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Will Your Next Mistake Be Fatal?: Avoiding the Chain of Mistakes That Can Destroy Your Organization

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As I was part of one of the biggest corporate mistakes in U.S. history, I thought it would be interesting to read Will Your Next Mistake Be Fatal? by Robert E. Mittelstaedt, Jr. I wasn't disappointed... This should be required reading in all organizations.

Chapter list: The Power of M3 and the Need to Understand Mistakes; Execution Mistakes; Execution Mistakes and Successes as Catalysts for Change; Strategy - How Do You Know It's a Mistake?; Physical Disasters with Cultural Foundations and Business Implications; Cultures that Create "Accidents"; Mistakes as Catalysts for Cultural Change; Economics at Work: Watching Entire Industries Lose It; Mistakes Aren't Just for Big Companies - Small Company Chains; Making M3 Part of Your Culture for Success; Summary of Insights; References; Index

I started working for Enron Broadband back in 1998 when it first got going. I was laid off on September 1st, 2001 when the Portland office closed. Little did any of us know that the entire company would melt down just three months later. Did they plan for that to be the culmination of all their actions? No, but no one in power saw the signs and had enough courage to stop the string of mistakes that ultimately doomed the company. Mittelstaedt uses Enron and numerous other companies to show how a culture of tolerating mistakes can lead a company to the brink of disaster (and many times right over the edge). But instead of just concentrating on "when bad things happen to good companies", he also covers how strong leadership can allow a company to survive and prosper in adverse conditions (like J&J's handling of the Tylenol tampering case). There's a lot of material here that is excellent reading and should cause organizations to ponder their ways.

There are 38 "insights" that summarize the main teachings and help the reader to focus on making the necessary changes for success. Insights such as "fly the airplane" and "you cannot afford even a whiff of an ethical lapse" are easy to remember and should quickly bring you back to a proper attitude for running a successful and thriving organization. Oh, and the "M3" you see in the chapter list refers to "managing multiple mistakes". Once you start to implement a systematic approach to M3, you won't guarantee that your company will never make an error or misstep again. But you will be assured of not letting things get totally beyond control.

Excellent book, and it's so very relevant to today's business environment. A highly recommended read...

The one comforting realization this author brings out in his book is that significant or catastrophic events are usually caused by a long trail of mistakes. Thus, unlike say a car crash that can be caused by one simple mistake, the business version of a car crash is preventable if you can identify the mistakes. The author calls this the process of managing multiple mistakes. If you can find a away to break a chain of mistakes, a major issue can be avoided. This book attempts to educate the reader about the avoidable traps that business people tend to set for themselves. The author details many of the higher profile blunders over the past 30 years to show the reader the patterns and to act as case studies. It attempts to help the reader learn from the experiences of others to improve the odds that the reader can also avoid disasters.

The author believes that there are lessons to be learned from looking at the mistake patterns and common themes that have taken place in other organizations. The author believes that most organizations and people for that matter, lack the drive to truly investigate and examine the mistakes they make individually and in business, thus learning opportunities are lost. The author believes then that by looking at others mistakes, it can at least for us, lead to learning. Overall I found the book to be informative and interesting. It was sort of like watching a series of train wrecks in slow motion. It also provides an interesting way to view behavior to help the reader in identifying the chain of mistakes before you become one of the footnotes of history. The book is well worth your time.

Robert Mittelstaedt has written a rare, commendable book. He manages to address a significant business topic - the phenomenon of major corporate blunders - in an original, insightful and entertaining way. In this intriguing volume, he cites case after fascinating case where a series of seemingly small errors went uncorrected until a whole house of cards marked "faulty assumptions" came crashing down. The biggest mistake you can make is assuming that a fatal blunder just couldn't happen in your organization, and the second biggest is ignoring the warning signs that disaster is just ahead. The key, Mittelstaedt advises, is to learn to admit that something has gone wrong before the situation spirals out of control. We encourage every thoughtful business professional to read this substantive contribution to the field of risk management and disaster prevention.

