practical advice, but frankly a little bit of a letdown compared to the first part of the book.
Rating: 
(4
out of 5) @ 2008-12-18
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Thought provoking analysis of failures (with benefit of hindsight)
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This is a remarkably informative and entertaining analysis of some famous (and some not so familiar) failures. The authors' vast research has been abstracted into seven fairly distinct themes which are then illustrated with detailed examples. Of course, it is benefiting tremendously from hindsight and perhaps there is an element of confirmatory or availability biases (the authors themselves warn of this danger in a different context in Part 2 of the book). Nevertheless, the compendium of examples and some succinct observations are well-worth the time (and money) for the book. The Part 1 of the book dealing with the seven themes of failures is far more informative than the second part. The second part attempts to provide ideas on how not to repeat these failures. I found this part to be very "consultant speak" - not a negative in itself; but there was an opportunity missed for using 'positive examples' that would have reinforced their statements. The book then delves into some behavioral biases (a topic very well covered in behavioral finance, for example, but never really highlighted in the book ) to provide some insight on biases that can hinder decision making. For a book that essentially draws from failures, it is surprising that there weren't many (if at all, any) examples that could have been used to expound on their statements/strategies for avoiding the mistakes they so carefully abstracted. Overall, an excellent and informative read.
Rating:
(4
out of 5) @ 2008-12-11
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A Must Read
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While reading through this book you find that you ask yourself "how is it possible that someone didn't stop or see these problems along the way?" Billion Dollar Lessons provides dozens of examples of strategies gone wrong and if you think that they would be deeply complex issues to cause such high dollar mistakes you are in for a shocker.
This book should be read by business students, entry level employees, experienced professionals, senior leaders and executives. It provides a clear examples of how easy it is to overlook problems as well as what can be done to prevent them in the future.
Rating:
(4
out of 5) @ 2008-11-17
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Clear, consise - excellent examples
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This is how a business book should be written - well organized, stating the theory, providing relevant examples and a summary at the end of each chapter. I have begun distributing the book to my clients who are actively involved with or contemplating a merger - a must for anyone in that situation.
Rating: 
(5
out of 5) @ 2008-11-15
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Look Into Others' Rear View Mirrors .... And Avoid Crashing
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First, the bottom line - I think this book is definitely worth it. Businesses and business literature don't analyze failures often enough, so it is a welcome shift in perspective. Coming out amid the ongoing financial crisis that has destroyed many firms and crippled the whole financial system, hopefully this book will start a shift in attitude in the business world so non-conforming discussions truly become acceptable.
For my detailed review, let me first describe the criteria that I apply to business books in order to separate the valuable ones from the many many "also rans". To be valuable over time - as opposed to seeming important or attractive at their launch, then fading away - a business book needs to do well against the following criteria (in my view):
1. Is it credible? (Does it have a solid foundation in data and research?)
2. Will it stand the test of time? (Will the conclusions remain valid beyond the current boom/bust cycle?)
3. Is it broadly applicable? (Is it relevant and valid across industries and geographies?)
4. Is it crisp? (Are the recommendations clear, concise and actionable?)
5. Is it memorable? (Will it be remembered and leveraged when readers are making their next big decision months or years after reading it?)
In terms of the first criterion, "Billion-Dollar Lessons" comes out shining. The authors and their research team have performed a structured and comprehensive analysis of numerous business failures over the last few decades. The data set seems to be large and representative and the analysis rigorous. The authors have also cited from numerous other books and articles - perhaps too numerous.
The soundness of the underlying research also helps the book in terms of the second and third criteria (test of time and broad applicability). The book is not about a specific industry or specific strategy or specific panacea for everything (e.g., the dot-com phenomenon), and hence should remain valid over time. Linking the failures to underlying human traits and social factors also shows that the conclusions are not applicable just to the company or industry being analyzed, but to human commercial enterprise in general, and therefore should again stand the test of time.
The fourth criteria - around the quality of recommendations - is a crucial one. To use an overused phrase, this is the "so what" of the book. I especially liked the "Tough Questions", and to some extent, the "Red Flags" embedded in each chapter. Chapters 8 and 9 (Why bad strategies happen to good people or good companies) are pretty interesting. That said, the lessons, the recommendations could have been crisper. The ideas are all there, but I guess a concise roadmap to bring it all together would be helpful.
The fifth criteria is akin to the "brand recall" metric. Will the ideas in this book or at least its central thrust remain with us after we put the book back on a shelf? I think it depends on two factors - (a) whether the book stirred the thought process of the reader while s/he was reading the book - thereby making a lasting impression on her/his mind, and (b) whether the reader is able to immediately apply some of the learnings in their business or life, even if it happens to be on a smaller scale. These two factors improve the degree of engagement between the reader and the book and hence ensure long-term probability of being recalled and being leveraged. For me personally, factor (a) was definitely there, but (b) could have been better. Again, a concise roadmap would have helped.
In summary, based on these criteria, I think the book is definitely valuable.
Before I close, let me list some other "nice to haves" that I'd have preferred to also see in the book (maybe in the next edition?):
1. Graphical representation of the entire sample universe, perhaps showing a scatter plot or a bubble chart of these failures, their sizes and their drivers/categories,
2. Some examples of success for each of the seven patterns and contrasted them with the failure examples to tease out even more what makes the difference between successes and failures,
3. More international/global examples would make a good addition, given that business today is truly global, as proven by the ongoing crisis, and
4. Finally, an assessment of Enron - perhaps the most dramatic corporate failure of recent times. While financial engineering caused the final blow to their existence, I suspect they were afflicted by a few more of the seven failure patterns the authors talk about.
Happy reading, everyone! It's not always possible to look in to other people's rear view mirrors, so do use this opportunity.
Rating:
(4
out of 5) @ 2008-11-11
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