Customer Reviews

Why Smart Executives Fail: And What You Can Learn from Their Mistakes

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Initially, Finkelstein really didn't understand, nor did I before reading his book, how and why can so many business leaders fall so far so fast. "How can so many people be do disastrously wrong? What can possibly account for the scores of business failures we see each year, in different industries, and even in different countries? And how can we prevent this sort of thing from happening again?" Finkelstein devoted more than six years of research to answering questions such as these. "My goal was not only to understand why businesses break down and fail, but to focus on the people behind these failures; not only to understand how to avoid these disasters, but to anticipate the early warning signs of failure. Ultimately, I wanted to move beyond ad hoc explanations of failure on a case-by-case basis and expose the roots of these breakdowns in a definitive way." Whereas Peters and Waterman set out in search of excellence, Finkelstein and his research associates set out in search of failure...and achieved that objective. What they found and what they learned are now offered in this brilliant book.

He organizes his material within three Parts: Great Corporate Mistakes, focusing on four different business challenges: creating successful new ventures, managing mergers and acquisitions, coping with innovation and change, and developing winning strategies in the face of new competitive pressures. In Part II, he identifies the underlying causes of failure evident even across different types of corporate mistakes. In this Part, Finkelstein offers a deeper analysis of the common patterns of behavior that executives in failing companies exhibited. In Part III, Finkelstein shifts his (and his reader's) attention to explicitly developing two critical ideas that have stayed in the background to this point. "First, can we use the findings of our study as an early warning system? Can our results tell us how to predict when troubler is coming? And second, how do successful executives create organizations that can learn from, and better yet avoid disaster? What can we learn fro them?"

Almost everything of any significant value I have learned in my life thus far has been the result of personal experience. And almost everything of value I have learned from that experience involved a failure of some kind. Hence the great importance of this book which examines dozens of "smart executives" who failed. They include Jill Barred at Mattel, Dennis Kozlowski at Tyco, Jean Marie Messier at Vivendi, Robert Pitman at AOL Time Warner, and Wolfgang Schmitt at Rubbermaid. Indeed, the research for this book devoted rigorous attention to senior level executives in 51 different companies of various sizes and nature. Where did even the brightest executives go wrong? What can we learn from their mistakes? How can we avoid repeating those mistakes in the future? In essence, that is what this book is really all about.

Long ago, someone made a clever observation that Russian historians always predict the past with absolute accuracy. I recall that comment by way of suggesting that Finkelstein indulges in no gloating whatsoever. There is no indication of any hubris in him even as he examines several victims of that classical affliction. He well realizes -- and with evident dismay -- that the mistakes of any presumably capable executive can sometimes have serious, if not catastrophic implications for hundreds and even thousands of others. He lists and then evaluates seven theories which are frequently offered to explain executive failure. (For example, "The Executives were stupid.") Next, he explains that before the research began, there were no "crystal-clear hypotheses" with regard to patterns of failure. Then on to a series of mini case studies which reveal both the executive mistakes and what lessons could be learned from them. Of special interest to me is the set of early warning signs which the research uncovered. They may not prevent others from making mistakes but recognition of them in a timely manner can indeed reduce the potential damage. Also of special interest are the ways Finkelstein formulated by which to diagnose business mistakes as they are happening.

It may not have been Finkelstein's initial purpose but in fact what he found during his search for an explanation of executive failure is a wealth of information which can help smart executives to succeed. Obviously, there is so much more involved than merely inverting a serious of mistakes (e.g. cooking the books) and then assuming that (Eureka!) a recipe for certain success has emerged. This is a remarkably thoughtful and sensitive book about human failure. How valuable it proves to be is for each reader to determine. If appropriate, when reviewing other business books, I intend to include this book among those recommended for further reading.

I presume to suggest that this book would be an excellent choice to serve as the basis of an off-site meeting of senior level executives. Reading of it in advance would of course be required. I further suggest that the agenda follow the book's structure: Rigorously examine areas in which, over the previous 12-18 months, the organization has either failed or encounted less than the success it desired; next, with equal rigor and (yes) candor, determine the reasons for unsatisfactory performance; finally, determine with meticulous precision the lessons learned and then formulate a game plan to make whatever changes are necessary throughout the organization's operations, with special focus on leadership and management.

