Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years (Hardcover)

~ Paul B. Carroll (Author), (Author)
Key Phrases: advocate review, synergy strategy, cost synergies, Green Tree, Loewen Group, United States (more...)

Editorial Reviews

From Publishers Weekly

Carroll (Big Blues) and Mui (Unleashing the Killer App) collaborate to perform an autopsy on some of the most spectacular business failures and corporate disasters in recent times, hunting down the fatal strategies responsible. The authors examine more than 750 inexcusable corporate collapses, neatly cataloguing them into eight common failure patterns: doomed practices, including the Illusion of Synergies, as illustrated by the ruinous merger attempts by Sears and Dean Witter; Faulty Financial Engineering, as conducted by Tyco and Revco; Staying the (Misguided) Course Too Long, a sin committed by Kodak, which missed the boat on digital photography; and Consolidation Blues, as depicted by U.S. Airways, which crashed as a consequence of buying up too many companies too quickly. While there are assuredly lessons in defeat and the authors' detailed analysis and bracing honesty is welcome, readers hoping for a more encouraging or inspirational business book might find Carroll and Mui's avalanche of disastrous failures, avoidable bankruptcies and destruction of shareholder value a depressing—if highly instructive—read. (Sept.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

With lessons learned from extensive research into 750 major bankruptcies between 1981 and 2006, including Enron, Conseco, Texaco, Kmart, and Refco, authors Carroll and Mui set out to help corporate management avoid failure from bad strategies. Almost one-half of the failures could have been avoided if the companies had been aware of strategy pitfalls or had become cautious in the face of clear warning signs. The authors describe seven basic strategic failures, including estimating synergy from mergers, which proves to be exaggerated; aggressive use of accounting or financing mechanisms; staying the course in spite of a clear business threat; and riding the wrong technology, which fails. We also learn about the psychological implications of management banding together when something is wrong rather than individuals standing up for what is right and the important benefits of introducing a devil’s advocate into a strategy’s deliberative process. This well-researched book provides valuable insight for corporate executives and investors. --Mary Whaley

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Product Details

• Hardcover: 310 pages
• Publisher: Portfolio Hardcover (September 11, 2008)
• Language: English
• ISBN-10: 1591842190
• ISBN-13: 978-1591842194
• Product Dimensions: 9.1 x 6.1 x 1.3 inches
• Shipping Weight: 14.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.7 out of 5 stars  See all reviews (35 customer reviews)
• Amazon.com Sales Rank: #281,817 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

12 of 13 people found the following review helpful:

5.0 out of 5 stars Billion Dollar Lessons, September 11, 2008

By	Leslie D. Ball (Scituate, MA) - See all my reviews (REAL NAME)

This is one of the best business books that I have ever read. While I knew parts of many stories in the book, I never realized WHY certain events happened. When I have read about big corporate blunders in the past I always asked "Why did this happen?" The authors answer that question and put the huge blunders into several categories that are easy to understand and relate to.

I liked the "Tough Questions" found at the end of each chapter. If business executives pay attention to just those questions, then they won't be involved in one of these huge mistakes.

I also want to say that when I sat down to read it, I expected to read for 30 minutes and put it down. This was a page turner and I didn't stop reading until I finished.

Great book! Well written! Needed by the Business Community!

13 of 15 people found the following review helpful:

5.0 out of 5 stars Does your company need "failure insurance"?, September 11, 2008

By	Robert Morris (Dallas, Texas) - See all my reviews (TOP 50 REVIEWER)    (REAL NAME)

Two of the business thinkers I admire most are Jim Collins and Jason Jennings. Collins has written two books in which he explains how certain companies are built to last and how other companies have been able to make a "leap" from good to great. Jennings has written several books in which he explains what all high-performance companies share in common, with two of their attributes being that (a) they have a bold, compelling vision but also "nail the fundamentals, and (b) produce more and better with fewer resources and do it faster. There are important lessons to be learned from business success but, as Paul Carroll and Chunka Mui explain in their book, there are valuable lessons to be learned from business failures. For example, rather than because of lack of execution, poor timing, or bad luck, "many of the of the really big failures stemmed from bad strategies. Once launched, the strategies were doomed to fail, and these failures probably could not have been prevented by even spotless execution - unless the implementers were licensed to kill the strategy itself." That said, are doomed strategies avoidable or are fatal flaws only recognizable in hindsight? To answer this question, Carroll and Mui embarked on rigorous research the "billion-dollar lessons" they learned are provided in this volume.

