Why do companies fail? And what can be done to turn them around before it is too late? While these are common questions in the business world, the responses frequently are inadequate and the lessons of failure are not always taken to heart. In a capitalist economy built on risk and reward, business failures are bound to occur and are a normal, healthy part of what the economist Joseph Schumpeter called “creative destruction.” At the same time, there are ways to improve the odds of success, as any business school professor will tell you.
Most problems begin with bad management— perhaps the entrepreneur who started the business with a great product or idea is the wrong person to take the company to the next level. He or she may be good at product development but not at marketing and commercialization.
Corporate governance is another big issue; directors may not be sufficiently independent of management to do a proper job of oversight or they may simply not...
Peter Hadekel, a journalist and author, is a business columnist for The Gazette in Montreal.
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