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Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years
Welcome to Business Failure 101
In the 1960s, IBM CEO Tom Watson called an executive into his office after his venture lost $10 million. Watson asked the man if he knew why he’d been called in. The man said he assumed he was being fired. Watson told him, “Fired? Hell, I spent $10 million educating you. I just want to be sure you learned the right lessons.”
In Billion-Dollar Lessons, Paul Carroll and Chunka Mui draw on research into more than 750 business failures to reveal the misguided tactics that mire companies again and again. There are thousands of books about successful companies but virtually none about the lessons to be learned from those that crash and burn.
Lesson One: The Cold Hard Facts
Between 1981 and 2006, 423 major publicly held U.S. companies with combined assets totaling $1.5 trillion filed for bankruptcy. Hundreds more took huge write-offs, discontinued major operations, or were acquired under duress. Again and again, companies follow the same wrong-headed strategies that brought down businesses in the past. The sub-prime mortgage crisis that cost companies tens of billions of dollars in 2007 and 2008 echoes the ill-conceived strategies that pushed Green Tree Financial and Conseco into bankruptcy years earlier. Tom Watson’s executive’s $10 million lesson seems cheap by comparison.
Lesson Two: Failure Patterns
Carroll and Mui found that the number one cause of failure was misguided strategy—not sloppy execution, poor leadership, or bad luck. These strategic errors fall into seven categories, including:
* Pursuing nonexistent synergies: Quaker Oats’ purchase of Snapple was supposed to capitalize on distribution synergies but instead led to a $1.7 billion write-off.
* Moving into an “adjacent” market that isn’t really adjacent: Avon decided its “culture of caring” qualified it to operate retirement homes. Subsequent write-offs totaled $545 million.
* Buying more problems than efficiencies through misguided consolidation: Despite pioneering the discount department store years before Sam Walton came along, Ames Department Stores flubbed consolidation efforts, landing in bankruptcy twice before eventually liquidating.
Lesson Three: Avoid Making the Same Mistakes
But there’s light at the end of the tunnel: Billion-Dollar Lessons provides proven methods that managers, boards, and even investors can adopt to avoid making the same mistakes. While there’s no way to guarantee success, this book draws on vivid, off-the-beaten-track examples to help you avoid failure by showing you how to thoroughly assess potentially disastrous strategies before they bring your company down.
Required Reading
Think of Billion-Dollar Lessons as the flip side of Good to Great, but just as eye- opening and essential as that business classic. There’s enormous value in learning from companies that lost millions (if not billions) in pursuit of strategies that led to spectacular flameouts. Everyone makes mistakes, but why make the same mistakes over and over?
In the 1960s, IBM CEO Tom Watson called an executive into his office after his venture lost $10 million. Watson asked the man if he knew why he’d been called in. The man said he assumed he was being fired. Watson told him, “Fired? Hell, I spent $10 million educating you. I just want to be sure you learned the right lessons.”
In Billion-Dollar Lessons, Paul Carroll and Chunka Mui draw on research into more than 750 business failures to reveal the misguided tactics that mire companies again and again. There are thousands of books about successful companies but virtually none about the lessons to be learned from those that crash and burn.
Lesson One: The Cold Hard Facts
Between 1981 and 2006, 423 major publicly held U.S. companies with combined assets totaling $1.5 trillion filed for bankruptcy. Hundreds more took huge write-offs, discontinued major operations, or were acquired under duress. Again and again, companies follow the same wrong-headed strategies that brought down businesses in the past. The sub-prime mortgage crisis that cost companies tens of billions of dollars in 2007 and 2008 echoes the ill-conceived strategies that pushed Green Tree Financial and Conseco into bankruptcy years earlier. Tom Watson’s executive’s $10 million lesson seems cheap by comparison.
Lesson Two: Failure Patterns
Carroll and Mui found that the number one cause of failure was misguided strategy—not sloppy execution, poor leadership, or bad luck. These strategic errors fall into seven categories, including:
* Pursuing nonexistent synergies: Quaker Oats’ purchase of Snapple was supposed to capitalize on distribution synergies but instead led to a $1.7 billion write-off.
* Moving into an “adjacent” market that isn’t really adjacent: Avon decided its “culture of caring” qualified it to operate retirement homes. Subsequent write-offs totaled $545 million.
* Buying more problems than efficiencies through misguided consolidation: Despite pioneering the discount department store years before Sam Walton came along, Ames Department Stores flubbed consolidation efforts, landing in bankruptcy twice before eventually liquidating.
Lesson Three: Avoid Making the Same Mistakes
But there’s light at the end of the tunnel: Billion-Dollar Lessons provides proven methods that managers, boards, and even investors can adopt to avoid making the same mistakes. While there’s no way to guarantee success, this book draws on vivid, off-the-beaten-track examples to help you avoid failure by showing you how to thoroughly assess potentially disastrous strategies before they bring your company down.
Required Reading
Think of Billion-Dollar Lessons as the flip side of Good to Great, but just as eye- opening and essential as that business classic. There’s enormous value in learning from companies that lost millions (if not billions) in pursuit of strategies that led to spectacular flameouts. Everyone makes mistakes, but why make the same mistakes over and over?