Among their most interesting revelations is that failures tended to be associated with one of seven types of strategy. "Failures could certainly happen for other reasons, but if a company followed one of these strategies it is far more likely to fail." Here's where it gets really interesting. For as long as I can remember, all of these strategies have been included among those that organizations are most likely to select: synergy, financial planning, rollups, "staying the course," adjacencies, "riding" technology, and consolidation. Carroll and Mui duly acknowledge the merits of each and the fact that they have served many organizations well. So what's the problem? In many instances, excess is the root cause. For example, overestimating the potential benefits of mergers (e.g. AOL Sears, Time Warner, UnumProvident,), aggressive accounting that crosses the line into illegality (e.g. Conseco, Green Tree Financial, and Spiegel), buying dozens, hundreds, and even thousands of local businesses and combining them in a regional or national "behemoth" (e.g. AutoNation, Tyco, and Waste Management), and ignoring or underestimating a serious threat to "business as usual" and then making insufficient adjustments (e.g. Kodak, Mobile Media Communications, and Pillowtex).

Carroll and Mui devote a separate chapter to each of the seven categories of corporate strategy involved in what they assert are avoidable failures. "We aren't saying that these seven strategies are doomed to failure. Far from it. In the right circumstances, all of these strategies can succeed splendidly. All we're saying is that these strategies are danger zones. If you are pursuing one of these strategies, you need to be extremely alert to what could go wrong, and ready to react before your business is flirting with disaster." In Chapters 10 and 11, they explain several processes by which to "build disagreement into the formulation of strategies." On of them is identified as the "devil's advocate review" to bring all possible objections to the surface, to enable those involved to consider every possible risk and reward and then cross-rank them in terms of relative importance and degree of probability. The objective is not to generate an alternative to the proposed strategy. Rather, to subject that which is proposed to rigorous scrutiny. "The process isn't designed to produce the best answers; it's designed to produce the best questions." For these and other reasons, Carroll and Mui view the information, insights, and recommendations they offer in their book as "failure insurance."

Throughout most of their narrative, I especially appreciate their brilliant use of real-world mini-case studies as well as their strategic application of two reader-friendly devices, "Red Flags" and "Tough Questions," that serve two very important purposes: they help to create and then maintain what is (in effect) an early-warning system for those engaged in a strategy planning process or who have only recently embarked on executing a strategy; also, the "Red Flags" and "Tough Questions" material facilitates, indeed expedites frequent review of key points later. Redundant verification is imperative, especially in a competitive marketplace in which change is the only constant.

One of my favorite New Yorker cartoons features two parents in formal wear seated at one end of a long table in a vast dining hall, their son seated at the other end of the table. High above them, chandeliers hang from a cathedral ceiling. Elaborate tapestries adorn the walls together with family portraits in lavish frames. Several uniformed attendants dutifully stand nearby. The child stares at the dinner plate that has just been placed before him. "I say it's spinach and I say to hell with it."

I thought of that cartoon as I neared the conclusion of this book when Carroll and Mui make a point worthy of special attention and emphasis: The need to establish and then sustain what could be characterized as a "culture of candor," one in which principled dissent is not only strongly encouraged but indeed required and (yes) gratefully acknowledged. Many corporate strategies resemble a naked emperor. Its benefits are analogous to a wardrobe that doesn't exist. In Hans Christian Andersen's tale, only a child speaks up. Who will do so in a corporation about to commit to a flawed strategy, one that is doomed to fail? "We're willing to bet that in every failure that we studied, there were critical thinkers in the heart of the organization who saw the dangers of the proposed strategy. We hope to legitimize their voices [especially of those in middle management] to question and, when appropriate, to quash doomed strategies while they are still on the drawing board." It is a result devoutly to be wished.

8 of 9 people found the following review helpful:

5.0 out of 5 stars Other people's lessons, as important as other people's money, September 21, 2008

By	Gary Katz - See all my reviews (REAL NAME)

I enjoyed reading Billion Dollar Lessons. Many business books read like school texts, but these authors connect with each example and the story to easily teach each lesson.

Also, while so many business and leadership books on the market focus on what worked well, these authors bring attention to how those same strategies can backfire. Each of these strategies can play a role in a successful enterprise, but Mr. Carrol and Mr. Mui elucidate nicely how managment can fool itself into believing that any one strategy can serve as the panacea to create business success.

I recommend this book.