Why Smart Executives Fail

It's an all too common scenario: A great company breaks from the pack; the analysts are in love, the smiling CEO appears on the cover of BusinessWeek and Fortune, the stock explodes. Employees, stockholders, vendors, and the customers are happy.

Two years later, the company is in flames, the pension plan is bleeding, the CEO is under attack — or even indictement — and the stock is worthless.

We're suffering an epidemic of leadership failure. How can this vicious cycle be broken? How do you know if your company is vulnerable? How can investors and managers reduce the likelihood of being disappointed by a company's performance?

In Why Smart Executives Fail, Sydney Finkelstein unveils the extraordinary results of the largest research project ever devoted to leadership failure. Over the past six years, Professor Finkelstein and his team conducted hundreds of interviews with insiders at top companies that have risen and fallen — and, for some, risen again — to expose the root of these failures and to gain insight into the people behind them. One astounding finding: Businesses that seemed to have nothing in common turned out to have failed for exactly the same reasons. Even the excuses that failed managers offered turned out to be the same in case after case.

In the end, despite all that could go wrong for a company, the real fiascos can be blamed on surprisingly few causes. And they're not the ones you might think, like ineptitude or greed. Rather, top executives confront failure when they:

• Choose not to cope with innovation and change
• Misread the competition
• Brilliantly fulfill the wrong vision
• Cling to an inaccurate view of reality
• Ignore vital information
• Identify too closely with the company

This fascinating in-depth study offers an unprecedented inside look into what kinds of mistakes can bring a great company — such as GM, Mattel, Motorola, Rite Aid, Quaker, Saatchi and Saatchi, and Webvan, to name but a few — to the brink of collapse. As much an engrossing story about people as it is about people, Why Smart Executives Fail will be the first time many of these managers and executives speak out about what really happened when the decisions were made that sealed their companies' fate and what they would do differently now if they could.

As timely as today's headlines, Why Smart Executives Fail is a truly indispensible, practical, must-read book for anyone intent on avoiding the executive mistakes so many have made in recent business history.

1. Why Smart Executives Fail
   What Can Studying Failure Tell You?
• Part I. Great Corporate Mistakes
1. New Business Breakdowns
   Stories of New Ventures That Don't work…: and Why
2. Innovation and Change
   Choosing Not to Cope
3. Mergers and Acquisitions
   The Search for Synergy: the Quest for Integration
4. Strategy Gone Bad: Doing the Wrong Thing
   Why Strategists Misread Competitors and Select "Irrational" Strategies
• Part II. The Causes of Failure
1. Brilliantly Fulfilling the Wrong Vision
   How Executive Mind-set Failures Push Businesses to the Brink… and Beyond
2. Delusions of a Dream Company
   How Executives Avoid Facing Reality
3. Tracking Down the Lost Signals
   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
• Part III. Learning from Mistakes
1. Predicting the Future
   The Early Warning Signs
2. How Smart Executives Learn
   Living — and Surviving — in a World of Mistakes

This is something as rare as a well-researched book, that tries to teach the reader something valuable and doesn't try to sell you on adhering to the authors firm beliefs. In short, the subtitle is correct!

The only criticism, is that some of the companies/CEOs have gotten away too easily, as I still believe that a matter of personal greed always is present (and subsequently poses a problem). But that is a personal reflection, and shouldn't take away your enjoyment in reading this outstanding book.

Recommended reading, and I shouldn't be surprised to find out that it became mandatory reading at a lot of MBA schools in the future.