Category Archives: Leadership

Why do so many great businesses fail?

John Persico Photo 2013 edited 2 (640x423)Dr. John  Persico, since i986, has worked with organizations in both the profit and non-profit sector. He specializes in the area of quality improvement, service management, leadership development, team building and strategic
planning. Received his PhD degree in Training and Organizational Development from the University of Minnesota. He worked closely with Dr. W. E. Deming early in his career. Has taught at the Glob University Graduate School where he continues teaching part time. He has written two books on business strategy including the “TQM Transformation” and “The New Business Values.”

A few years ago, I started thinking about all of the “mistakes” that management and organizations have made. There are several books dealing with the subject and various companies, leaders and managers are noted for the blunders they have made in decision making. For instance, out of the top ten mergers undertaken in the 90’s, eight of them lost money or shareholder value. Not just a little money, but billions and billions of dollars. We are all familiar with other noted disasters such as “New Coke”, Apple’s Newton and Ford’s Edsel. The question I wanted to answer was simply: “what is behind such faulty decision making?” I found an excellent article that looked at the top ten mistakes managers make in decision making. The title of the article was “10 reasons people make stupid decisions.” I have found this article posted on many blogs but I am unable to find the author of the article. The top ten reasons the author lists are:

Attribution error, Illusion of control, Conformity, Availability bias

Endowment effect, Dysfunctional competition, Overconfidence

Confirmation bias, Egocentric bias, Sunk cost bias

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THE BUSINESS ENTERPRISE AND TODAY’S SOCIETY

DRJOHN2Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com,  publisher of www.GavdosPress.com and Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation.
For details go to: http://linkd.in/1AF7El7

In the last two decades we have experienced a fundamental and historic shift of how the economies around the world develop. With the collapse of communism, the centralized and state control model of the economy has also collapsed. Other socialist State models, i.e., Sweden, UK before Margaret Thatcher, have also collapsed. What we have now, however, imperfect it maybe, is the model of the “Free Market.”

This shift is occurring in parallel with two other sociopolitical expressions:

  1. Smaller government, though the last couple years this seems to have moderated quite a bit, and
  2. the need, indeed the demand by our society to provide assistance, protection, and distribution of economic benefits a “fair” way

What we are witnessing is a major shift on “how we can fulfill our expectations of a humanistic society” while we keep the state’s interventions and control power at minimum.

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AN OPERATING CORPORATE GROWTH STRATEGY: Building a Fortune 500 Manufacturing Business (7th article in the series on M&A)

I  write about two of the factors I consider central to successful growth and I used to build JPIndustries (JPI) in to A Fortune 500 Corporation at a time of economic recession, high interest rates and an exodus of manufacturing operations from the mid west: synergy and homogeneity.

You are probably saying to yourselves that synergy was a concept of the 1960’s which was not notably and successfully employed by the conglomerates which coined it, and that homogeneity reminds you more of processing milk than of conducting business.

But these words, synergy and homogeneity are Creek.  And I of Greek origin. I believe   that understood and applied correctly, the concepts expressed by these words    have clear practical meanings and direct application to business growth.

First: synergy.

Synergy comes from the Greek synergia, meaning “working together”. From the same root we have synergism, which means cooperative action of separate agencies such that the total effect is greater than the sum of the effects taken independently. This is the basis for the famous 2+2=5 definition of synergy promoted as the strategy of the conglomerates of the 1960’s.

I would propose to you that in the 1960’s the term synergy was poorly understood and in many cases poorly applied. That is the fault not of the concept, but of its utilization. And I would further propose that, correctly understood and applied the concept of synergy works.

Continue reading AN OPERATING CORPORATE GROWTH STRATEGY: Building a Fortune 500 Manufacturing Business (7th article in the series on M&A)