The Lessons of Great Blunders
When Giants Stumble by Robert Sobel. Prentice Hall, 349 pages, $26.
The infamous cases of the Edsel, Coca-Cola's change in formula and IBM's lack of foresight in dealing with Bill Gates are all classic examples of what not to do in marketing, but you won't find them in this book.
When Giants Stumble is a collection of lesser-known mistakes or miscalculations. Careful not to judge them for it, Sobel takes 15 companies and gives their decisions a historical context to analyze why and how they went wrong.
Packard, for example, leads the "Blunder of Downward Extension." In the early 1900s, Packard was considered to be the "American Rolls Royce" of luxury cars. The company hand-crafted cars while most other companies were mass-producing, thus making its image one of wealth and aristocracy.
Then Packard expanded into the mid-range market. This move was a temporary success. At the beginning of the Depression, comparatively wealthy people could buy in that range and still retain their prestige. Ultimately, however, this strategic move would undo the company as it sacrificed the aristocratic image that had gained such loyalty.
After the Depression, Packard couldn't compete with mid-range kings Buick and Chrysler, and couldn't get back into the luxury market because it had been surpassed by Lincoln and Cadillac.
In clear and engaging writing, Sobel, a professor of business history at Hofstra University, presents other stories of great business blunders, such as the blunders of:
* ineptitude at Osborne Computer, where weak management led to the failure of its cutting-edge transportable computer;
* ignorance at Kaiser-Frazer, where founder Henry Kaiser, once the most revered businessman in America, plunged into automobile manufacturing without understanding the industry or market; and
* nepotism at RCA, where visionary founder David Sarnoff was succeeded by his well-meaning but ill-prepared son, Bobby, which led to the company's decline.
Sobel doesn't spell out the lessons to be drawn from each case, but by specifically identifying the blunder involved, and evoking in such compelling detail the story of the blunder, he offers memorable learning experiences for all managers.
Copyright © 1999, Executive Book Summaries.