The 5 Most Expensive Words Known to Man

Rather than rush to make strategic changes in confusing times, we should be even more careful and find a way to bring in a "devil's advocate."

Spending money

When I remodeled a house years ago, I decided that the most expensive words known to man were, "While we're at it...." Then a co-author and I spent two years having a team of researchers look at 2,500 corporate disasters and realized the most expensive words are actually, "We have to do something...." 

Those words spring to mind because several columnists in recent days have opined that, sure, Mark Zuckerberg is overspending by billions of dollars a year on a misguided vision of the metaverse, contributing to the expected layoffs of thousands of employees this week, but HE HAS TO DO SOMETHING to revive growth--and right now. Or, look at Elon Musk, who HAS TO DO SOMETHING about Twitter so quickly that he is doing and undoing initiatives almost as fast as he can tweet and is driving away users and advertisers in the process.  

Actually, rather than lunging toward the metaverse before he has it figured out, Zuckerberg could return the billions to shareholders and let them find other innovations to invest in, or he could simply keep his powder dry until he understands more about what more prudent investors, such as venture capital firm Andreessen Horowitz, are calling Web 3.0. Musk, after taking his initial, likely needed, cut at costs could put together an actual plan and stress test it rather than just announcing and quickly amending plans online.

The rest of us don't HAVE TO DO SOMETHING, either, even though inflation, geopolitical turmoil and a bunch of other forces are creating extreme stresses that may tempt us to do something rash with our businesses.

Instead, we should be even more careful in tough times. In addition to following our normal methods for making strategic decisions, we should add a "devil's advocate" process to make sure we understand all the ways a strategy can go wrong. A strategic bet can't just be the best available from a set of bad choices but must actually make sense analytically. 

I'll explain. 

Zuckerberg's and Musk's desperate logic is clearly tempting. These are very smart guys. But Chunka Mui and I learned the dangers when we researched 2,500 corporate disasters for our 2008 book, "Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Corporate Failures of the Last 25 Years." We learned that management teams can talk themselves into all sorts of corporate strategies even when it should be obvious that the idea is a nonstarter -- we decided that 47% of the failed strategies could easily have been identified as losers ahead of time. For instance, one of the world's biggest cement companies decided that, because its cement was used in so many homes, it was really in the home products business and should start selling lawn mowers. It didn't take a genius to see that the home products strategy was a huge reach, but the company went ahead and, sure enough, filed for bankruptcy soon enough. 

The propensity for major error increases when companies are under pressure--as so many feel they are these days or expect to be in coming quarters. Management teams feel the need for quick, dramatic action and are more likely to rush to judgment. That's especially true when the CEO lines up behind an idea early, as Zuckerberg has at Meta and as Musk is doing (much more chaotically) at Twitter. The dynamic shifts from testing an idea to trying to make the CEO's idea work, no matter how improbable.

Chunka and I also learned, though, through consulting work based on the book that a management team almost always sees all the flaws in a strategy. The key is to give those people a chance to point out the flaws before the company commits to a bad idea. 

The process we recommend is to use a devil's advocate. We mostly modeled our approach on what President Kennedy did so successfully during the Cuban Missile Crisis. JFK, having bungled the Bay of Pigs because he too readily accepted his advisers' assurances, appointed his brother Bobby to challenge all the claims and advice offered by political and military leaders. So, when Gen. Curtis Lemay told JFK that he could bomb Cuba without fear of prompting an attack by the Soviets, RFK spoke up, eventually got Lemay to admit that he had no evidence for his claim and maybe saved the world from nuclear holocaust. 

In a corporate environment, a CEO can anoint someone as the devil's advocate--perhaps a senior executive, perhaps a board member, perhaps an outsider, depending on the internal dynamics. That person would then be given license to identify all the potential problems, mostly through interviews with the senior team, and would present the case against a strategy. The negatives could then be weighed against the positives and a decision made, free of the pressure to do SOMETHING even if all the alternatives are bad.

Some version of Zuckerberg's metaverse may well play out. Virtual reality keeps improving, and we're clearly still in the early days of realizing the potential of digital forms of communication. Andreessen Horowitz, one of the smartest VC firms around, obviously has investment theses for each of its Web 3.0 companies that go well beyond any hype. (I'm less optimistic that Musk can figure out a magic solution at Twitter.)

But Zuckerberg, Musk and others are nonetheless adding to the very long list of corporate errors that the rest of us can learn from.