I think so highly of this book that I listed it as the best book of the year in my annual "Best Books of the Year" column that I write for the online "Journal of Object Technology" (JOT). JOT is a journal written for people who use object-oriented technologies to teach computer science and develop large software projects. The process of creating a program that has millions of lines of source code is a very complex one, there are millions of ways you can fail and only a few ways that you can succeed. The main point is that catastrophic mistakes are generally not due to one big error, but are the consequence of a series of small errors that reinforce each other.
Major historical failures such as the sinking of the Titanic, the meltdown at Three Mile Island, plane crashes, business failures such as the collapse of Enron and the associated destruction of Arthur Anderson are all examined in detail. The failures can generally be placed in one of the following categories:

*) Failure to question an authority figure.
*) Not trusting hard data.
*) Trusting "hard" data too much.
*) Believing only the data that agrees with your beliefs.
*) Tolerating violations of proven procedure.
*) Lack of adequate training and experience.
*) Arrogance or a feeling of infallibility.

It amazed me to read how in most cases, the correction of even one of the small mistakes in the chain could have led to a minimization or avoidance of the catastrophe.
There are also examples of successful recoveries from catastrophic events. In 1982, several people died due to a tampering with the product Tylenol after it left the factories. The manufacturer, Johnson & Johnson, immediately engaged in a total recall and then reintroduced the product in a tamper-proof package. This reassured the public and while they took an immediate loss, the company recovered very quickly, maintained and increased their level of public trust.
At some point, nearly every company is faced with a crisis that can make or break it. Given that there are generally so many small errors in the chain, in most cases many people can act to prevent a failure. By reading this book, you can increase your chances of being on the make side of the ledger.

“This is not a book about crisis management. It is not about managing public relations, the victims, the lawyers, or the shareholders. It is about discipline, culture, and learning from the experiences of others to improve the odds that you can avoid the things we label as accidents, disaster, or crisis altogether. Even if you do not totally avoid such situations, knowledge of the typical patterns that occur should help you create an organization that is observant enough to intervene early and minimize damage. Learning and implementing the lessons described here will not mean that you throw away your plans for handling problem situations. But it could mean that you will never have to manage the aftermath of an unpleasant situation (from the Introduction).”

In this context, Robert E. Mittelstaedt, Jr. divides this excellent handbook into ten chapters and an Appendix as summary of insights.

For this Appendix, R. E. Mittelstaedt, Jr. says that “Summarized here are the insights associated with the accidents, incidents, and successes examined in the book. They are offered with the caution that slavishly adhering to them in the hope of avoiding all mistakes will not necessarily lead to success, because success is different than a lack of failure, which might lead to mediocrity. Despite the caution that success requires more than avoiding mistakes, these are powerful insights into the ways that many have ‘snatched defeat from the jaws of victory.’ The patterns are similar and have shown themselves repeatedly over and over again in a variety of industries, countries, and businesses. Additionally, if we are honest we can see similarities to the things that drive or hinder our personal success in school, careers, sports, and social relationships. Consider these guidelines for most situations, personal or business, and look not only for their occurrence individually, but in patterns that serve as warnings for analysis and action (p.289).”

Summary of Robert E. Mittelstaedt’s Summary of Insights:

• Insight #1: Mental preparation is critical because organizations and individuals are rarely good at learning by drawing parallels.

• Insight #2: Fly the airplane.

• Insight #3: You cannot afford even a whiff of an ethical lapse.

• Insight #4: Execution mistakes can be generated through a lack of resources or knowledge.

• Insight #5: Establish and enforce standard operating procedures.

• Insight #6: Make responsibilities clear.

• Insight #7: Seek advice and seek to understand assumptions.

• Insight #8: If something does not make sense or feels confused, STOP and figure out what’s going on.

• Insight #9: People are usually at the root of the problem.

• Insight #10: A significant portion of execution-related mistakes occur because criteria for measuring progress and performance have not been identified and/or communicated explicitly.

• Insight #11: Failure to analyze data points and ask what they mean is a major source of mistakes.

• Insight #12: Ignoring data is dangerous – ignoring or misinterpreting consumer data can be catastrophic.

• Insight #13: Across industries and situations, ineffective communications can accelerate deterioration of a mistake chain.

• Insight #14: Spending time and money to build a culture that takes mistakes seriously may have the highest ROI of anything you can do as a manager.

• Insight #15: Look for the opportunity for an accident or even a major success to be a rallying cry for change and transformation.

• Insight #16: A very successful business can blind you to opportunity.

• Insight #17: Your competitors are not who you think they are.