310 pages, Hardcover
First published September 11, 2008
About the author
Paul B. Carroll
9 books5 followersPaul B. Carroll has excelled at the highest levels of journalism for decades, while pushing the state of the art on business strategy and innovation.
For 17 years, he was a reporter and editor at the Wall Street Journal, where he wrote about information technology. The WSJ nominated him twice for the Pulitzer Prize, and he was a finalist once. He left to become a partner at Diamond Management & Technology Consultants, where he founded and edited a magazine that was a finalist for the National Magazine Award for General Excellence. For the past eight years, Paul has been the editor-in-chief at Insurance Thought Leadership, an affiliate of The Institutes that drives innovation in insurance.
He is the best-selling author of numerous books, beginning with “Big Blues: The Unmaking of IBM,” published by Crown in 1993. In 2008, Paul and Chunka Mui published “Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years,” based on 20 researchers’ two years of analysis of 2,500 corporate disasters. While Jim Collins looked at success stories and said, Here’s how to be like those guys, “Billion Dollar Lessons” looked at failures and said, Here’s how not to be like those guys. The Wall Street Journal review called the book “fascinating…, insightful and crisply written.” Most recently, Paul, Chunka, and Tim Andrews have published “A Brief History of a Perfect Future: Inventing the World We Can Proudly Leave Our Kids by 2050.”
Paul was the writer on the National Broadband Plan, which the FCC submitted to Congress in 2010, and on a report that the Department of Energy produced later that year on a $36.5 billion innovation initiative funded by the Stimulus Act.
He and Chunka have founded a boutique consulting firm, the Future Histories Group, which stress tests corporate strategies. They have worked with senior management at numerous major organizations.
Paul graduated magna cum laude from Michigan State University’s Honors College at age 19 and earned a master’s degree in journalism from Northwestern University the following year.
For 17 years, he was a reporter and editor at the Wall Street Journal, where he wrote about information technology. The WSJ nominated him twice for the Pulitzer Prize, and he was a finalist once. He left to become a partner at Diamond Management & Technology Consultants, where he founded and edited a magazine that was a finalist for the National Magazine Award for General Excellence. For the past eight years, Paul has been the editor-in-chief at Insurance Thought Leadership, an affiliate of The Institutes that drives innovation in insurance.
He is the best-selling author of numerous books, beginning with “Big Blues: The Unmaking of IBM,” published by Crown in 1993. In 2008, Paul and Chunka Mui published “Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years,” based on 20 researchers’ two years of analysis of 2,500 corporate disasters. While Jim Collins looked at success stories and said, Here’s how to be like those guys, “Billion Dollar Lessons” looked at failures and said, Here’s how not to be like those guys. The Wall Street Journal review called the book “fascinating…, insightful and crisply written.” Most recently, Paul, Chunka, and Tim Andrews have published “A Brief History of a Perfect Future: Inventing the World We Can Proudly Leave Our Kids by 2050.”
Paul was the writer on the National Broadband Plan, which the FCC submitted to Congress in 2010, and on a report that the Department of Energy produced later that year on a $36.5 billion innovation initiative funded by the Stimulus Act.
He and Chunka have founded a boutique consulting firm, the Future Histories Group, which stress tests corporate strategies. They have worked with senior management at numerous major organizations.
Paul graduated magna cum laude from Michigan State University’s Honors College at age 19 and earned a master’s degree in journalism from Northwestern University the following year.
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Displaying 1 - 30 of 71 reviews
May 8, 2021
I found this book from an old Wall Street Journal book review that absolutely raved about it, and it's easy to see why. It's truly one of the best and most helpful business book I've ever read. There are so many books that talk about a business' success, so it's refreshing to see that concept turned on its head to give lessons that feel more applicable in the real world. You can tell that this was a very thoroughly researched book, and the writing is crisp and clear. This is a book that anyone in any business sector should read — and now I'm recommending it to you.
March 11, 2015
I'm a big fan of the "mistakes to avoid" genre, and this book is an excellent representative of it.
The authors romp through a broad spectrum of industries, outlining cases of how companies incurred big losses -- everything from metal ore shippers to film photography -- and delve into the dynamics that make these large failures possible.
From an investing point of view, both the examples and the insight into dynamics behind them are very valuable. One of the several patterns the authors highlight is the rollup -- where a company acquires assets of many small companies and seeks to either raise prices, or eke out efficiencies from economies of scale. Well, what is usually discounted is that acquired businesses may lose some of their customer intimacy, the competitors may pounce during the integration difficulties, and diseconomies of scale from loss of local agility may -- in some industries -- outweigh the benefits. In general, the rollup plays rose in popularity when backoffice IT was on the rise, so integration of backoffice systems is often envisioned, but not as often realized.
The authors perceptively point out that what would be nice for the company is not always what the customer dreams about. For instance, retailer acquisitions where the acquired stores switch their model to that of the buyer -- for instance from coupon inc and frequent sales to "everyday low prices" can lead to large customer defections. Since the book has come out, JC Penney seems to have repeated this history which it failed to heed.
The second part of the book shifts gears from case studies to how managers of large companies can adjust the decision processes to steer clear of large mistakes. It zooms in on the cognitive biases that come into play (like premature closure and conformity) and insightfully highlights that a CEO often wants (because of financial incentives or ego) to leave a legacy of executing a daring, industry-reshaping move. This bias for glory can cost a corporation dearly. The book goes over the frequently discussed experiments demonstrating human irrationality, but does so with some freshness -- after describing the Milgram's experiments about subjects administering shocks, the authors summarize thus: "... never trust a social scientist. Whatever he tells you he's testing surely isn't what's really going on."
