Why Smart Executives Fail (Sydney Finkelstein)



  1. The “standard” causes of failure do not explain why smart executives fail
    1. “The executives were stupid.”
    2. “The executives could not have known what was coming.”
    3. Etc.
  2. New ventures often fail spectacularly
    1. Do not lose sight of what counts in any business venture
      1. Strategy
      2. Capability
      3. Customers
      4. Competitive advantage
  3. Innovation and change can cause failure
    1. Many companies choose not to cope with the change. They simply ignore it.
    2. Executives must motivate awareness and facilitate action within their companies in response to change
  4. Mergers and Acquisitions can cause failure
    1. The search for synergy and the quest for integration are key areas where failure can take place
    2. Challenges in companies related to mergers
      1. Hubris (pride)
      2. Integration
      3. Cultural roadblocks
  5. Strategy Gone Bad: Doing the wrong things can cause failure
    1. Why strategists misread competition and select irrational strategies
    2. Beware of people blinded by hubris and/or desperation
  6. The Causes of Failure
    1. Brilliantly fulfilling the wrong vision
    2. Delusions of a dream company – how executives avoid facing reality
      1. Does your company systematically exclude any information that could contradict its reigning picture of reality
    3. Tracking down the lost signals
      1. Why businesses don’t act on vital information
    4. Seven habits of spectacularly unsuccessful people – the personal qualities of leaders who preside over major business failures
      1. They see themselves and their companies as dominating their environments
      2. They identify so completely with the company that there is no clear boundary between their personal interests and their corporation’s interests
      3. They think that they have all the answers
      4. They ruthlessly eliminate anyone who isn’t 100% behind them
      5. They are consummate company spokespersons, obsessed with the company image
      6. They underestimate major obstacles
      7. They stubbornly rely on what worked for them in the past
  7. Learn from Mistakes
    1. Predict the future – look for the early warning signs
      1. Unnecessary complexity
      2. Speeding out of control
      3. The distracted CEO heavily involved in activities outside the company
      4. Excessive hype about the company and especially about the CEO
      5. A question of character (ethics and defensiveness)
    2. Living and surviving in a world of mistakes
      1. Step up to learning and open mindedness
      2. Listen to people; learn from people
      3. Share worst practices, not just best practices
        1. Why did something fail and how can we learn from this failure?
      4. Spread the news
        1. Active communication within the company and with stakeholders

About David Shedd

David has been a President - CEO - COO of an up to $350M group of manufacturing, distribution, specialty retail and services companies, having led 22 different businesses from turnarounds to start-ups to fast growth companies.
This entry was posted in Business Acumen, Leadership. Bookmark the permalink.

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