Why Giants Stumble. (November 2019)

• Record Type: Journal Article
• Authors: Barber, Felix; Whitehead, Jo; Bistrova, Julia
• Is Part Of: California management review. Volume 62:Number 1(2020)
• Page Start: 5
• Page End: 30
• Publication Date: 2019-11
• Subjects: business failures -- case studies -- CEO dismissal -- corporate governance -- corporate strategy -- decision biases -- decision making; Industrial management -- Periodicals; Industrial management; Management; Bedrijfseconomie; Periodicals; 658.005
• DOI: 10.1177/0008125619876904
• Languages: English
• ISSNs: 0008-1256

Abstract

Why do large, successful public companies and their CEOs suddenly weaken? To find out, we studied 45 large European and U.S. stumbles. Our case studies point to some common mistakes, such as undertaking unnecessarily risky growth strategies, treating compliance issues lightly, or poor cost control. These simple mistakes often had complex origins, such as attempts to meet conflicting objectives, weak board governance, or even executives being misled by positive experiences with ambitious growth investments. We develop a checklist of "Emperor's Clothes" failings to help executives and boards lessen the risk of the worst stumbles.