In its brief but insight fool looks at specific failures (grouped into categories such as "Consolidation Blues", and "Deflated Rollups") the book also helped me better appreciate the difference between growing business organically versus growth through acquisition. In a sense, growth through acquisition is an inherently reducing activity -- as operations are consolidated, staff is fired and the acquired company's culture becomes both less independent and subjugated to the acquirer's. To make matters worse, the frequent acquisitions send out the signal to the prospective targets, who wind up extracting much of the hoped for economic gain of the consolidation. So, while "diworsification" should not be new to anyone, this book will help one understand the specific mechanisms involved, and perhaps even recognize related forms of it -- such as growth through acquisition of, for instance, mortgage servicing rights or other assets.
All in all, an insightful book that covers a lot of ground in relatively few pages, helping one build up their "latticework of mental models" and a set of cases of mistakes companies make. Five stars, worth re-reading.
The authors romp through a broad spectrum of industries, outlining cases of how companies incurred big losses -- everything from metal ore shippers to film photography -- and delve into the dynamics that make these large failures possible.
From an investing point of view, both the examples and the insight into dynamics behind them are very valuable. One of the several patterns the authors highlight is the rollup -- where a company acquires assets of many small companies and seeks to either raise prices, or eke out efficiencies from economies of scale. Well, what is usually discounted is that acquired businesses may lose some of their customer intimacy, the competitors may pounce during the integration difficulties, and diseconomies of scale from loss of local agility may -- in some industries -- outweigh the benefits. In general, the rollup plays rose in popularity when backoffice IT was on the rise, so integration of backoffice systems is often envisioned, but not as often realized.
The authors perceptively point out that what would be nice for the company is not always what the customer dreams about. For instance, retailer acquisitions where the acquired stores switch their model to that of the buyer -- for instance from coupon inc and frequent sales to "everyday low prices" can lead to large customer defections. Since the book has come out, JC Penney seems to have repeated this history which it failed to heed.
The second part of the book shifts gears from case studies to how managers of large companies can adjust the decision processes to steer clear of large mistakes. It zooms in on the cognitive biases that come into play (like premature closure and conformity) and insightfully highlights that a CEO often wants (because of financial incentives or ego) to leave a legacy of executing a daring, industry-reshaping move. This bias for glory can cost a corporation dearly. The book goes over the frequently discussed experiments demonstrating human irrationality, but does so with some freshness -- after describing the Milgram's experiments about subjects administering shocks, the authors summarize thus: "... never trust a social scientist. Whatever he tells you he's testing surely isn't what's really going on."
In its brief but insight fool looks at specific failures (grouped into categories such as "Consolidation Blues", and "Deflated Rollups") the book also helped me better appreciate the difference between growing business organically versus growth through acquisition. In a sense, growth through acquisition is an inherently reducing activity -- as operations are consolidated, staff is fired and the acquired company's culture becomes both less independent and subjugated to the acquirer's. To make matters worse, the frequent acquisitions send out the signal to the prospective targets, who wind up extracting much of the hoped for economic gain of the consolidation. So, while "diworsification" should not be new to anyone, this book will help one understand the specific mechanisms involved, and perhaps even recognize related forms of it -- such as growth through acquisition of, for instance, mortgage servicing rights or other assets.
All in all, an insightful book that covers a lot of ground in relatively few pages, helping one build up their "latticework of mental models" and a set of cases of mistakes companies make. Five stars, worth re-reading.
August 29, 2020
I'm honestly surprised more people don't rate this book 5 stars. After reading some of the reviews I was a little worried that I wouldn't find much relevance in this book. As I'm finishing it up, however, I've got to say that I've learned an awful lot of not just company failures but how anthropology mixes in with corporate culture.
If you're a fan of business, key metrics, or corporate anthropology, this book is for you. If not, you may find the writing too dry for your tastes as it cites countless studies and cases to show its points.
If you're a fan of business, key metrics, or corporate anthropology, this book is for you. If not, you may find the writing too dry for your tastes as it cites countless studies and cases to show its points.
November 21, 2020
A great book with many lessons that will benefit any reader.
