Why do Leaders Fail?

Businesses fail because their respective leaders and/or managers fail. Sadly there are many thousands of businesses which succumb via a bankruptcy or insolvency route simply because of a few basic but yet simple causes depending on the specific nature of the enterprise.

No business or enterprise is immune from these failures and as I have heard on many occasions, ‘If only I had done this’ things would have been different. Sadly most of these individual cases do not set themselves up to measure performances against the ‘Vital Signs’ of what makes it tick.

Mostly the failures are attributable to poor financial management and a distinct lack of appreciation for the need to have proper budgets in place to measure cash flow, growth, and profit including a live balance sheet to show net asset ratios.

Failures can also be predicated by poor market research, tardy product planning, faulty engineering, poor quality, costly waste or failure of personnel to be committed to and motivated develop the necessary skills to perform their functions and to keep pace in new development to suit changing market trends.

Another major problem I have encountered is even with a business that is experiencing a dynamic growth phase and are caught attempting to fund the growth out of normal internally generated cash flow. Invariably this will quickly drain available operational cash and put unnecessary strain on paying creditors, new marketing and/or new product development.

Although managers may have inherently great business skills it would make them a total package if they were to study the techniques of others who have been successful. It would also be equally important to study the causes of managerial failures and to adopt strategies to alleviate the possibility of making those same mistakes.

I repeatedly revue and consider businesses that were either giants in their day or looked upon as being industrial national icons and then ask where they are today? Especially the automotive industry which was a huge business empire in Australia which excelled in exports and actually took Australian manufacturing to the world. For every one major motor vehicle manufacturer there was around eight in the supply chain which serviced them. Where are they today?

There is no such thing as ‘It can’t happen here because we are different. Surely those managers in these now defunct businesses must have uttered these very same words or had the same thoughts.

The fact is that it won’t happen only if you don’t permit it to happen and to prevent it from happening take more than just brave words.

Business does not need to re-invent the wheel because there are those of us out there who have been there and done and can relate to you through personal experience and success. And failures also.

Although the products and processes may differ, the principles of management are all the same.

Best of luck in 2020 and beyond.

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