Wednesday, January 25, 2012

10 dumb mistakes companies make over and over - CBS News

CBS News
By Steve Tobak

"Not again!" (Photo courtesy Flickr user Alex E. Proimos)

(MoneyWatchCOMMENTARY These days I'm constantly bombarded with books and articles about why leaders, executives and companies fail. … Most of the "sage" advice is pretty weak, running the gamut from the absurdly obvious to the obviously absurd.

One article by author and psychologist Jack Stark lists the top five reasons leaders fail as greed, insecurity, power, arrogance and narcissism. Can't say I disagree, but I seriously doubt if any of the CEOs I know will be running to a shrink anytime soon. Maybe they should.

Mark Stevens, author of "Your Marketing Sucks," says companies fail because of "lack of leadership." Well, thank you Captain Obvious. To be fair, he also lists "complacency" and "conventional thinking," which I do agree with.

Why leaders need a good shrink, not a coach 10 reasons why smart people do dumb things

… Here are my top 10, along with some recent and notable examples:

Seal of the United States bankruptcy court. Ch...
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Killing promising new businesses to maintain old ones. Kodak (EK) just filed for Chapter 11 bankruptcy protection after years of mismanagement and playing catch-up in digital photography. Ironically, Kodak invented the digital still camera in 1975 and then sat on it for a quarter of a century … . When will companies learn that if you don't cannibalize your own business, competitors will do it for you?

Image representing Research In Motion as depic...
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Lack of objectivity and perspective. Probably the most common mistake executives make is being too self-contained … . They stop asking questions like, "How are we doing," and when a daring customer or employee tries to provide some feedback, they ignore it. As failure modes go, this one even takes down big companies like BlackBerry maker Research in Motion (RIMM), for example.

Image representing Yahoo! as depicted in Crunc...
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Failure to articulate the company's strategy. … [There] are large, public companies with CEOs who cannot tell you what the company's unique vision and value proposition are. As one VP said of Scott Thompson, the new CEO of Yahoo (YHOO), "Maybe he can let us all finally know what Yahoo is." …

Chronically bleeding red ink. Over the years, I've watched dozens of once prominent companies continue to lose money, quarter after quarter, year after year, until they're either acquired for peanuts or they file for bankruptcy protection. …

Not challenging the status quo. Many famous leaders have said it a lot of different ways, but it always comes down to the same message: when you stop challenging the status quo, you're dead. Few companies are great at constantly reinventing themselves … But the ones that resist change and try to hold onto what they were are lost.

Image representing AOL as depicted in CrunchBase
Image via CrunchBase
Poor risk management. The flipside of taking no risks … is unnecessarily betting the company on huge mega risks or jumping from one strategy to another hoping that one will actually stick. An example of the latter is the current incarnation of AOL (AOL). An example of the former is the old AOL's merger with Time Warner (TWX). …
The second logo for AOL, used from 2006–2009
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Ignoring hot new trends. Resting on your laurels, ignoring viral trends and failing to innovate turns market leaders into dinosaurs in record time. [There’s] Nokia (NOK), Yahoo, and for some historical perspective, big iron computer companies like Digital Equipment Corp. whose CEO couldn't understand why anyone would ever want to own a computer.  

Dumb customer service policies. … [Some] companies have systemic issues with bad policies and procedures. The reason, I think, is the inherent conflict between the customer's satisfaction and the company's customer service expense and efficiency. Still, that's no excuse for customer service nightmares we all experience, like these.

Harassing customers. We all get spam in our inboxes, but most annoying is the spam you can't get rid of no matter how many times you unsubscribe. Don't these companies know better? … Take it from me: persistence is fine, but harassment has the opposite effect.

The Peter Principle. Last but certainly not least is the gold standard of executive failure, the Peter Principle. Incompetence that breeds more and more incompetence, … is the perennial gift of business mediocrity that never stops giving.
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