May 25, 2020
Academic approach but rigourous to minimize any anecdotal/other bias. Some good quotes
-We may care deeply about customers but feeling often non reciprocal(eg insurance from utilities)
-Scariest villains are the good folks who turn bad(eg CEOs)
-Independent thinking can help middle managers avoid projects headed for disasters
-Cause linked products like craft beer or Snapple risk distributor misalignment if new owner
-Synergies should be adjusted for implementation/change management costs, and checked if partnerships can work instead(eg Hertz+Westin+United)-it will if benefits are OBVIOUS
-Some novel examples like GreenTree(30 year mortgages for 10-15 year trailer homes)
-Failling interest rates affects insurance companies(lower investment yields) and lenders(re-finance)
-Having pilot manager sit in the 2nd seat if they overrule safety rules, made deaths=0
-Abolition of devil's advocate aka black hat thinking role in Vatican made canonization 20x more (500/year) from 1983=>but antibody like rejection by those who ideas were lost is the risk
-We may care deeply about customers but feeling often non reciprocal(eg insurance from utilities)
-Scariest villains are the good folks who turn bad(eg CEOs)
-Independent thinking can help middle managers avoid projects headed for disasters
-Cause linked products like craft beer or Snapple risk distributor misalignment if new owner
-Synergies should be adjusted for implementation/change management costs, and checked if partnerships can work instead(eg Hertz+Westin+United)-it will if benefits are OBVIOUS
-Some novel examples like GreenTree(30 year mortgages for 10-15 year trailer homes)
-Failling interest rates affects insurance companies(lower investment yields) and lenders(re-finance)
-Having pilot manager sit in the 2nd seat if they overrule safety rules, made deaths=0
-Abolition of devil's advocate aka black hat thinking role in Vatican made canonization 20x more (500/year) from 1983=>but antibody like rejection by those who ideas were lost is the risk
March 12, 2010
I really wanted to like this book, as I'm a person who believes you can avoid mistakes yourself by learning from the mistakes of others. Unfortunately, after going through about 20% of this, I realized that it was I who had made this mistake here, so I decided to move on to something else.
Don't get me wrong... There are some good lessons here; I simply found an increasing level of diminishing return with each page and didn't feel like putting so much effort in for something with such little application to my situation.
Don't get me wrong... There are some good lessons here; I simply found an increasing level of diminishing return with each page and didn't feel like putting so much effort in for something with such little application to my situation.
December 20, 2017
The author made his point very clearly: companies want to pursue growth for many reasons, and M&A is one of the fastest ways to achieve growth, however, the growth may not be sustainable over the long term given that few M&A have real synergy. He used many examples to illustrate how perceived synergy doesn’t lead to real synergy in reality. I think it’s a valid point and we should be mindful when analyzing companies that expand into new business/geography through M&A.
October 16, 2020
A book which explores and points out reasons why firms fail (not just on engaging in mergers and acquisitions, but also for other things they do or do not do!). A really comprehensive and educative look. Full of lessons for business leaders, managers (especially those who, one day, aspire to reach the top), and entrepreneurs. Also for, the policy makers (government and regulatory bodies), in fact.
March 16, 2017
Great book about strategy and how to avoid errors. Much more practical view of companies' strategies than the failed "Good to Great" and I would highly suggest strategy consultants take this volume to heart. I would also recommend MBA professors who teach strategy look to this book as a supplemental text for their course readings.
May 30, 2018
One of few books which dissects business failures and shows a way on “ how not to run a business “
Good business anecdotes which shows how humans under biases, preconceived notions, irrational thinking leads to business failures leading to “billion” dollars bankruptcy.
Good business anecdotes which shows how humans under biases, preconceived notions, irrational thinking leads to business failures leading to “billion” dollars bankruptcy.
September 7, 2017
A must read for anybody involved in business in any way.
September 17, 2017
Key learning:
Good judgement is usually the result of experience. and experience is frequently the result of bad judgement.
Setup a devil's advocate panel to hear the alternate story.
Good judgement is usually the result of experience. and experience is frequently the result of bad judgement.
Setup a devil's advocate panel to hear the alternate story.
May 28, 2019
A must read if you run a company or invest in shares
February 11, 2022
The authors - Paul Carroll and Chunka Mui - examined hundreds of company failures over twenty-five years in an attempt to find repeating patterns or variations on a similar theme. They found basically seven of them and then found the company actions that exemplified that theme. Of course, some errors flow over several of them. Then there are the references or translations of Warren Buffett's 'homespun' language which are just as insightful. Maybe the reason why he is considered by many to be the "Oracle of Omaha".
Anyway, the failure patterns -
* Synergy - too many companies think the only option is mergers and acquisitions with all the problems associated with merging two different companies, systems, sales forces, etc. Offered the option of partnerships would provide the benefits while blocking competition from taking advantage of the momentary chaos.
* Financial Engineering - the financial and accounting techniques needed - and sometimes very necessary - for the restructuring of a company, to finance new ventures and the risk there-in. Creative financing can be very much an illegal or at least, questionable, option.
* Roll-ups - combine multiple companies in the same industry into one. Hmm, can see the benefits regarding supply chain but the problems as regulations, company contracts and techniques vary and the master company might not have seen those requirements.
* Staying the Course - Ignoring imminent threats - they'll either go away, circumstances will change back - so the company was rarely 'prepared' with any responses that can be put into action in a timely manner.
* Misjudge adjacencies - expanding into nearby industries or buying similar companies since 'their' experience with "A" will be all that's primarily needed to be a success in "B". They used a media distribution company that expanded into making their own programming as well as brand recognition for a utility would encourage users to buy insurance from them. Nope!
*Fumbling Technologies - riding or backing the wrong tech - they used Iridium and their satellite phone system with all it's bugs and problems even as the cellular phone industry was taking off. Also there was 'being a lemming' - just because a competitor was getting involved in such an industry (see one of the above failures as a possibility), others would follow along because they wanted to make sure they were not missing out on some vital information or ground-breaking tech.
* Consolidation - everyone wants to be the buyer and not the seller. The example they used was the Ames Department Store which was profitable in their niche of focusing on seniors and women. But they responded to the threat of Wal-Mart (still at a distance from their region) and over the years, bought up C. G. Murphy, Zayre and Hills which targeted different customers, had unhappy employees, massively diverse accounting and inventory systems.
