Weekly Bookmarks –
134th Edition – August 28, 2021
Define reality, give hope.Napoleon
1. Business Failure vs Personal Failure
Numerous books have been written on business failure. Some even suggest celebrating failure. Rarely do we get a detailed discussion of what failure did to the people behind those results.
Mark Jacobsen is a professor of strategy and security studies at the Air Force School of Advanced Space Studies. He’s also a startup founder who understands an Elon Musk comment about failure which is, “Being an entrepreneur is like eating glass and staring into the abyss of death.”
Mark’s book is entitled Eating Glass: The Inner Journey Through Failure and Renewal. This could possibly be the most transparent manuscript I’ve ever read on a person dealing with failure and the mental health issues that followed.
This book is a dive headlong into catastrophic failure, in my case, a startup failure, but not about the business side of it. It’s really about what it was like for me going through that — and through a recovery and healing process that that took years. I wrote it precisely because nobody writes about this.Mark Jacobsen
2. Regarding Business Failure
While thinking of Mark’s book, I’m reminded of books about business failure like Good to Great to Gone: The 60-Year Rise and Fall of Circuit City and Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry.
But there’s one obscure business failure that’s probably been forgotten unless you took a course with Cynthia Montgomery at Harvard Business School. One of her courses includes a case study about Masco Corporation.
3. Masco’s Furniture Liquidation
Masco Corporation experienced thirty-two years of consecutive earnings growth until earnings dropped 30%. What happened?
Masco, once described as the master of mundane, is a manufacturer of household products. In the 1980s, it elected to invest its excess cash into the furniture industry by spending more than $1.5 billion on acquisitions.
A few years later, Masco exited the furniture business at a loss of more than $600 million.
The decision to go into the home furnishings business was probably one of the worst decisions I’ve made in 35 years.Richard Manoogian, CEO of Masco Corporation – Chapter 2, The Strategist by Cynthia Montgomery.
4. Why Do CEOs Fail?
I would never throw bricks at the Masco CEO or leadership team for their business to enter the furniture business. Still, an exploration of what happens before any type of failure is instructive.
Sydney Finkelstein has written the book, Why Smart Executives Fail, and he lists the seven traits of CEOs who fail:
- CEOs see themselves and their companies dominating their environments.
- CEOs identify so completely with the companies they run, there is no clear distinction or boundary between personal interests and the company’s interests.
- CEOs think they have all the answers.
- CEOs get rid of anyone who is not 100% behind them.
- CEOs are obsessed with company image and are the consummate company spokespersons.
- CEOs vastly underestimate major obstacles.
- CEOs stubbornly rely on what has worked in the past.
Do you agree with the list? Is it complete? Which item resulted in Masco’s failed attempt to exploit the furniture industry?
5. The Best ‘Stop Doing’ List I’ve Ever Read
Gary Harpst is the co-founder of Solomon Software which was ultimately acquired by Great Plains (since then purchased by Microsoft).
While Gary’s company never experienced failure, they brushed against it many times during their tumultuous growth years. During a Zoom call with him this week, he told me that the ‘stop list’ that I read to him propelled their highest growth years. Here’s the list –
- stop targeting low-end market
- eliminate UNIX as a target platform
- eliminate support of multiple databases
- remove from our target market list foreign markets that require double-byte language sets
- phase out OEM program
Failure cannot always be avoided, but it can be constrained while being cognizant of Finkelstein’s list above and employing a ‘stop list’ like Gary and his Solomon leadership team constructed.
By the way, Gary’s list above is documented in his book, Six Disciplines for Excellence: Building Small Businesses That Learn, Lead and Last.
The CFO Bookshelf Podcast – If you want to hear more about Mark Jacobsen’s startup failure and what happened next, you can listen to the conversation on this week’s show.
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