A billion dollar lesson — tell your boss what’s wrong

I sat in on a fascinating talk by former *Wall Street Journal* reporter Paul Carroll this week. Carroll is the co-author (along with Chunka Mui) of *Billion Dollar Lessons* about some of the most colossal business failures and what can be learned from them. The event was sponsored by the [Churchill Club](http://www.churchillclub.com).

Carroll recounted some of the familiar ones, though with additional insights as to the reasons behind them. He noted, for example, companies that aren’t technology-oriented, can get enamored with the latest disruptive technology with dire consequences. Exhibit A: Federal Express’ disastrous Zapmail rollout in the mid-1980s.

“Companies make the mistake of assuming their competition will remain static,” said Carroll. Zapmail made sense at the time because fax machines weren’t very good and the service offered a way for companies to get important documents delivered the same day they were sent. Problem was, fax machines got better and less expensive, leaving Federal Express with a half a billion dollar write-off a few years after launch.

And then technology companies themselves get carried away. The Iridium satellite project had a competitive edge when it was first hatched in 1985, but $5 billion later it failed and the consortium behind it was forced to sell its assets for $25 million.

**The Emperor has no clothes**

Carroll has no problem with big ideas and thinking different, but he said companies often make decisions for the wrong reason. Worse, it’s not companies but the CEO making the mistakes everyone else can see but are too afraid to make waves.

“There’s a desire to please the CEO,” he said. “But successful organizations tolerate a high level of disagreement, even encourage it,” he said. Carroll covered IBM for years and recalls its legendary CEO Tom Watson “loved a good fight.” He suggests companies would even be wise to designate a devil’s advocate to make sure new ideas can withstand critical evaluation.

**But what about Apple?**

So in the spirit of Carroll’s supposition, I waited for the Q&A portion to disagree. I said it all sounded good in theory, but how did he explain the success of a company like Apple, which seems to run counter to a culture of challenging ideas — unless the challenge comes from CEO Steve Jobs.

Carroll conceded Jobs is the exception that proves the rule. “Apple is an anomaly. Steve Jobs is just remarkable, he’s Mozart,” said Carroll. Going by his knowledge of failed mergers and acquisitions, Carroll recalled Jobs convinced Apple to buy his company NeXT as part of his return to Apple. “At the time, I thought it was a mistake,” said Carroll.

You can read excerpts from *Billion Dollar Lessons* and find information on company failures at a [related Web site](http://www.billiondollarlessons.com”).

Carroll joked that with the way some of the big company failures are going now he may have to re-title the next edition to *Trillion Dollar Lessons*.

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