• Insight #18: Sometimes a mistake is not a mistake.

• Insight #19: Even companies that have successfully reinvented themselves have to work hard, perhaps even harder, to understand when it is time to do so again.

• Insight #20: With disruptive technology, prices usually drop and value shifts to customers.

• Insight #21: Some changes happen without your permission.

• Insight #22: Many more industries and companies will see the value continue to shift from hardware to software and services.

• Insight #23: Test and retest assumptions – until proven beyond a doubt.

• Insight #24: Push or ignore engineered safety at your peril.

• Insight #25: Believe the data.

• Insight #26: Use available resources.

• Insight #27: Train for the “can’t happen” scenario.

• Insight #28: Open your mind past your blinders.

• Insight #29: Culture is a powerful – what creates success may kill you.

• Insight #30: Culture is powerful, but be sure you understand where to extend it.

• Insight #31: Rapid culture change designed to obliterate mistakes in supercritical areas is possible, but sharp focus, extra diligence, and continuous training are necessary for success.

• Insight #32: Most cultures develop by accident – those that are designed to accomplish a purpose are more effective.

• Insight #33: Economic forces and laws are real, industry changes are real. They are not as unexpected as most people believe – it is usually only a matter of the timing.

• Insight #34: Being #1 or #2 really does matter.

• Insight #35: Economic business visioning (EBV) is not optional.

• Insight #36: Startups and small businesses make mistakes in the same ways that larger organizations make mistakes. However, they usually have fewer resources to avoid or recover and less flexibility to survive mistakes with alternate plans or products.

• Insight #37: Do you want to trust “saving the business” to your last line of defense?

• Insight #38: If you do not make any mistakes, you may not be taking enough risk, but failing to take any risks at all may be the most dangerous type of mistake that a business can make.

Strongly recommended

Win or lose is a stark concept. At one time, many acted as if there was enough to go around. Yet, in today's worldwide competitive marketplace that is no longer the case. Businesses deliver value or they are ignored. They grow or they die.

Robert E. Mittelstaedt, Jr., Dean of the Arizona State University School of Business, argues that most failures, blunders and mistakes, be they corporate, physical or political are the result of compounding errors that land the crisis on the world's front pages.

The difference between organizations that we hear about and those we do not is a process he terms "M3", Managing Multiple Mistakes. He offers 38 insights to help managers and leader to recognize and break the chain.

Among his insights:

* Being successful often blinds you to opportunity.

* Mental preparation is critical.

* Avoid any ethical lapses.

* Execution errors are often generated by a lack of resources or knowledge.

* Establish and enforce standard operating procedures.

* Make responsibilities clear.

* Seek advice

* Understand assumptions.

* If something does not make sense is confusing. Stop. Figure out and decipher it.

* People are usually at the root of the problem.

* Execution-related mistakes occur because progress and performance metrics have not been identified and/or communicated.

* Failure to analyze data points.

* Ignoring data is dangerous; ignoring or misinterpreting consumer data may be fatal.

* Ineffective communications accelerate mistake chains.

* Building a culture that takes mistakes seriously may have the highest ROI of anything a manager can do.

* Seek an event to become the rallying cry for change.

* Your competitors are not who you think they are.

* Sometimes a mistake is not a mistake.

* Change happens without your permission.

* Test and retest assumptions.

* Believe the data.

* Train for the "can't happen" scenario.

* If you do not make mistakes, you probably are not taking enough risk.

Mittelstaedt has written a valuable book. Reading it may help you keep your organization or project off the front pages of the Wall Street Journal or Financial Times.

In 1980, one year after the Three Mile Island nuclear power plant disaster, Robert E. Mittelstaedt, Jr. served as a consultant to the Nuclear Regulatory Commission. In that capacity, he began thinking more and more about the fact that many physical accidents, such as the partial core meltdown at TMI's Unit 2 plant, are caused by a whole chain of mistakes, or sequence of errors, that go unchecked for reasons usually related to an institution's culture or the lack of processes in place to deal with failure.

