Businesses Don’t Fail, Leaders Do

“Why do businesses fail?  If you’re willing to strip away all the excuses, explanations, rationalizations, and justifications for business failures, and be really honest in your analysis, you’ll find only one plausible reason – poor leadership.” – Mike Myatt

I don’t think I could have said it better than Mr. Myatt.  Leaders, at the senior executive level of a company, drive success or failure. 

In an article written for Forbes.com, Mike states it clearly – “Businesses Don’t Fail – Leaders Do”.   He points to 15 reasons commonly attributed to business failure.  He then shows how leadership is really the underlying issue behind the business problem.   I won’t take you through all 15, but will point out 4 of the most critical issues that result in business failure.(To view the full article go to: http://www.forbes.com/sites/mikemyatt/2012/01/12/businesses-dont-fail-leaders-do/ )

Lack of Vision – “The CEO has the responsibility to define the vision of the company.  If there is no vision, a flawed vision, or a poorly communicated vision, the responsibility falls squarely in the lap of executive leadership.”

A lack of clarity at the executive leadership level will spill down through the organization.  If the CEO and the senior team don’t have a clear vision, they can’t get the rest of the employees engaged and committed.  Without clarity, you have nothing to aim for, nothing to measure, and nothing to rally around.  I will add that a compelling mission must also be in place.  You must know why you exist as a company – beyond your great product and goal to be #1 in your market.

Flawed Strategy – “A flawed strategy simply reveals weak leadership.  While there are exceptions to every rule, companies tend to succeed by design and fail by default.  Show me a company with a flawed strategy and I’ll show you an inept leader.”

To develop a good strategy demands the aptitude for strategic thinking.  If your leaders don’t have the skills or experience to think at that level, they are forced to rely on the CEO for all strategic direction.  The CEO becomes the smartest person in the room, which is never a good idea.  Leaders need to have the skills to assess threats and capitalize on opportunities.  They need to know what’s happening outside of the organization, so they can develop an informed strategic plan.

Lack of Sales“A lack of sales is ultimately attributable to a lack of leadership.  Strategy, pricing, positioning, branding, distribution, compensation, or any number of other metrics tied to sales force productivity all rest with executive leadership.  A lack of revenue is not someone else’s problem, it’s a leadership problem.”

This would be a trickle down result of the Lack of Vision we talked about earlier.  Without a strong guiding vision and purpose, you don’t have the foundation built to determine your product’s value proposition, branding message, target market, etc. How do you develop sales objectives, marketing strategies, and revenue targets without these pieces in place?  You don’t.

Poor ManagementIt is the job of leadership to recruit, mentor, deploy, and retain management talent.  If the management team is not getting the job done, it’s not a management problem, it’s the fault of executive leadership.  Show me a leader that blames his management team for failure to execute and I’ll show you a poor leader.

Mike has hit the nail on the head here.  If your management team is struggling, it’s most likely because they have no role model at the senior level.  Whatever has been established from the top will trickle down to the management team.  So, if the CEO doesn’t hold the executive team accountable for performance, goal alignment, quality of hire, retention, mentoring and employee development – guess what?  You won’t have a management team capable of executing critical people management responsibilities.   It’s rare to see senior executive incentives and bonuses tied to people management metrics.  We send an interesting double message when we place all of the importance on hitting numbers, which cannot be sustained without productive, engaged employees.

I urge you to look at these 4 areas in your company and see if you might have some opportunities for improvement.  I wouldn’t want your business to fail because of leadership.

Share your thoughts, comments and feedback.  Together we can grow strong leaders and strong companies. 

Posted in Business Failure, Culture, Growth, Leadership, Risk, Strategy, Success
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