Billion Dollar Lessons – What you can learn from the most inexcusable business failures of the last 25 years – Written by Paul Carroll & Chunka Mui

Intro: Billion Dollar Lessons – What you can learn from the most inexcusable business failures of the last 25 years – Written by Paul Carroll & Chunka Mui Billion Dollar Lessons is a must read for any business owner that wants to sustain and grow the business. In a separate video summary, I profiled Good to Great by Jim Collins. This book profiled companies that outperformed all others in their category for 15 years. This book looks at Good to GONE or basically the opposite. In any endeavor it is imperative to study the negatives as well as the positives to gain true understanding. Example: In mixed martial arts (UFC stuff) you see this all the time. You have the top strikers (boxers, kick boxers) that may be in the top 5% of their category and they lose the fight in the first two minutes to a great Jujitsu fighter who was more well rounded. This happens because the striker did not study the full game and his weaknesses. Billion dollar lessons profiles horrific business mistakes that anybody can learn from.

Why is this important to me?

Simple!!! The methodology of studying inversion is critical to true understanding. Charlie Munger, the vice chairman of Berkshire Hathaway and Warren Buffet’s partner has one paramount saying and that is “INVERT”. Alfred P. Sloan was the excellent leader of General Motors in the heyday of that company. In a meeting, he asked a simple question regarding decision making. Are there any opinions against this decision? Everybody said no that they agreed with the decision to move forward. Mr. Sloan ended the meeting by saying, come back to me when you don’t agree so we can truly understand the implications. Constructive Conflict is a good thing when making decisions. In the book, there is a profile of the Devils Advocate. In the Catholic Church, they have the Devils Advocate and the purpose is to make sure that the decisions made by the church are good for the church in the long run. The Devils Advocates job is to create constructive conflict to elicit debate. Debate always leads to better decisions.

Billion Dollar Lessons is packed with great war stories on destructive strategies. In studying Good to Gone, I will profile three type of growth strategies outlined in the book.
I need to make a side note here. Be careful when investing in companies with white night CEO’s that are adamant on growth for growth’s sake. This is the destructiveness outlined throughout the whole book.
1.Market Synergies– This is a concept of selling additional services to an existing customer base. With discipline this can have positive effects but most of the time it results in a weak and convoluted strategy that results in losses. The idea is simple – the whole is greater than the parts 1+1=3. Remember the AOL Time Warner merger? 1+1= Destruction. The real problem in this strategy has to do with integrating the companies. Most executive teams don’t study the cultural implications of the integrated company so in the end it is the EXECUTION that fails. Billions lost!!!!!!

2.Market Roll ups– In theory, this is a great strategy. If you look at ADT (the security firm), they grew buy buying independent businesses all across the country. The idea was to streamline the operations and centralize all the back office operations. Sounds like a great idea and if the culture and execution is planned then it is a good idea. The problem with this was that they purchased independent businesses at a fast pace. If you have every tried to manage an
entrepreneurial person through corporate management then you know this is like herding cats. Worse than that, try doing it in mass with all the different personalities. Most business owners go into business to be free of the corporate world and do their own thing. With that premise, you see the issue. Again this comes down to CULTURE and EXECUTION. The two taken lightly results in failure. I have made this mistake on a really small scale in my own business and of course lost money. (I read this book after that decision…………..)
3.Financial Engineering – Gotta love aggressive CFO’s – aka ENRON. This is not to say that all companies that utilize these techniques end in fraud but once an aggressive growth plan starts then it is tough to stop it. A local Michigan example is good to profile here. A company called Lason was actually doing a market roll up as outlined in number two. They were growing leaps and bounds and using their stock to buy independent businesses. The growth & debt were piling up but since the stock was performing everything was fine. Once the stock hiccupped then the house of cards fell. This ended in bankruptcy. I tell this story because again I invested in the stock and received everything but the kiss.

Billion Dollar lessons read at the right time would have saved me a ton of headaches along with some green backs. Unfortunately I can only change my future behavior because of this great book. The past is the past.
You will get a lot out of this book so I suggest you read it.
I hope you have found this short video summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days.
One thing you can take away from this book is to encourage Constructive Conflict. This technique will result in better decisions throughout your life and career.
If you enjoyed this video then please do not hesitate to pass it along and if you want more detail then click on the link below and purchase “Billon Dollar Lessons”

Thanks for watching and have a great day!
Joe Mosed