Ways to Fail

In a recent Harvard Business Review article, Paul Carroll and Chunka Mui wrote about several ways big organizations fail. Their warnings apply to small organizations and individuals as well, albeit on a different scale.

Carroll and Mui included the synergy mirage, pseudo-adjacencies, stubbornly staying the course, and betting on the wrong technology as ways for big companies to fail. They are right, and they offer many examples. But small organizations and individuals make the same mistakes.

The synergy mirage is clearly demonstrated in corporate mergers. The authors shared the example of a group disability insurer merging with an individual disability insurer. At first glance it appears smart. “It turns out they had entirely different sales models and customers.” The mistake: defining talents and skills in very broad terms.

Instead of defining yourself as an accountant, perhaps you should say you are a cost accountant specializing in cost containment in the auto parts manufacturing industry (a talent and skill set very different from that required of an accountant who specializes in small business start-ups).

Pseudo-adjacencies are also common mis-steps of even the most sophisticated business decision makers. Carroll and Mui give the example of a school-bus operator company spending millions of dollars to move into the ambulance services business. The company “expected its logistics expertise to carry over, but discovered ambulances were not a transportation business but a highly regulated health care business demanding skills it sorely lacked.”

Stubbornly staying the course can be an admirable trait in an organization or an individual. But at some point, it is important to know it’s time to abandon the original plan. I have purchased stocks “on the way down” believing they were cheap and the price would rebound quickly. Eventually I had to admit the stock was properly priced at its lower level, and sold at a loss. Selling at a loss is painful (financially and emotionally), but it is better than continuing to accumulate loses.

Finally, betting on the wrong technology is typically associated with organizations not individuals. But individuals also bet big on a particular skill set. Refusing to accept the fact that they are becoming obsolete, their value in the marketplace falls on a daily basis.

I hope you can see how easily these mistakes can be made in large organizations. But equally important (or more so), can you see how you can make these mistakes in your own career?

To learn more about organizational and individual effectiveness use the Search function on my blog and read my book, Strategic Organizational Learning (available at Amazon.com or my website http://www.mikebeitler.com/).

There are also many free resources on the Free Stuff page on my website.