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Why Smart Executives Fail: And What You Can Learn from Their Mistakes
Professor Sydney Finkelstein
Steven Roth Professor of ManagementTuck School of Business at Dartmouth
www.whysmartexecutivesfail.com
The Turnaround Finance Group Spring Event at Kasteel Nyenrode
April 16, 2005
Why Smart Executives FailWhy Smart Executives Fail
Executive Executive Mindset Mindset FailuresFailures
Delusions of a Delusions of a Dream CompanyDream Company
Confidential. Do not quote or copy without written permission. © Sydney Finkelstein, 2003.
OrganizationalBreakdowns
Leadership Pathologies
The Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction
– March 31, 2005
“Analysts did not question the hypotheses underlying their conclusions, and tended to discount evidence that cut against those hypotheses.”
Why Smart Executives FailWhy Smart Executives Fail
Executive Executive Mindset Mindset FailuresFailures
Delusions of a Delusions of a Dream CompanyDream Company
Confidential. Do not quote or copy without written permission. © Sydney Finkelstein, 2003.
OrganizationalBreakdowns
Leadership Pathologies
Executive Mindset FailuresStrategy gone bad: doing the wrong thing
• Inaccurate view of reality
• Negative transfer
• One best way
• Ignoring change
• The Perfect Storm Fallacy
WebvanMotorola
Napoleon Snapple
Saatchi & SaatchiRubbermaid
Boston Red SoxBritannica
LTCM Chrysler
Delusions of a Dream CompanyHow Executives avoid facing reality
• “The Firm”
• Just Say No
• Disrespecting competitors
• Customers and suppliers are wrong!
EnronInternet Start-ups
Barings Bank Snow Brands
Barneys Internet Start-ups
Schwinn Rubbermaid
Confidential. Do not quote or copy without written permission. © Sydney Finkelstein, 2002.
Organizational BreakdownsTracking down the lost signals
• Communication and control breakdowns
• Break all the rules
• No oversight
• Inappropriate incentives
Boston Red Sox Black Hawks 1994
Saatchi & SaatchiBankers Trust
WorldCom Sony
MotorolaLucent
Confidential. Do not quote or copy without written permission. © Sydney Finkelstein, 2003.
IV.IV. Seven Habits of Spectacularly Seven Habits of Spectacularly Unsuccessful PeopleUnsuccessful People
Top 5 Takeaways
1. Test assumptions!
2. Teams win more than leaders win.
3. Make it easy to tell the truth.
4. Track warning signs like your business depended on it.
5. Only dead companies make no mistakes.