The economist has a list of ways to birth a megaflop, by which they appear to mean a strategically important investment that loses a company money, face and time. The basics:
- Don’t break something that works (“slaughter a sacred cow”)
- Don’t do something you’re not good at just because you can. (“mix oil and water”)
- Don’t produce a genuinely awful product.
I’m fascinated by organizational dysfunction. Not only from train wreck voyeurism, mind you, but because the only way to learn is through failure and I’d rather learn through others’ failure if I can. (btw, the only book I’ve seen in this vein, and it isn’t that great, is this one.)
Anyway, the most interesting kinds of failure happen when companies that get a lot right screw up. In that light, that list above isn’t too bad. But I’d add one:
4. Forgetting what the product is.
The Economist opens their article with a discussion about the recent film flop John Carter, which I wanted to see but skipped after checking reviews. I think Hollywood blockbusters are a better example of my point than any of theirs.
The problem is that ‘Hollywood’ is actually not in the content creation business, believe it or not. They’re in the distribution business, a business run by advertisers, marketers and salespeople. There are two really important challenges to overcome in sales driven businesses:
First, to quote Gordon Moore: “Every the salesmen thinks he’s management material”.
Second, salesfolk are quick to criticize products that they think might be a difficult sell.
Sales is tough. And when it doesn’t work it’s not always obvious where something went wrong.
Salespeople have two extremely powerful advantages that quickly turn into a disadvantage in tough times: they have outstanding communication skills (which they use to trick themselves and everyone else into thinking they know more than they do, see Gordon Moore above) and they’re the ones who are experts in sales. Shouldn’t they know what’s best?
Hollywood flops all the time. I think this happens when the sales department makes too many decisions on what they want to sell: the package becomes the product.
It’s easy to say “don’t give marketing too much control!” but remember that marketing is often a bigger part of the blockbuster budget than the film itself. They control the money!
I didn’t quite know where to link to it, but this is an awesome post on sales.