Home > Articles

  • Print
  • + Share This
This chapter is from the book

Deadly Business Mistakes—Strategy, Execution, and Culture

Some years ago, Peter Drucker wrote an article4 describing "Five Deadly Business Sins" that have driven many companies into deep strategic and financial trouble. His characterization of these "sins" included:

  • "Worship of high profit margins and premium pricing"

  • "Mispricing a new product by charging what the market will bear"

  • "Cost-driven pricing"

  • "Slaughtering tomorrow's opportunity on the alter of yesterday"

  • "Feeding problems and starving opportunities"

These, and others we will discuss, are primarily examples of longer-term cultural mistakes that companies make with regularity. Damage does not occur overnight; it occurs slowly and consistently until someone or something breaks the chain and fixes the problem. Breaking the chain for these types of mistakes is difficult because the decision criteria and mindset are hard-wired into the brains of company managers and executives as a result of past successes.

As we will discuss later, the U.S. auto industry has been guilty of many of these mistakes and is trying to change, but serious remedial action was delayed for years until their market share and profitability was decimated by competition from Japan and Germany. Sometimes the initial recognition that a problem exists is the biggest hurdle.

In other cases, individual companies, such as IBM, have made one or more of these mistakes but have realized it early enough, changed, and recovered. But for every company that has detected its mistakes and taken action in time to survive, there are many more that never saw the danger that was coming until it was too late.

Strategic mistakes, particularly those affected by the organization's culture, are among the most difficult to deal with because, at any given point in time, it may not seem like there is a huge crisis. In cultures not known for rapid change, it is too easy to feel comfortable with the way things have always been done until there is a huge crisis that wakes you up to the need for change. This is analogous to an individual's problems with weight control. The problem does not result from a single bad decision or action but from a thousand small bad decisions over a period of time. Just as with weight control, however, if allowed to go too far, these types of business mistakes become life threatening.

Other cultures make it difficult to expose and deal with mistakes of strategy or execution even if they are detected early. Organizations that are paternalistic, hierarchal, consensual, or family dominated all have unique characteristics that may make them inept, defensive, or slow to act on bad news. Many organizations do not even understand what their culture is, much less think about how to take advantage of its strengths and design around its weaknesses, which is necessary to avoid mistakes.

Most execution mistakes are related to operations but may have strategic implications. Execution mistakes usually revolve around tangible actions that are more visible than strategic blunders. They happen more rapidly and are usually measurable in customer dissatisfaction, lost sales, warranty returns, or other shorter-term measures. They have immediate consequences and are thus easier to see and understand.

Culture-driven mistakes, especially around strategy, are usually colossal and fairly permanent in their damage. AT&T attempted to enter the computer business by acquiring NCR—a colossal cultural mistake chain that took years to clean up and cost both companies dearly. While this was a strategic mistake, it affected operations directly with confused product offerings, angry customers, and conflicts over resource allocation and resulting poor financial performance. It eventually resulted in spinning off NCR, which should never have been acquired in the first place.

Execution mistakes can be fatal as well but are more often just very expensive, unless they continue so long that they become cultural. There are many categories of execution mistakes, from not following procedures, as in many airline crashes, to not understanding markets enough to bring out the right product, to bad timing with good products. The dustbin of product development is filled with things like the RCA Videodisk. Introduced in the early 1980s, it was actually a decent product in a clumsy format that was inconvenient for the market at the time. This product was the result of a series of mistakes related to market understanding, technology, product design, and pricing.

Subsequent chapters will deal with the impact that culture can have on the likely success or failure of organizations in avoiding multiple mistakes. A common theme that runs through all the cases we will explore, whether strategy or execution related, is that in most cases it takes three, four, or five mistakes that must occur in sequence to create a serious failure. We will also look at the dramatic effect that organization culture has on affecting a positive or negative outcome.

The reality is that the business world, and perhaps life in general, is more forgiving than we realize. More often than not, you have to mess up a number of times and pretty badly to get a really bad outcome.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020