It is only after identifying and providing examples of each instance, that the authors go into possible actions that will avoid the same mistakes. Bad strategies can happen to good people or companies no matter how aware they are. It's being able to have the so-called devil's advocates ponder every major situation - either from inside the company (and their positions are secure enough to go against executives without fear of being fired for speaking the truth or at least not agreeing with higher-ups) or to have an outside company evaluate the proposed action and for executives to actually read their reports and recommendations.
Published in 2008 so United States (and worldwide) companies and corporations have likely spent billions and trillions more on the educational lessons which result from failures. We can only hope that they have learned the 'right' lessons.
2022-034
Anyway, the failure patterns -
* Synergy - too many companies think the only option is mergers and acquisitions with all the problems associated with merging two different companies, systems, sales forces, etc. Offered the option of partnerships would provide the benefits while blocking competition from taking advantage of the momentary chaos.
* Financial Engineering - the financial and accounting techniques needed - and sometimes very necessary - for the restructuring of a company, to finance new ventures and the risk there-in. Creative financing can be very much an illegal or at least, questionable, option.
* Roll-ups - combine multiple companies in the same industry into one. Hmm, can see the benefits regarding supply chain but the problems as regulations, company contracts and techniques vary and the master company might not have seen those requirements.
* Staying the Course - Ignoring imminent threats - they'll either go away, circumstances will change back - so the company was rarely 'prepared' with any responses that can be put into action in a timely manner.
* Misjudge adjacencies - expanding into nearby industries or buying similar companies since 'their' experience with "A" will be all that's primarily needed to be a success in "B". They used a media distribution company that expanded into making their own programming as well as brand recognition for a utility would encourage users to buy insurance from them. Nope!
*Fumbling Technologies - riding or backing the wrong tech - they used Iridium and their satellite phone system with all it's bugs and problems even as the cellular phone industry was taking off. Also there was 'being a lemming' - just because a competitor was getting involved in such an industry (see one of the above failures as a possibility), others would follow along because they wanted to make sure they were not missing out on some vital information or ground-breaking tech.
* Consolidation - everyone wants to be the buyer and not the seller. The example they used was the Ames Department Store which was profitable in their niche of focusing on seniors and women. But they responded to the threat of Wal-Mart (still at a distance from their region) and over the years, bought up C. G. Murphy, Zayre and Hills which targeted different customers, had unhappy employees, massively diverse accounting and inventory systems.
It is only after identifying and providing examples of each instance, that the authors go into possible actions that will avoid the same mistakes. Bad strategies can happen to good people or companies no matter how aware they are. It's being able to have the so-called devil's advocates ponder every major situation - either from inside the company (and their positions are secure enough to go against executives without fear of being fired for speaking the truth or at least not agreeing with higher-ups) or to have an outside company evaluate the proposed action and for executives to actually read their reports and recommendations.
Published in 2008 so United States (and worldwide) companies and corporations have likely spent billions and trillions more on the educational lessons which result from failures. We can only hope that they have learned the 'right' lessons.
2022-034
January 2, 2021
Paul B Carroll and Chunka Mui have examined failures of thousands of public companies to arrive at the 7 key reasons/strategies which led to failure:
1. Overestimating synergy benefits
2. Financial engineering/manipulated accounting or financing
3. Rolls ups: buying smaller companies to create a conglomerate
4. Staying the course/ not adapting with changing times
5. Entering adjacent markets
6. Failures in introducing new technologies to new markets
7. Consolidation/ buying too many competing firms
1. Overestimating synergy benefits
2. Financial engineering/manipulated accounting or financing
3. Rolls ups: buying smaller companies to create a conglomerate
4. Staying the course/ not adapting with changing times
5. Entering adjacent markets
6. Failures in introducing new technologies to new markets
7. Consolidation/ buying too many competing firms
This entire review has been hidden because of spoilers.
December 10, 2017
Reader, I made them.
March 3, 2015
I once heard a saying: “A smart person learns from her mistakes, a dumb person repeats them, but a genius learns from the mistakes of others.”
This is a wonderful book about failure (and therefore a great chance to learn).
Billion Dollar lessons definitively debunks some of the most popular business strategies from synergy through acquisitions, roll-ups, to expansions to adjacent industries. The authors give example after example of how smart and capable CEOs repeat the same mistakes repeatedly, deluding themselves that this time it will be different and that this time we’ll execute it right.
As it turns out, it wasn’t the execution at all, maybe they (and you) should re-consider if the strategies were really right in the first place. If even one of these cautionary tales saves you and your business a lot of time and money, then it’s well worth the price of the book.
This is a wonderful book about failure (and therefore a great chance to learn).
Billion Dollar lessons definitively debunks some of the most popular business strategies from synergy through acquisitions, roll-ups, to expansions to adjacent industries. The authors give example after example of how smart and capable CEOs repeat the same mistakes repeatedly, deluding themselves that this time it will be different and that this time we’ll execute it right.
As it turns out, it wasn’t the execution at all, maybe they (and you) should re-consider if the strategies were really right in the first place. If even one of these cautionary tales saves you and your business a lot of time and money, then it’s well worth the price of the book.
