- The expectation that the good times will continue to roll. This expectation affects the behavior of all stakeholders in all sorts of ways that are inconsistent with frugal management in tough times.
- They failed to plan for the “worst-case”, while taking all the benefits of the good times as they showed up.
- A scapegoat was necessary to demonstrate that those who were supposedly in charge, (in this case the board) really were in charge, and were prepared to take meaningful action.
- Forecasting has become an exercise in using spreadsheets to extrapolate the current trends at the expense of common sense.
The CEO of a significant business in an industry I know well was walked very recently after the collapse of profitability over the last 6 months.
From the outside, after looking at the public reports, a number of common misconceptions are evident:
Prudent management plans for the worst whilst hoping for the best.
