We examine the present in light of the past
so as to better understand the future.
John Maynard Keynes

* With apologies to Karl von Clausewitz

In management as in medicine, prevention is better than cure

Managing for Success, my new book which comes out April 23rd with Bloomsbury Press, has a somewhat ironic title. In fact, the bulk of the book is about management failure and – especially – how to avoid it. The rationale is simple: there are various traps and pitfalls waiting for unwary managers and companies, and if you want to succeed, you need to avoid these.

When I talk about avoiding failure, I’m not talking about the small, often harmless mistakes that we all make, all the time. Some business activities positively demand an element of failure. In research and development, for example, the lessons of previous failed experiments are often of real value in creating new products and services. I’m a great admirer of Tata’s ‘Dare to Fail’ scheme which rewards employees who try things that don’t quite work, but nonetheless show great potential. That kind of failure does little if any harm and, through the learning it generates, quite a lot of good.

No, I mean the big failures, the seismic catastrophes that destroy millions and even billions in value, that bring companies to their knees. A number of books already on the market talk about how to rescue companies on the brink of collapse and bring them back to health again. That’s great; but not every company can be rescued. I’ve just finished reading Winthrop Smith’s Catching Lighting in a Bottle, the story of Merrill Lynch. This very large and very proud company was wiped out in 2008; there was no way back. There was no way back for Lehman Brothers either, or RBS, or Northern Rock, or many, many others that have fallen by the wayside in recent years.

Management failure destroys value. It wipes out investments. It destroys jobs, throwing people into unemployment and families into poverty. It destroys potential. And sometimes, in cases like Titanic or Deepwater Horizon or Bhopal or Minamata, management failure kills people. That is the kind of failure we need to become better at identifying and eradicating.

One of the conclusions of Managing for Success which may surprise people is that leaders are seldom solely to blame for failures on this scale. They are responsible, of course; the failure happened on their watch, and they doubtless took actions that contributed to the failure. But organisations have a habit of getting the leaders they want; or, you might say, the leaders they deserve. Leaders are sustained in their positions by supporting cultures, whose values the leaders usually share. So at Merrill Lynch and Lehman Brothers, Stan O’Neal and Richard Fuld did not single-handedly drive their banks to destruction. The seeds had been sown long before, when both men were still in relatively junior posts. The culture of both these organisations turned toxic, and it is culture, as much as anything, that kills companies.

I will have much more to say about these toxic cultures in subsequent posts, so as they say, stay tuned.
 

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Adi Gaskell commented on
Management Consultancy
5/12/2015

Pradee commented on
Oh, no, not another book on management!
27/3/2015

Laurie commented on
Another one bites the dust - reflecting on my new book on management failures
12/12/2014