Tag Archives: Megan McArdle

Why Do Companies Fail? – Some hints from Megan McArdle

So, why do companies fail?  A lot of them do, you know.  And more will fail – some of them fairly soon.  I don’t know which ones, and I don’t know all the whys, but there will be companies fail…

In this the Atlantic article, Why Companies Fail: GM’s stock price has sunk by a third since its IPO. Why is corporate turnaround so difficult and rare? The answer is often culture—the hardest thing of all to change, Megan McArdle tackles the question.  Here are a couple of quotes with insightful hints:

All seem to agree on one thing: most companies wait far too long to even recognize that they have a problem.
Change is risky, after all, since it definitionally involves doing something that isn’t already working—and even product lines that have grown lackluster still have some customers.

Here are two valuable hints:

Hint #1 – failure to acknowledge reality; failure to acknowledge “we have a problem.”  This is a universal!  Political parties have this blindness; football team owners have this blindness.  And, I suspect you and I have this blindness.  To see a problem early requires paying great attention to reality, and most of us are a little afraid of taking such an honest look at reality.

Hint #2 – focusing on my “long-term customers” while ignoring the need to find “my next customer.”

This reminds me of this excellent counsel from the UCLA Health Care system (from Joseph Michelli, Presecription for Excellence):

“No matter how good we are today, it isn’t good enough.  Everything we do must be of the highest quality, and we have to be in a relentless pursuit of constant quality assessment and enhancement.  I am pleased with where we are today…  However, each day I think about one thing:  what can I do as a leader to make sure that our quality of care is the best it can possibly be – you guessed it – for our next patient?”  (Dr. David Feinberg, CEO, UCLA Health System)
Create the quality experience for your most important customer – the next one.

So, to avoid failure, (to succeed!), it might help to be honest about problems, and to keep looking for that next customer.

Do you read books to change your mind? — Why do we read books?

The set up:

This morning, Andrew Sullivan, who blogs on one of the The Atlantic blogs, wrote a post entitled Bipartisan Book Club. It was a discussion regarding economics.  Someone from the conservative end of the spectrum was asking if there were books by competent folks that he could read to give him the other side, to “change his mind” (my words), and this person, Tony Woodlief (I’m sorry – I do not know him or his work) wrote:  This got me wondering what books thoughtful leftists and small-c conservatives/small-l libertarians might recommend to one another.

Here’s the key quote from Woodlief from his blog post If only these people would read…:
So, here’s what I’m asking. If you are a leftist, what three books do you believe would best persuade thoughtful people who disagree with you that they are in error? And if you are a conservative or libertarian, what three books do you recommend to thoughtful leftists? In each case, assume the reader is intelligent and educated. Assume as well that he has a life, which means you probably shouldn’t roll up in here with Mises’s Human Action. Unless you really want to.

Andrew then linked to another The Atlantic blogger, Megan McArdle, and her post Three Books to Change Your Mind, in which she made three recommendations for book titles.

My takeaway:

I think this is an interesting exchange, but I write this not to enter this particular partisan discussion re. the pursuit of information about economic viewpoint and validity.  I write to ask a more simple question:  do we actually ever read anything to change our minds?

I think not – certainly, not often.  To read anything for the purpose of changing our minds means that we do so with an open mind.  And we have very many closed minds today.

I doubt that many conservatives have actually read Paul Krugman or Al Franken in order to change their minds.  And I doubt that many progressives have read Ann Coulter or Glenn Beck in order to change their minds.  Those books are bought and read by book buyers to reinforce their own viewpoints — to get affirmation for and thus feel good about their own viewpoints.  And, by the way, I confess to this myself.  You will never find me reading an Ann Coulter book.

But, I also confess that I have read business books from authors that I do not agree with – either going in, or coming out of the read.  And yet, there have been times when I have been impressed, and I’ve even partially (or a time or two, fully) changed my thinking after reading some books by authors that I was prone to disagree with from the get-go.

But…  why do we read books?  Why do you read books? I think we read books for these, among others reasons:

I've never thought about that before!

I've never thought about that before!

1.  We read books to learn – something new. Many of the books I have read and presented in the last decade plus have provided such newness to me.  I don’t think I will ever forget the thoughts I had while reading Freakonomics.  I had, on page after page, the impression that “I’ve never thought about that before.”  That is a fun feelling for me, one that I seek, one that I love.  Bryson’s A Short History of Nearly Everything fits into that category.  (warning:  short = 560 pages.  That man needs a dictionary!)

2.  We read books to remind us of what we do know, but may not always put into practice – books to reinforce and expand our thinking and acting/behaving. This happens with a lot of business books.  It is almost impossible to disagree with practically any book about customer service.  We “know” what to do — but we do not do it.  Do all companies provide good customer service?  I – don’t – think – so!

3.  We read books to change our minds. We should read these more often.  But we don’t.  We are pretty proud of our minds just as they are.  I suspect that we all (me included!) need to read more books with this intent in mind.

4.  We read books to be entertained (even while we learn). Even serious, nonfiction books.  I get actual pleasure from reading a well-written book, and I am especially appreciative of good story telling.  Malcolm Gladwell is currently at the top of my list for such writing, and I still love David Halberstam for the same reason.  The old phrase for such writing is “page turner,” and a well-written nonfiction book can provide this as well as any good novel.

Of course, I am leaving novels out of this discussion.  We read those for another whole set of reasons…


• NEW BOOK ALERT! — The authors of Freakonomics are coming out with SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance in three days.  Yes, I plan to read it – soon.

If you never read their first, Freakonomics, you can order my synopiss, with audio + handout, at our companion web site 15minutebusinessbooks.com.