February 22, 2015
This took a very long time to finish listening to. I’ll tell you why. It has absolutely no relevance to me and could imagine it would be far off when I could make use of this book. I couldn’t even make it smaller to be relevant to just me, because it really seemed just lessons regarding BILLIONS, not millions.
The authors have written a book about bad decisions multi-billion dollars made and how I, as the reader, should be careful not to make.
Sure, first let me reach my multi-dollar status and I’ll read this book again.
The authors have written a book about bad decisions multi-billion dollars made and how I, as the reader, should be careful not to make.
Sure, first let me reach my multi-dollar status and I’ll read this book again.
January 23, 2010
Amazing book. Makes the business failures in my first book look like mere pittances. Not merely statistics; great stories and quotes from people involved in massive failures such as Motorola's Iridium.
July 1, 2014
Some good stories in here, that hopefully will help us to avoid some basic common sense...though of course we all know how common that really is...mistakes.
Enjoyable through and through, though the last hundred pages is pretty simple preaching about the authors' solution which gets a bit dull.
Enjoyable through and through, though the last hundred pages is pretty simple preaching about the authors' solution which gets a bit dull.
April 12, 2018
“People focus on role models; it is more effective to find antimodels - people you don't want to resemble when you grow up”
This is the Aphorism by Nassim Taleb that engrossed inside my mind forever that changed my perception of successful people. Business books routinely look at success and suggest how readers can emulate their strategies. But no one looks at failures and layout methods for how not emulate them. Look at the shelves of Business section in our bookstore. There is numerous published book about successful companies, successful entrepreneur and artist who embrace obstacles and overcome challenges on their way to success. And quite often those books author bragged about their visionary mind and keen sight for their prediction and precise strategy to overcome their failure. Of cause, people like the happy ending, success stories in order for them to emulate and to increase their risk appetite for success. But, no one talks about the loser in the games, who knows we are just looking at the "Survivor of the fittest", or "Survivorship Bias".
At the Wall Street Journal, there is a saying, "There are no new stories, just new reporters." It seems the same is true of business. There are no new mistakes, just new executives and new companies.
I've read a lot of business books about strategic planning, marketing planning, and many entrepreneur biographies. It's paradoxical for me to determine whether their decision making that leads them to the road of success or just plain luck that is so abstract that we overlook the probabilities. After reading this book, it's inevitable that some of the failed strategies in this book also attributes to perfect strategies in other business books like Good to Great. In fact, I came to the conclusion that "Things always become obvious after the fact" or "Failure isn't a failure when it did not fail". Recalled from the book, The Black Swan, Nassim coined that "Narrative Fallacy" is the problems of human nature is associated with our vulnerability to overinterpretation and our predilection for compact stories over raw truths. It severely distorted our mental representation of the world. Because explanations bind facts together. They make them all the more easily to remember; they help them make more sense, and this leads us the highly improbable consequential events. It is the same inevitable mistakes for both of the good and bad strategy which only lead me to the Paradoxical situation of doing nothing. (Doing nothing is also one of the strategies that lead to success or failure. I'll read The Strategy Paradox by Michael E. Raynor real soon)
Of cause, the author emphatically stressed that: "To be clear: We aren't saying that strategies are doomed to failure. Far from it. In the right circumstances, all of these strategies can succeed rapidly. All we're saying is that these strategies are danger zones. If you're pursuing one of those strategies, you need to be extremely alert to what can go wrong, and ready to react before your business is flirting with disaster." So, my question is, what is the definition of In the right circumstances? Luck? Timing? Environmental facts? We don't know. But I think chance and luck plays a huge role in strategic planning. But there has to be a method, agreed on ahead of time, for discussing possible problems and given extra efforts or tinkering. Otherwise, once it starts to build momentum it will only lead to a consequential problem.
I'm not gonna stress the seven strategies from the book since chances and luck play a huge role in success. (If anyone curious, you can check the book context online). The book distinguishes into two parts. Part 1 will be more focusing on the strategies and case studies of companies who adopted those deadly strategies. Part 2 will be inquiring more about human psychology and nature that contribute to the fact of failure strategy. At last, the author describes; "You'd think that with the lessons of the crisis now in full view, companies might learn some of the lessons (or even reading this book) that failures have to offer. Instead, the same old mistakes continue to be made." So, why bother mistake even though we humans are flawed and far from doing a rational decision?
May 29, 2019
Three fourths of the book deals with various ways in which Billion Dollar Empires collapse. The last one fourth of the book deals with a solutions to tackle the pitfalls of strategy. The three fourths of the book that deals with how Corporations kill themselves, through acquisitions, chasing wrong technologies, with biases, mergers, expansions, industry consolidations and dreams of grandeur etc... is the best part of the book. A very good collection of Billion Dollar Bankruptcies over decades carefully curated into an organized collection. This is a very interesting read, and will help you a lot when you try to devise a strategy for your corporation. All the usual suspects are captures, with a chapter dedicated to the unusual biases that are inherent to humans as individuals and as Groups.
