Friday, June 3, 2011

3 Common Reasons Businesses Fail–and How to Avoid Them

By Margaret Heffernan | June 2, 2011

Margaret Heffernan
Margaret Heffernan
Margaret Heffernan
Margaret Heffernan
Cover of Cover via AmazonMargaret Heffernan worked for 13 years as a producer for BBC Radio and Television before running her first company. She has since been CEO of five businesses in the United States and United Kingdom, including InfoMation Corporation, ZineZone Corporation and iCAST Corporation. She has been named one of the Internet's Top 100 by Silicon Alley Reporter and one of the Top 100 Media Executives by The Hollywood Reporter. Her books include The Naked Truth, How She Does It: How Female Entrepreneurs are Changing the Rules for Business Success , and the upcoming Willful Blindness. She has appeared on NPR, CNN, CNBC, and the BBC, and writes for Real Business,The Huffington Post, and Fast Company.

… After every disaster - Lehman Brothers, Deepwater Horizon, WaMu, Fukishima and 50 - 80 percent of M&A deals - participants look back and see all the warning signs they missed at the time. What made them so blind?

Multiple psychological, neurological and social causes explain willful blindness. But some of the biggest causes of disaster are among the simplest to avoid. Here are three:

1. Too little sleep … Just because we can keep turning up to work, we assume that we’re still competent. The brain science says otherwise. When tired, most of our energy goes to keeping awake; what we lose is our capacity for critical thinking. … But critical thinking is what we most need when doing deals and making crucial decisions.

2. Too much money
Lots of companies … pay ridiculous salaries. … But there’s a mounting body of evidence that shows that, the more money you have, the less socially engaged you are. You simply stop caring about other people. This is not a great mindset with which to do business.

3. An aversion to conflict
140 pxImage via Wikipedia… Conflict is a vital way to test new ideas and forge new thinking. The challenge isn’t to avoid conflict - but to learn to do it well. The National Transportation Safety Board estimated that 25 percent of all aircrashes could have been prevented if the pilot had been challenged when making an error. …

More sleep, less pay and a little more debate: that can’t be that hard — can it?

Watch my interview on the BNET Live show on this topic here:

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