"Over time, I realized that the same sequences of mistakes also occur in businesses," says Mittelstaedt. "The big difference is that with the failure of physical systems-such as an airplane crash or nuclear power plant malfunction-the immediate reaction is to investigate the problem. Regulatory agencies, not to mention the public, step in to demand detailed analyses of exactly what went wrong and how the situation can be prevented from reoccurring. But in business, if mistakes are made and laws are not broken, you rarely see any formal investigation. Even when the companies themselves look into what happened, they don't do it in a structured and rigorous way. They don't learn anything from the process."

Airline crashes or near-misses, says Mittlestaedt, who is a pilot in his spare time and the owner of a six-seater Cessna Centurion, are "so well-documented that you can see patterns behind the errors, and you can also see what the industry has done to dramatically improve its safety record through training, orientation, and the establishment of procedures and structures. I believe businesses can benefit from that same approach."

This realization led Mittelstaedt, former director of executive education at Wharton and now dean of the W.P. Carey School of Business at Arizona State University, to write a book titled, Will Your Next Mistake Be Fatal? Avoiding the Chain of Mistakes that Can Destroy Your Organization. Recently released by Wharton School Publishing, the book analyzes the common factors that underlie major failures ranging from disasters-like the sinking of the Titanic in 1912, the crash of Air Florida Flight 90 in 1982 and the fiery destruction of the Columbia space shuttle in 2003-to serious, but not fatal, mistakes that occur in companies across all industries. Mittelstaedt dissects Coca Cola's "New Coke" fiasco, Firestone's tire debacle, Intel's mishandling of its Pentium chip recall, American Express's failed blue card Optima launch and Webvan's ill-fated online grocery shopping experiment, in addition to missteps at companies such as Xerox, Motorola, Kodak, Enron and McDonalds, to name a few. He talks about Martha Stewart's decision to sell stock apparently with inside information (an initial mistake which then mushroomed into several others) and he takes readers through the whole chain of events at Enron where a corporate culture based on arrogance and contempt for others eventually led to what was then one of the biggest bankruptcies in history.

The concept of Managing Multiple Mistakes, Mittelstaedt writes, "is based on the observation that nearly all serious accidents, whether physical or business, are the result of more than one mistake. If we do not 'break the chain' of mistakes early, the damage that is done, and its cost, will go up exponentially ... until the situation is irreparable." The Watergate scandal, he suggests, is perhaps one of the best illustrations of failing to manage multiple mistakes, "starting with the decision to burglarize Democratic party offices to obtain information that was of little value." That mistake "was compounded severely by subsequent attempts to cover up" others, eventually leading to more and more unbelievable fabrications and finally, the resignation of the President. Business mistakes, too, have their own individual patterns and "sins of both omission and commission," Mittelstaedt says, but most fall into the broad areas of strategy, execution and culture.

A recurring theme identified in Will Your Next Mistake Be Fatal? is the reluctance of many executives to acknowledge their failures. "In an era of shareholder litigation, admitting publicly that you messed up can put the company and shareholder value at risk," Mittelstaedt says. "Also, with the focus always on performance, there is an attitude of, 'Okay, we made a mistake. Let's just straighten it out and get on with what we are doing.' Managers don't see any upside in analyzing and understanding the mistake chain." He cites a story in the business press earlier this fall on Hewlett Packard's recent decision to analyze why one of its divisions had not performed well and what could be learned from that experience. "It was the first time I had seen an announcement like that from a major company saying it was going to investigate itself."

A Culture of Supremacy

The most disastrous sequence of business errors that Mittelstaedt describes in his book is the one that led to Enron's collapse. "The chain of mistakes was so long, and in many cases purposeful in that [executives] were focused on trying to beat the system and drive up earnings," says Mittelstaedt, who divides his book into mistakes that caused economic damage to the company but were not life-threatening, and those that threatened the entire viability of the firm. Enron was an example of the latter, and it is part of a chapter titled "Cultures that Create 'Accidents,'" which includes analyses of what went wrong at American Medical International, Ford and Firestone in addition to Enron. "Culture is powerful," Mittelstaedt says, "but what creates success may also kill you." The cultures of companies can, especially in the early stages, help organizations see market trends before others, grow faster and weather competitive threats. And yet the same powerful force that binds an organization together for success "can also be a catalyst for, or even a cause of, failure."

At Enron, Mittelstaedt says, all the mistakes made-including aggressive financial management and lack of oversight by the board and committees-"were the direct result of a culture of supremacy that was built consciously by CEO Jeffrey Skilling, CFO Andrew Fastow and others. They believed that the management team at Enron was simply more intelligent, insightful and skilled in all business matters than anyone else in the world."

