When smart execs do dumb things; After 6 years of research and a book, Prof Finkelstein has answers that surprise. Why do smart executives fail? Why is it that successful executives running thriving companies sometimes stumble and fail? What types of mistakes do these managers and business owners make, and how can they be avoided? These were some of the questions that a research team at Tuck Business School in the United States set out to answer six years ago. The answers they uncovered were surprising. Many of the qualities that sound like the attributes of a dream enterprise turned out to be the basis for a business nightmare. For managers, many of the qualities we aspire to emulate, or feel guilty for not having, turned out to be the ones we are better off without. For investors, many of the signposts of success that we strive for were identified as markers for failure. In some cases, the real fiascos can be blamed on a few causes. And these can also happen to businesses around the world. Ignoring change Companies that have been successful in the past often let their history and culture take over. This combination that had brought on success can also become a cause for failure as it closes the company to new ideas. For instance, as technology advances, companies that choose to ignore the changes or are slow in adopting the new technology will get left behind. Wrong vision One of the biggest management strategies that came out of the 1990s was the notion of strategic intent - which saw companies strategising to attain one big goal. In principle, strategic intent is a powerful and seemingly straightforward idea. In practice, people just seem to get in the way. What looks like a logical intent often breaks down when executives let themselves get caught up in the "one big idea" fallacy without regard for the limits of logic. Identifying too closely with firms While most investors and employees would like their leaders to be fully committed to their jobs, some of the worst mistakes occur when executives are too closely connected to their companies. Such executives treat the company as an extension of themselves, and act accordingly. Living in the past Executives often revert to harmful or inappropriate strategies as the result of a "defining moment" earlier in their careers. It's usually the one thing they are most known for, and the thing that gets them their subsequent jobs. Unfortunately, once people have passed this professional milestone, they tend to let it define them for the rest of their careers. All of us know that it is important to learn from mistakes, but how often do we take the time to do so? Those who run organisations are subject to the same biases, pressures and misjudgements that all of us are, yet the price they pay for these mistakes can be immense. If we do not learn, we are destined to fall into the same traps. An understanding of why smart executives fail offers a real opportunity to choose a different path. This article is contributed by Sydney Finkelstein, a professor at the Tuck School of Business at Dartmouth College, United States, and author of Why Smart Executives Fail. He will be in town on Nov 14 to speak on this topic at the Singapore Institute of Management. For more details, call Lucy Low at 6248 9409 or email exec@sim.edu.sg.

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