Seven common strategic errors that lead to business failure.
Why bad strategies happen to good people.
How to encourage devil’s advocacy before it’s too late.
While we are inspired by business success stories, we are educated by business failures. Chunka Mui and Paul Carroll researched 750 of the most significant business failures of the past quarter-century and found the Number 1 cause of failure was not sloppy execution, poor leadership or bad luck. It was, instead, misguided strategy. Mui gives examples of the seven most common strategic failure patterns: illusions of synergy, misjudged adjacencies, faulty financial engineering and others. He explains that each pattern has predictable red flags.
Human beings are hard-wired for bad decision making in complex situations, notes Mui. We hone in on answers before examining all the facts, and then seek evidence to confirm our answers. We are adversely influenced by emotion, loyalties, and group think. However, decision making can be improved when we encourage conflict and question our assumptions. A devil’s advocate review should be built in early to the strategy process, and again at the key design stages and when near completion for a last chance to review the full strategy.
Chunka Mui is a fellow with Diamond Management & Technology Consultants and a partner with Cornerloft Partners, LLC. He co-authored with Larry Downes “Unleashing the Killer App, Digital Strategies for Market Dominance,” and co-authored with Paul Carroll “Billion Dollar Lessons.” He holds a BS in Computer Science and Engineering from Massachusetts Institute of Technology.