In a chapter subsection called "Enron-Living on the Edge and Loving It," Mittelstaedt describes Enron as "one of the most complex mistake chains imaginable ... a case of Multiple Failures to Manage Multiple Mistakes." Once arrogance "became the dominant behavior for senior management at Enron, another very dangerous effect took place that had to do with pushing boundaries. Enron got so used to believing it could change the rules of the game ... that it used structures so convoluted that the only conceivable purpose was to give the appearance of improved performance while obfuscating the truth ... The entrepreneurial visionary spark and culture that had created early success ... was smothered by the actions of senior executives who took risks to support their egocentric needs."

Corporate culture, Mittelstaedt says, is clearly a critical part of any company. But "if an organization's culture is one that discourages the delivery of bad news, then people will be afraid to speak up about problems they see." Why, he asks, do we still talk about the Johnson & Johnson Tylenol crisis from 1982-when seven people in the Chicago area died from Tylenol laced with cyanide-whenever there is a discussion of corporate culture? "Because it's an extraordinary example of a company where people didn't have to be told to do the right thing. It was ingrained in their blood, in their DNA. A plan came together very quickly and the product was recalled. The company didn't say it was not going to do a recall because the deaths happened only in the Chicago area. The company understood that it could never know that for certain."

Most of the examples in Will Your Next Mistake Be Fatal? do not involve massive fraud (Enron) or death (airline crashes); they are more the result of a series of bad judgment calls that mushroom into a series of interrelated and harmful consequences for the company. The book, for example, analyzes Xerox's failure to commercialize technologies developed in its famous Palo Alto Research Center (PARC) where some of the most important innovations in personal computing, networking and printing had taken place. It looks at recent missteps by Motorola which has lost market share to Nokia's smaller, more stylish cell phones, was slow to make the shift from analog to digital cell phone technology, and in 2003 failed to anticipate demand for color-screen phones with cameras, among other mistakes. McDonald's is studied for its failure to change a culture that emphasized standardization and sticking to tried-and-true menus at a time when consumers wanted more food choices. While other fast food restaurants began to introduce product innovations for baby boomers who had eaten one too many Big Mac, McDonald's just kept discounting the goods it already had. Although McDonald's "culture of operational excellence was intact, the growth and diversification efforts got off track," wrote Mittelstaedt, adding, however, that the past year has brought strategic change and vast improvements in the company's performance.

The Tipping Point

The goal in avoiding costly chains of mistakes is not for companies to be mistake- free, Mittelstaedt says. "If you do not make any mistakes, you may not be taking enough risks, and failing to take any risks at all may be the most dangerous type of mistake a business can make." The objective instead is to "find ways to stop mistakes quickly once they are made, and to learn from them in the process."

Mittelstaedt cites a book that came out in 1994 whose authors identified 18 companies as "visionary," including Boeing, Ford, Hewlett Packard, Merck, Motorola, Sony and Walt Disney. Yet in the last decade, all of these companies "have fallen on harder times ... and are seeing questions raised about their futures," he says. "All have made serious mistakes or initiated a chain of mistakes that accelerated their fall from the pedestal of business admiration."

Perhaps the one common theme in their difficulties is that they "hung on to what made them great too long. Once you recognize that the world has changed and there is nothing you can do about that, then you have to change your strategy." Kodak, for example, didn't act quickly enough to commercialize digital technologies. "The problem is money," Mittelstaedt says. "Kodak was making so much money under the old model. It's tough to get the timing right. A company lulls itself into thinking it can wait and suddenly, the market has passed it by.

"So there is a tipping point that usually comes from the external market. In the cases of Motorola, IBM and Kodak, the tipping point was created in the marketplace, and the companies ignored the data longer than they should have." In IBM's case, however, the company made some huge mistakes "but also kept rising above them, the most recent example being its turnaround in the 1990s under Louis Gerstner," Mittelstaedt says.