Of course, I hope this book helps many smart executives to avoid making the mistakes Finkelstein examines. My greater hope (and presumably his is as well) is that countless others who are not directly involved in the decision-making process will be spared the financial and emotional damage which has been inflicted upon their counterparts at companies such as Enron, Tyco, and WorldCom.

John Donne was right. "No man is an island." That is especially true of senior-level executives.

Someone said, and I believe, that "Success is the result of a series of failures from which one has learned." This book is filled with important and interesting failures that you can learn from. Most business books focus on and celebrate successes in the business world, but here the author has focused on some of the largest blunders in recent history (e.g. Enron, Iridium), as well as lesser known mistakes. What makes it so valuable is that Finkelstein has taken a systematic approach to analyzing these missteps to find patterns that will be recognizable to anyone who has worked in a business. Beyond that, the book offers excellent insight on ways to get back on track and avoid a fate similar to the companies studied.

As for the enjoyable part, the book is told through a series of anecdotes and in-depth retellings of mostly familiar blunders. Reinforced with insider interviews and extensive research of the contemporary media coverage, these stories come alive making it very readable. This combination of message and method make "Why Smart Executives Fail" an extremely valuable and somewhat unique resource.

I was stunned by this book. As a successful executive who reads several business books a year, I am usually disappointed by both the ideas and the writing style of most writers-especially strategy professors. Professor Finkelstein's book is the exception. It is beautifully written; has excellent examples based on REAL RESEARCH; offers ways to avoid making mistakes yourself; and it comes at just the right time for those of us running large organizations. Bravo, Professor!

As a MBA and manager, I've been reading business books for years, and we all know what that can be like. Weak research, spotty stories, stilted prose. When I picked up Why Smart Executives Fail (don't judge a book by its cover, but this cover is great), it seemed like I was entering a different genre.

The writing is highly entertaining, the stories are fascinating, and the author's (Finkelstein is a b-school prof from Dartmouth) insights are nuanced and carefully drawn. It's hard to imagine a business book being a page-turner, but this one is as close as I've ever seen. All the front page stories are here - Enron, Tyco, ImClone, Adelphia, WorldCom, but there is also a host of companies whose crimes were more strategic in nature - Motorola in the cell phone business, J&J in the stent business, Rubbermaid, LA Gear, and even the Boston Red Sox.

The stories of what went wrong and why are sprinkled with quotes from interviews the author conducted with CEOs, other managers, competitors, and customers, which I found gave me a much better understanding of the key lessons than any previous press accounts I had read. Topping it all off is the author's storytelling skills, which keep you almost entranced. This is one business book that you will want to read cover to cover.

This is a book that tries to state the obvious and draw generalized conclusions from specific business failure cases... and that may be be most troubling aspect of it. To quickly summarize, it calls attention that executives at companies that have failed usually have huge egos that blind them to change, blind them to the scope of risk they are taking on, and cause them not to listen to opposing views or recognize early-on that key decisions they made are not correct.

Great... but CEOs at successful companies also seem to exhibit many of these characteristics. If they don't have egos this large, they don't make it to the top. If they change their minds "too frequently" in reaction to change, they are seen as wishy-washy. If they recite the details in the risk, they are seen as not having vision and understanding the big picture.

In the end, it is all about degree, I think. Unfortunately, this didn't come through to me in reading this book... and I think the suggestion another reviewer about having a control group is an excellent one. There are companies that are successful that have executives that exhibit many (if not all) of these characteristics... but there are subtle differences in organizational empowerment and the like that would be useful in understanding. It is not just about the executives themselves where avoiding failure or gaining success is concerned.

I still give the book the positive rating I have because it does provide a lot of food for thought and there is a lot of value in the case studies that are presented.

I didn't enjoy this book as much as I thought I would. That said, the book I chose to follow this one was "On A Clear Day You Can See General Motors," which is about the downfall of what Finkelstein calls a "zombie organization" (an organization seen by others as healthy but in fact dying for varying reasons). Reading On A Clear Day definitely made me appreciate Finkelstein's book a lot more, since I was able to see so many of the warning signs of an organization in trouble that Finkelstein outlines in his book. Unfortunately so much of this book's ideas seem banal and a lot of it just feels like muckraking of the business failures of the 1990's. This isn't the worst book in the world, but you can probably pass on it.

