During the last decade the world has come to witness first hand the dangers of money through events such as the Global Financial Crisis. Paul B. Carroll and Chunka Muis’ article Seven Ways To Fail Big discusses some of the biggest business failures in the past 25 years and their causes. The authors highlight seven “sirens,” as they call them, that account for most business failures. While reading about the seven sirens I realized they all shared one similarity, they are all about making more money. Some people might argue that this is obvious, that the point of business and corporate strategy is to make as much money as possible, but I disagree. There are plenty of corporate goals and missions that call for strategies where money is not the central focus. Rather, they focus on non-monetary aspects, such as producing the highest quality products (Toyota) or developing the newest technologies (Sony). Of course these companies are still profit driven, but the strategies developed at the executive level are not just structured around profit and cost savings. And when companies’ strategies become solely focused on improving profitability without any measure of accountability or purpose, that’s when companies start to fail, as demonstrated in Seven Ways to Fail Big.
Two of the most compelling examples form the article would be Green Tree Financial and Eastman Kodak. The Green Tree Financial example is a picture perfect example of how money leads to strategies that fail. Rather than developing a strategy that focuses on facilitating a families ability to buy a trailer home or maximizing a families’ well being, Green Tree was solely focused on maximizing profits. If the strategy had been more customer centric, someone would have realized that 30-year mortgage loans for assets that depreciate in up to 10 years makes no sense and that the obvious outcome would be a high default rate. But the company wasn’t interested in the customers’ well being or facilitating sustainable familial housing; they just wanted to make money.
Similarly, Eastman Kodak decided that their original film-based photo business was much more attractive than the digital market. The margins in the film photo industry were apparently too attractive to pass up and the executives argued that a world without physical photos was unfathomable. Rather than focusing on what the consumers wanted and what would be the more popular and usable technology in the future, their strategy was solely driven by trying to sustain and maximize profit.
All seven sirens in the article suffer from the same flaws mentioned above. They are to money-centric. Of course, a company can also implement a strategy that is not driven by financial incentives and still fail. However, the nature of financially based strategies being so lucrative that executives are blind to their warnings and dangers is what makes money-based-strategies so dangerous in the corporate world.