He wants corporate managers to recognize that there is a chain of events that leads to the visible mistake that finally catches people's attention. "Many executives don't acknowledge the chain. They see the final mistake and think there wasn't an early warning that they could have noticed. The point my book makes is that there are many places you can intervene, especially if you have designed both processes and structures whose function in internal governance is to catch and investigate mistakes." The process can range from a standardization of operating procedures to a focus on customer service. "Customers may be your most important external sensors in the market. Yet a company's marketing/customer service division is often isolated from strategy and finance functions. Consequently, much of that valuable customer data is lost."

Will Your Next Mistake Be Fatal? includes, among its chapters, one on the sequence, and consequences of, mistakes made by small businesses, and a chapter on mistake scenarios in entire industries, including the auto, airline and personal computer industries. At the end is a summary of 38 insights associated with "accidents, incidents and successes" that can be used as a guide for managers when examining their own organizations.

Doing things right in business "has gotten a lot of press in recent years," Mittelstaedt writes in this book. "We seem to have finally discovered that just having ideas is not enough. Results are what really matter, and results come from both ideas and execution, but the biggest enemy of great execution is mistakes."

While serving as an office in U.S. Navy nuclear submarines in the late 1960s, Mittelstaedt says he learned one thing right from the beginning: "There is no partial credit in the fleet. You win or lose in battle. There is no in-between-something that is especially true in the unforgiving environment hundreds of feet below the surface of the ocean." In many ways, he writes, "these are the most challenging times for business in a generation. We have all been awakened to the need to look beyond the comfort of our day-to-day existence, to the need to synthesize the implications of external events, including heightened competition. That, in turn, leads to the need to focus not just on execution but on flawless execution. There is no partial credit in the Fleet"-something to keep in mind when someone asks the question, Will Your Next Mistake Be Fatal?

Dr. Mittelstaedt is the first to provide a comprehensive, systematic framework called M3 that helps to manage mistakes so they don't lead to disaster. Leaders could use M3 to identify warning signals, build systems that prevent 'failure chains' from spiraling out of control and ultimately mobilize company's resources to prevent mistakes.

Another valuable source book for organizational (and personal) success from the Wharton School

Every disaster is the result of a mistake or a series of mistakes that people in an organization (from the top down) failed to recognize or overlooked. The author introduces the concept of M3-managing multiple mistakes. By using fascinating case studies of companies that either failed or flourished (by doing everything right or successfully recovering from mistakes), he proves that M3 is cost effective. Mr. Mittellstaedt clearly analyzes the failures or successes of companies such as Ford, Firestone, Enron, Dell, Apple, Toyota, and Southwest to name a few. He also includes valuable advice for small enterprises as 90 percent of all U.S. businesses have fewer than 20 employees.

In each chapter, the author has a section called Insights; they number one through 38 throughout the book. An example, culled from a lifetime of observation, research, and experience as a consultant, is Insight #10: A significant portion of execution-related mistakes occur because criteria for measuring progress and performance have not been identified and/or communicated explicitly.

In a competitive capitalistic system, never taking a risk is the enemy of success; learning to manage risk to minimize failure is the goal. In Chapter 10, the author gives you a precise and clearly delineated blueprint for success. He closes with an exceedingly useful Summary of Insights from this highly researched and invaluable book.

I read this just after reading the 9/11 Commission report on the World Trade Center disaster. Just after yet another news story on Hurricane Katrina. Many of the same rules seem to apply. Perhaps Dr. Mittelstaedt could think of his next book in terms of the world outside of business.

If you think "fatal" is hyperbolic, consider these statistics which Michael Gerber shares in E-Myth Mastery: "Of the 1 million U.S. small businesses started this year [2005], more than 80% of them will be out of business within 5 years and 96% will have closed their doors before their 10th birthday." These are indeed chilling statistics. There are others which indicate that many once large and successful companies have either disappeared or were acquired. Reasons for business failures vary from one company to the next, of course, but in many instances there seems to have been one serious, eventually fatal mistake which set in motion what proved to be a path to failure.

As Mittelstaedt explains in the Introduction, "This book is about the avoidable traps that we set for ourselves as business people which lead to disasters. It is about what we can learn from the patterns of action or inaction that preceded disasters (sometimes called `accidents') in a variety of business and nonbusiness settings in order to avoid similar traps and patterns of mistakes. This goes beyond kaizen and six sigma on the factory floor to M3 [i.e. managing multiple mistakes] in the executive suite and at all operational levels of companies." Mittelstaedt identifies a very common pattern. First, problem which goes undetected, a subsequent problem then exacerbates it, disbelief or denial as the situation becomes worse, concealing the nature and extent of the situation as it becomes even worse, then shock in response to a situation out-of-control, and finally a significant (avoidable) loss of life, financial resources, or both. Later, of course, accusations, recreations, assignment of blame, punishments, etc. Neglect or denial of "early warning signs" is a common problem in and of itself.

