Will Your Next Mistake be Fatal?: Avoiding the Chain of Mistakes That Can Destroy Your Organization [Hardcover]

If you think "fatal" is hyperbolic, consider these statistics which Michael Gerber shares in E-Myth Mastery: "Of the 1 million U.S. small businesses started this year [2005], more than 80% of them will be out of business within 5 years and 96% will have closed their doors before their 10th birthday." These are indeed chilling statistics. There are others which indicate that many once large and successful companies have either disappeared or were acquired." Reasons for business failures vary from one company to the next but in many instances there seems to have been one, eventually fatal mistake which set in motion an irrevocable path to failure.

As Mittelstaedt explains in the Introduction, "This book is about the avoidable traps that we set for ourselves as business people which lead to disasters. It is about what we can learn from the patterns of action or inaction that preceded disasters (sometimes called 'accidents') in a variety of business and nonbusiness settings in order to avoid similar traps and patterns of mistakes. This goes beyond kaizen and six sigma on the factory floor to M3 [i.e. managing multiple mistakes] in the executive suite and at all operational levels of companies." Mittelstaedt identifies a very common pattern. First, problem which goes undetected, a subsequent problem then exacerbates it, disbelief or denial as the situation becomes worse, concealing the nature and extent of the situation as it becomes even worse, then shock in response to a situation out-of-control, and finally a significant (avoidable) loss of life, financial resources, or both. Later, of course, accusations, recreations, assignment of blame, punishments, etc. Neglect or denial of "early warning signs" is a common problem in and of itself.

Mittelstaedt wrote this book to help decision-makers understand how and why business is like an engine, requiring energy to get a flywheel rotating at the correct speed and in the proper direction to produce whatever the desirable results may be. His correctly emphasizes the importance of:

1. Identifying which potential disasters would result in the greatest damage.
2. Identifying where and when they are most likely to occur.
3. Identifying what are generally referred to as "early warning signs."
4. Making certain that everyone involved knows what they are, how to recognize them, and what to do in response to them. It is quite impossible to exaggerate the importance of the word "everyone."
5. Recognizing and generously rewarding vigilance.

While examining a number and variety of operational and strategic mistakes in his book, Mittelstaedt focuses on what specifically is involved in managing multiple mistakes. His observations and suggestions are presented within a framework which seems relevant to any organization, regardless of its size or nature. His objective is to help his reader "learn to recognize the patterns of mistakes that precede most business disasters and take actions to eliminate the threat [i.e. preventive maintenance] or to reduce the incident to something that does not require full-scale crisis management." The M3 concept is based on Mittelstaedt's belief that nearly all serious accidents, whether physical or business, are the result of more than one mistake. Hence the importance of "breaking the chain" of mistakes ASAP or the damage that has already been done and its cost will increase -- and probably accelerate -- exponentially.

Early on in his book, Mittelstaedt cites the "Five Deadly Sins" which Peter Drucker once described in an article published by The Wall Street Journal (October 21, 1993).

1. "Worship of high profit margins and premium pricing"
2. "Mispricing a new product by charging what the market will bear"
3. "Cost-driven pricing"
4. "Slaughtering tomorrow's opportunity on the altar of yesterday"
5. "feeding problems and starving opportunities"

Mittelstaedt views them as examples of longer-term "cultural mistakes" that many companies make with regularity. "Damage does not occur overnight; it occurs slowly and consistently until someone or something breaks the chain and fixes the problem." That "someone" may be the CEO but perhaps Mittelstaedt's more important point is that literally everyone involved in the given enterprise must be well-prepared to recognize seemingly insignificant but potentially quite serious "warning signs" as soon as possible, then respond effectively or enlist others to do so. I know from my own experience that a minor cut if untreated immediately can become a major infection. The same is true of organizations.

Mittelstaedt cites and then discusses a number of "mistake chains" which include the Eastern Airlines flight 401 crash, schoolchildren becoming sick after drinking Coke in western Belgium, the financial losses resulting from American Express' Optima card, the crash of Eastern Airlines 90, the failure of Webvan, Intel's flawed chip, Xerox's failure to commercialize PARC's technologies, and various problems resulting from the confluence of Motorola's strategic and execution mistakes.

The details of such disasters reveal both a "classic pattern" (page 26) and a series of 38 "Insights" which Mittelstaedt conveniently summarizes in an appendix (pages 289-298). Throughout the book's narrative, each is presented within a real-world context. I especially appreciate the aforementioned Appendix as well as the provision of various quotations, check-lists, caveats, and reiterations of key points within a reader-friendly format. Ultimately, this book must be judged on the quality of thinking and writing, organization and presentation of material, substance of content, and potential value to its readers. As my rating correctly indicates, I think this book makes an outstanding contribution to our understanding of a subject which really has not -- until now -- received the attention it deserves.

Those who share my high regard for Mittelstaedt's exceptionally informative book are urged to check out Robert Sobel's When Giants Stumble: Classic Business Blunders and How to Avoid Them, Robert F. Hartley's Management Mistakes and Successes, Michael Levine's Broken Windows, Broken Business: How the Smallest Remedies Reap the Biggest Rewards, Sydney Finkelstein's Why Smart Executives Fail: And What You Can Learn from Their Mistakes, Forbes Great Success Stories: Twelve Tales of Victory Wrested from Defeat, and Forbes® Greatest Business Stories of All Time ( Forbes Magazine Staff).

Robert Mittelstaedt has written a rare, commendable book. He manages to address a significant business topic - the phenomenon of major corporate blunders - in an original, insightful and entertaining way. In this intriguing volume, he cites case after fascinating case where a series of seemingly small errors went uncorrected until a whole house of cards marked "faulty assumptions" came crashing down. The biggest mistake you can make is assuming that a fatal blunder just couldn't happen in your organization, and the second biggest is ignoring the warning signs that disaster is just ahead. The key, Mittelstaedt advises, is to learn to admit that something has gone wrong before the situation spirals out of control. We encourage every thoughtful business professional to read this substantive contribution to the field of risk management and disaster prevention.

Since June 2004, Mittelstaedt has been serving as dean of the W. P. Carey School of Business at Arizona State University in Tempe. What is little known by many in the business community is that he was a child actor, starring from 1957-1959 in a recurring role as Theodore "Beaver" Cleaver's schoolmate Charles Fredericks in the TV series "Leave It To Beaver."