The last quarter of the book that deals with the solution i.e. the Devils Advocate approach requiring to Review the Strategy before it is chased down by the Management is the worst part of the book. The Solution is a simple BELL THE CAT type of a super solution presented to an extremely complex problem of Strategy causing Bankruptcy. The solution, though mentioned in extreme detail is flawed never the less, not because it is a bad one, but because it is practically impossible to vet a strategy with a team such diverse individuals and not all boards and managements are gifted enough to have an acquaintance with such a LEAGUE OF EXTRA ORDINARY GENTLE MAN/ GODS in this case. But the book is a very good one!
The best part of the books or the peak of the book according to me is the section where he discusses the network effects through metcalfe's laws (n square) and network of network effects or (two to the power of n) Reed's Law!
Here is a list of books that the author has mentioned during the passing of the book.
Surviving Transformation
The Innovators Dilemma
Beyond the Core
Through the Looking Glass
The Red Queen - Elizabeth Ponticus
Blue Ocean Strategy
Human Universals
Groupthink
The Black Swan
Fooled By Randomness
The Structure of Scientific Revolutions
The Subjective Side of Science
Normal Accidents
Wisdom of Crowds
Doing what Matters
Will your next mistake be fatal
The 10 faces of innovation
The Effective Executive
Lateral Thinking - De Bono
The Essence of Strategic Decision making
Growth Gamble
Thinking in Time
Bay of Pigs - The Untold Story
Predictably Irrational
The last quarter of the book that deals with the solution i.e. the Devils Advocate approach requiring to Review the Strategy before it is chased down by the Management is the worst part of the book. The Solution is a simple BELL THE CAT type of a super solution presented to an extremely complex problem of Strategy causing Bankruptcy. The solution, though mentioned in extreme detail is flawed never the less, not because it is a bad one, but because it is practically impossible to vet a strategy with a team such diverse individuals and not all boards and managements are gifted enough to have an acquaintance with such a LEAGUE OF EXTRA ORDINARY GENTLE MAN/ GODS in this case. But the book is a very good one!
The best part of the books or the peak of the book according to me is the section where he discusses the network effects through metcalfe's laws (n square) and network of network effects or (two to the power of n) Reed's Law!
Here is a list of books that the author has mentioned during the passing of the book.
Surviving Transformation
The Innovators Dilemma
Beyond the Core
Through the Looking Glass
The Red Queen - Elizabeth Ponticus
Blue Ocean Strategy
Human Universals
Groupthink
The Black Swan
Fooled By Randomness
The Structure of Scientific Revolutions
The Subjective Side of Science
Normal Accidents
Wisdom of Crowds
Doing what Matters
Will your next mistake be fatal
The 10 faces of innovation
The Effective Executive
Lateral Thinking - De Bono
The Essence of Strategic Decision making
Growth Gamble
Thinking in Time
Bay of Pigs - The Untold Story
Predictably Irrational
September 22, 2021
Whether you are a novice, growing or mature business owner we all need a mentor, partner, or another business to look up to and learn from as we intentionally pace ourselves to the next phase of our business. Billion Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years by Paul B Carroll and Chunka Mui is a tell-all account of how several major businesses made decisions that either adversely impacted or positively influenced their business bottom line. These decisions are what has caused these and countless other businesses to either continue to grow; merge; make heavy choices to scale back products, services, or human capital, or fail, close their doors and file bankruptcy.
This book is ideal for me because as a business owner I wondered what were the highs and lows, rise and fall decisions that big business CEOs make in various positions of the companies’ lifecycle. As a CEO they are in charge of not only spearheading the company but have to know when and where they can put their trust in making these decisions. Making day-to-day decisions, interpreting current information and trends, to merge or not to merge, and what is a conscientious profit is always at the forefront in determining the best interest for the people, shareholders, and the world. The CEO can’t do it alone and must rely on a team that reflects the eyes and ears in helping them to make tough decisions. At times they must either believe the data or trust their guts. Just as a consumer when you are purchasing products or services from a company it is essential to be well informed about these companies. Warren Buffett is a mentor for me and as he states in making investment decisions go with what you already know and are familiar with. Add this one to your library today. Highly recommended.
This book is ideal for me because as a business owner I wondered what were the highs and lows, rise and fall decisions that big business CEOs make in various positions of the companies’ lifecycle. As a CEO they are in charge of not only spearheading the company but have to know when and where they can put their trust in making these decisions. Making day-to-day decisions, interpreting current information and trends, to merge or not to merge, and what is a conscientious profit is always at the forefront in determining the best interest for the people, shareholders, and the world. The CEO can’t do it alone and must rely on a team that reflects the eyes and ears in helping them to make tough decisions. At times they must either believe the data or trust their guts. Just as a consumer when you are purchasing products or services from a company it is essential to be well informed about these companies. Warren Buffett is a mentor for me and as he states in making investment decisions go with what you already know and are familiar with. Add this one to your library today. Highly recommended.
August 13, 2022
This probably only pertains to people who run a business with a team of at least, say, 10 people. At the end of the day most of the issues pertain to deals, mergers, rollups, and consensus building within the company.
I did like the proposed solutions. Basically for pretty much every failure, there were likely people who saw it coming, but it's extremely difficult to have a legitimate open dialog, or method of getting honest feedback from people. Most people are worried about their job, or what the CEO thinks, and even so-called open forums are usually not serious. If the CEO says "I have a great idea, but let's see if anyone has a problem with it", then obviously the employees will keep quiet. Likewise, someone might bring up a good dissenting point, but then the CEO will say "Thank you for that" without any follow-up.