Mittelstaedt wrote this book to help decision-makers understand how and why business is like an engine, requiring energy to get a flywheel rotating at the correct speed and in the proper direction to produce whatever the desirable results may be. His correctly emphasizes the importance of:

1. Identifying which potential disasters would result in the greatest damage.

2. Identifying where and when they are most likely to occur.

3. Identifying what are generally referred to as "early warning signs."

4. Making certain that everyone involved knows what they are, how to recognize them, and what to do in response to them. It is quite impossible to exaggerate the importance of the word "everyone."

5. Recognizing and generously rewarding vigilance.

While examining a number and variety of operational and strategic mistakes in his book, Mittelstaedt focuses on what specifically is involved in managing multiple mistakes. His observations and suggestions are presented within a framework which seems relevant to any organization, regardless of its size or nature. His objective is to help his reader "learn to recognize the patterns of mistakes that precede most business disasters and take actions to eliminate the threat [i.e. preventive maintenance] or to reduce the incident to something that does not require full-scale crisis management." The M3 concept is based on Mittelstaedt's belief that nearly all serious accidents, whether physical or business, are the result of more than one mistake. Hence the importance of "breaking the chain" of mistakes ASAP or the damage that has already been done and its cost will increase -- and probably accelerate -- exponentially.

Early on in his book, Mittelstaedt cites the "Five Deadly Sins" which Peter Drucker once described in an article published by The Wall Street Journal (October 21, 1993).

1. "Worship of high profit margins and premium pricing"

2. "Mispricing a new product by charging what the market will bear"

3. "Cost-driven pricing"

4. "Slaughtering tomorrow's opportunity on the alter of yesterday"

5. "feeding problems and starving opportunities"

Mittelstaedt views them as examples of longer-term "cultural mistakes" that many companies make with regularity. "Damage does not occur overnight; it occurs slowly and consistently until someone or something breaks the chain and fixes the problem." That "someone" may be the CEO but perhaps Mittelstaedt's more important point is that literally everyone involved in the given enterprise must be well-prepared to recognize seemingly insignificant but potentially quite serious "warning signs" as early in the process as possible, then respond effectively or enlist others to do so. I know from my own experience that a minor cut if untreated immediately can become a major infection. The same is true of organizations.

Mittelstaedt cites and then discusses a number of "mistake chains" which include the Eastern Airlines flight 401 crash, schoolchildren becoming sick after drinking Coke in western Belgium, the financial losses resulting from American Express' Optima card, the crash of Eastern Airlines 90, the failure of Webvan, Intel's flawed chip, Xerox's failure to commercialize PARC's technologies, and various problems resulting from the confluence of Motorola's strategic and execution mistakes.

The details of such disasters reveal both a "classic pattern" (page 26) and a series of 38 "Insights" which Mittelstaedt conveniently summarizes in an appendix (pages 289-298). Throughout the book's narrative, each is presented within a real-world context. I especially appreciate the aforementioned Appendix as well as the provision of various quotations, check-lists, caveats, and reiterations of key points within a reader-friendly format. Ultimately, this book must be judged on the quality of thinking and writing, organization and presentation of material, substance of content, and potential value to its readers. As my rating correctly indicates, I think this book makes an outstanding contribution to our understanding of a subject which really has not -- until now -- received the attention it deserves.

Those who share my high regard for Mittelstaedt's exceptionally informative book are urged to check out Robert Sobel's When Giants Stumble: Classic Business Blunders and How to Avoid Them, Robert F. Hartley's Management Mistakes and Successes, Michael Levine's Broken Windows, Broken Business: How the Smallest Remedies Reap the Biggest Rewards, Sydney Finkelstein's Why Smart Executives Fail: And What You Can Learn from Their Mistakes, Forbes Great Success Stories: Twelve Tales of Victory Wrested from Defeat, and Forbes' Greatest Business Stories of All Time ( Forbes Magazine Staff).