Like all my friends, I have a business degree. We thought we were going to set the world on fire. What we ran into were senior managers who didn't have a clue about the very company they worked for.
A good interview is at www.firstvoicebooks.com/finkelstein.html
When I read this book, I laughed so hard I dropped the book. Most people won't have that strong a reaction. But for those of us who were taught that the guys at the top were the smart ones, it hits the nail on the head. The author is very organized, descrete and professional. It's a good book to read to learn from others' mistakes.

There is much to praise in Finkelstein's book. Particularly effective are the stories he tells about executive or organizational hubris, the detailed case studies of slow-motion disasters that in hindsight seem unthinkable, but at the time convinced thousands (or hundreds of thousands, if you count investors and analysts) as steadiness of vision and strategy.

Less useful is the book's attempts to apply a version of scientific inquiry to those case studies in order to generate a series of rules (or at least probabilities and their corollaries). The bottom lines are, or should have been: don't assume that a history of success grants you the right to dictate the future, don't ignore front-line or market feedback, and don't assume that your IQ automatically translates into business success. Rather than stating these points, Finkelstein works a little too hard to turn each of his observations into actionable essays. That starts a cycle of repetitions and rather bland generalizations that doesn't help his reader become more effective.

Sticking to the basic stories is what works best in this book, and Finkelstein's writing, interviews and on-the-spot analysis is a strength.

Finally, having just been through a stretch in my own company where a group of highly educated and intelligent executives parachuted in from their former senior-level roles at a major global consultancy, and then proceeded to fumble and bumble and nearly destroy the organization with a 24-month string of almost laughably bad bright ideas, I kept thinking of Finkelstein's title. While those now ex-colleagues are enoying their severance checks, I hope they'll consent to being interviewed for Finkelstein's next edition.

At first I was outraged by this book. The author claims to dig deeply into the ROOT CAUSES of failure so that the reader can learn from their mistakes and not make the same mistakes themselves. This is a noble goal and made it worth the purchase.

After reading about the first 1/3 of the book, I began to feel duped. The thesis says that companies don't fail due to incompetent leaders, they don't fail because executives fail to see competitive forces on the horizon, and they don't fail due to arrogance or irrationality. They promise some unified theory of why businesses fail, that explains failure beyond the shallow explanations usually offered by people who witness failure first hand.

I think the book fails miserably in its thesis. Instead of giving some miracle explanation for failure that doesn't depend on the factors they say AREN'T root causes, I think it actually proves that these actually ARE the reasons for failure. That's probably a less exciting thesis (that people just screw up and/or make stupid decisions and/or just get so arrogant or focused on acheiving a goal that they sabotage themselves and their company) but I think its more true than the answers they give.

But more importantly, I think this book is worth its weight in gold for what it DOES do well. I'm a manager, and I'm starting to work on projects at an executive level. In developing business and scientific strategies on my projects, I find myself thinking back to examples this book gives, over and over. It does a FANTASTIC job of going through many of the so-called "classic blunders" companies and executives are guilty of, in enough detail that you start to feel almost like you were there when they happened. Since the author (and the rest of us) have the luxury of perfect hindsight, it's very valuable to see the what the seeds of failure were, and how they grew into a failed organization.

I have a much broader perspective now, and that benefits my daily work a lot. It makes me better at my job, often thinking to myself, "am I being too arrogant," or "should I listen to my subordinates more," or "am I so focused on making this work that I stopped asking the more important question, which is: will this ever make money if I get it to work?" or, "Will developing a great idea/product cost me much more than the potential profit I could ever get from the idea/product?"

On that basis, it's about the best business book I've ever read. It's fairly plainly and clearly written, and the review of companies sucesses and failures is invaluable. I highly recommend this book.

Sydney's book brings important question for those who practice and teach leadership - why could reasons for managerial success and failure often be the same? The answer is organizational context. There is no leadership in vacuum. So if you get rid of those qualities which author calls as habits of unsuccessful people there is still no quarantee for success. Proper understanding of your organization is the key to take real advantage of many suggestions this insightful book offers and not to be misled by some of them.