Provocative Propositions

In the hyperactive and challenging world in which we all live, it is becoming harder and harder for business leaders to find time to read, reflect and gain insight from the many valuable sources at our disposal.

In "Provocative Propositions", The Beacon Group attempts to fill that void by offering our opinion, often rather pointed, on a wide array of issues we believe are relevant to leading a modern organization.

The articles are catalogued into 12 categories so you can quickly and easily find a topic of particular interest. We then offer three easy steps under the heading "In Our Opinion" to help business leaders take action on the key themes.

Simply click on the category and read away.

The Hidden Cost of Ignorance
We never really study failure. Sydney Finklestein argues in his book "Why Smart Executives Fail" that, in our minds, we simply label executive failures into seven categories...
  • The executives were stupid.
  • They didnít have time to anticipate and prepare for change.
  • Failure to execute... whatever that means, since itís awfully vague.
  • They werenít trying hard enough.
  • They just werenít good leaders.
  • Their company was too weak to survive business challenges in the first place.
  • They were a bunch of crooks a la WorldCom and company.

The fact is we donít really know about corporate failure. We reason vaguely about why organizations and executives stumble on challenges, but an organization is much larger than a single leader. There are many people that could anticipate and solve problems as they arise.

The problem is that at every juncture point in a corporationís history, there is increased risk for smart executives to fail. Executives perceive reality in different ways and organizations donít always face up to whatís really going on.

The outcome is that executives see problems coming, they are aware of changes in their industry, the people around them feed them information on new trends...but they fail to take the necessary steps to adapt.

The solution is to understand how failures slowly infect corporations and develop systems to help the organization be proactive in giving accurate feedback to leaders.

How did you miss it?

Most of the time, corporate problems are fairly easy to anticipate - on paper. A brief case-study in GMís struggles. Consider the facts...

- As early as 1956, foreign car manufacturers were drastically increasing their market penetration in the US.

- In 1957, the US imported more cars than it exported.

- Environmental concerns related to the automobile first emerged in the early 1960s.

- By 1974, GM was spending $2.25 billion a year to follow environmental regulations. By 1979 that expenditure was close to $5 billion a year.

Today Ė in 2008 Ė we hear about the burdens of healthcare and pension costs and low-cost foreign competition.

You get the point... these arenít new problems. GMís troubles were a long time in the making. Why did no one pick up on them?

Even by the 1980s, when GM began to copy Toyotaís automation techniques to lower their costs, the problems persisted. Nobody there really understood what made Toyota successful. CEO Roger Smith led the company to an obsession with robotic automation without considering the "lean manufacturing" techniques that Toyota was using.

All of GMís problems were single-mindedly defined as "labour cost" related.

Zombie Organizations

Another example: for years Motorola prided itself on having a "healthy dose of discontent". The organization was never quite happy with its accomplishments and always aimed for more innovation.

As the company faced change, the hints were obvious. Motorola had plenty of data indicating that the cell phone market was switching from analog to digital. They owned patents for the new digital technology and licensed them to Ericsson and Nokia. For every digital phone that was sold by their competitors, Motorola had perfect market data to track the emerging trend.

Nothing was done to adapt.

No one challenged the leaders to see the situation differently.

Thatís the point that Finklestein gets to in his book. Failures are caused by destructive patterns of behaviour. There are leaders, but they arenít the only ones guiding a company. The whole organization in involved in this process. Why is it that no one speaks out? Why is it that organization miss out on seemingly obvious trends? Where do these flawed mindsets and delusional attitudes come from?

In Our Opinion

The Beacon Groupís Keys to understanding and avoiding failure

Thereís no doubt that your organization has some of the smartest people around. However, that doesnít mean that they will not fail to recognize a problem or a solution within your organization. Failure is often not about the individual, but about a set of organizational qualities that weaken honest communication.

Three really key points to prevent your smart executives from failing...

Break the chain- A single error in judgment rarely brings down a company. The key is to break the chain of failure. A CEO can blunder, but the corporate culture and his/her leadership qualities need to be able to tolerate tough questions. Itís about the personality of the leader. Make it a rule for your co-workers to play the devilís advocate for every idea or proposal that comes through the door.

Juncture points - The failure situations described above are more likely to happen at key juncture points in a companyís history.

This is when you have to keep an eye out and ensure that you...

-Create new ventures

-Deal with innovation and change

-Manage mergers and acquisitions

-Address new competitive pressures

Look Deeper - Executives and leadership teams rarely fail because "they are stupid" or "they are crooks". Look for specific attitudes that show themselves in different situations. At the cable company Adelphia, a "Blood is thicker than business" attitude was clear among the family executives long before scandals actually hit the company.
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