Billion Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last Twenty-five Years

Carroll (Big Blues) and Mui (Unleashing the Killer App) collaborate to perform an autopsy on some of the most spectacular business failures and corporate disasters in recent times, hunting down the fatal strategies responsible. The authors examine more than 750 inexcusable corporate collapses, neatly cataloguing them into eight common failure patterns: doomed practices, including the Illusion of Synergies, as illustrated by the ruinous merger attempts by Sears and Dean Witter; Faulty Financial Engineering, as conducted by Tyco and Revco; Staying the (Misguided) Course Too Long, a sin committed by Kodak, which missed the boat on digital photography; and Consolidation Blues, as depicted by U.S. Airways, which crashed as a consequence of buying up too many companies too quickly. While there are assuredly lessons in defeat and the authors' detailed analysis and bracing honesty is welcome, readers hoping for a more encouraging or inspirational business book might find Carroll and Mui's avalanche of disastrous failures, avoidable bankruptcies and destruction of shareholder value a depressing—if highly instructive—read. (Sept.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.
From Booklist
With lessons learned from extensive research into 750 major bankruptcies between 1981 and 2006, including Enron, Conseco, Texaco, Kmart, and Refco, authors Carroll and Mui set out to help corporate management avoid failure from bad strategies. Almost one-half of the failures could have been avoided if the companies had been aware of strategy pitfalls or had become cautious in the face of clear warning signs. The authors describe seven basic strategic failures, including estimating synergy from mergers, which proves to be exaggerated; aggressive use of accounting or financing mechanisms; staying the course in spite of a clear business threat; and riding the wrong technology, which fails. We also learn about the psychological implications of management banding together when something is wrong rather than individuals standing up for what is right and the important benefits of introducing a devil’s advocate into a strategy’s deliberative process. This well-researched book provides valuable insight for corporate executives and investors. --Mary Whaley --This text refers to an out of print or unavailable edition of this title.


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.

Language: English | Audio CD in MP3/80 kbps | 396 MB