So the difficulty lies in creating a real devil's advocate with real power. There are some good examples of this here.
Also, if I set up a new business soon, it might be a consultancy that is paid to find reasons NOT to proceed with a new deal/project/merger/etc. Except, of course, no one would want to hire me. As it mentions in the book, by the time due diligence is called for, the CEOs and managers are just looking for reasons to proceed, not to stop.
I did like the proposed solutions. Basically for pretty much every failure, there were likely people who saw it coming, but it's extremely difficult to have a legitimate open dialog, or method of getting honest feedback from people. Most people are worried about their job, or what the CEO thinks, and even so-called open forums are usually not serious. If the CEO says "I have a great idea, but let's see if anyone has a problem with it", then obviously the employees will keep quiet. Likewise, someone might bring up a good dissenting point, but then the CEO will say "Thank you for that" without any follow-up.
So the difficulty lies in creating a real devil's advocate with real power. There are some good examples of this here.
Also, if I set up a new business soon, it might be a consultancy that is paid to find reasons NOT to proceed with a new deal/project/merger/etc. Except, of course, no one would want to hire me. As it mentions in the book, by the time due diligence is called for, the CEOs and managers are just looking for reasons to proceed, not to stop.
August 30, 2020
3.5. There's factors that make this a super read, and that make it more of the tunnel vision it pummels.
The thesis highlights are so well-organized, and at some point towards the end of the book's first half, it points out just how wicked and pessimisticly depressing its text surely is, with a comment something to the effect of how the engaged reader may look to stay inside to avoid any such flying anvils. (Covid-19 certainly drew an okay time to get from start to finish, in this light!) It does as much as non-fiction really can, though, with sincere efforts from a standpoint of reasoned risk mitigation.
The tone could be a nice audible if the writing voice maybe collided a bit more with 'How to unf* yourself' reflective humors. As is, the analysis of company cultures and subgroup dynamics gives such sharp attention to how public companies boil over in varied ways, and delves into often-universal company motives and directives that prioritize inclinations, notions, news feeds, identifiers, value concepts, ego concepts, etc in ways that just don't make sense in light of any kind of business. It also does an excellent job iterating the climate by which companies look to routinely flatter their customer loyalties, instead of feeling challenged.
The thesis highlights are so well-organized, and at some point towards the end of the book's first half, it points out just how wicked and pessimisticly depressing its text surely is, with a comment something to the effect of how the engaged reader may look to stay inside to avoid any such flying anvils. (Covid-19 certainly drew an okay time to get from start to finish, in this light!) It does as much as non-fiction really can, though, with sincere efforts from a standpoint of reasoned risk mitigation.
The tone could be a nice audible if the writing voice maybe collided a bit more with 'How to unf* yourself' reflective humors. As is, the analysis of company cultures and subgroup dynamics gives such sharp attention to how public companies boil over in varied ways, and delves into often-universal company motives and directives that prioritize inclinations, notions, news feeds, identifiers, value concepts, ego concepts, etc in ways that just don't make sense in light of any kind of business. It also does an excellent job iterating the climate by which companies look to routinely flatter their customer loyalties, instead of feeling challenged.
April 15, 2018
So many takeaways, so little time. I found it thoroughly enjoyable, but also cringed while listening to the stories, having read the audiobook. This book suffers somewhat from that of many business books: the facts are great but the prescriptive advice questionable or unrealistic. These billion dollar mistakes occur because people don't listen to advice, so an ego-stuffed mis-compensated c-level putz and her servile minions aren't likely to read info-rich books like this. They are especially not likely when a banker is whispering sweet nothings.
Of the points that hit closest to home, there is one huge takeaway for you as employee, investor, banker, or leader: mergers and acquisitions generally DO. NOT. WORK. Plan accordingly.
Of the points that hit closest to home, there is one huge takeaway for you as employee, investor, banker, or leader: mergers and acquisitions generally DO. NOT. WORK. Plan accordingly.
May 26, 2017
When thinking about leadership or strategy, I find that is is better to understand failure than success. In Billion Dollar Lessons, Carroll explains multiple ways in which businesses fail at a spectacular level. The mental traps that CEOs and their businesses fall into correlate into how military and government planners fail in strategy. More than just describing the mental traps and anecdotal failures, Carroll provides recommendations on how to mitigate these risks. Paramount in the mitigation proposals is the concept of Red Teaming. A practice which in my opinion is underutilized by the military. I highly recommend this book as both a source for both military planning and military leadership.
July 27, 2021
I found the book more educational for outlining the internal decisions of the profiled companies than as a warning of things to avoid. There are many diverse examples of failures to support the author's argument which make for interesting reading most of the time. The only part that dragged was the final chapter about adopting devil's advocacy programs. Said across twenty pages what should have taken three.
December 14, 2021
Interesting read, though the examples are a little dated and the advice a tad impractical/difficult to implement in the real world. That said, there are real lessons to take from the book around the importance of ingraining processes for sound decision making and review as well as understanding the potential pitfalls of common strategies.
May 19, 2018
It is a book about Strategic Planning. It points out the "traps of strategy" -- which are flawed but seemingly make sense. Building 'devil's advocacy' in decision-making and 'escalation path' in execution is critical.
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