Reality Straight Up!

Thoughts & Observations of a Free Range Astrophysicist

The Lesson of Lost Value

A study of over 1000 companies that experienced major setbacks reveals a fundamental fact, as true for individuals as it is for corporations.

Failure doesn’t happen to us, it is something that we do to ourselves. The difference between success and failure lies in our approach to knowledge.


A 2012 Booz & Company study , “The Lesson of Lost Value”, took a look at the biggest business failures between 2002 and 2012. What they found agrees with numerous other studies before and since.

The Lesson of Lost Value is that most failures are ultimately failures of knowledge.

The results of the Booz & Co study, “The Lesson of Lost Value” confirm what countless other studies have also found. Most failures are ultimately failures of knowledge.

In the business world, very few failures are due to operational problems, regulatory or compliance issues, or external events. Instead, the vast majority of failures stem from errors such as misunderstanding changing markets, failure of new products, or being caught flat-footed by industry shifts. What’s more, they are usually errors that could have and should have been foreseen.

The study describes these errors as “underestimation of strategic risk,” but that can be said a lot more clearly. When businesses fail it is usually because the world turned out to be different than someone thought it was!

In short, failure is almost always rooted in a failure of knowledge.

The Lesson of Lost Value: Success begins and ends with knowledge.

The foundation of leadership is knowledge.

The authors of the study go on to make a host of recommendations. Managers should “think broadly about what could occur and constantly layer new risks into their calculations.” They should “integrate risk awareness directly into strategic decision making.” Managers need to “be on the lookout for more strategically resilient alternatives.”

The authors stress that risk must be managed “at the top levels of the company, looping in key individuals as needed,” the need for “full understanding of the uncertainties inherent in strategic decision making,” and the importance of being “always on the lookout for more strategically resilient alternatives in order to build greater corporate agility.”

Lesson of lost value concerns strategic riskThe list goes on, and there is a lot of wisdom and value in those recommendations. But at the same time they dance around the real point. All of that advice really amounts to the same thing.“You are missing things that you should be seeing, so stop missing them!”

What is true for corporations is true for small businesses and individuals as well. The key to success is knowledge.

Of course, the real problem isn’t knowledge itself. In a changing world, knowledge is an ephemeral thing. What really matters is the way that we approach knowledge. What is knowledge in the first place? Where does it come from? What are its limitations? How can we tell the wheat from the chaff?

Answer those questions, and the rest will fall into place.

The Lesson of Lost Value  © Dr. Jeff Hester
Content may not be copied to other sites. All Rights Reserved.

Reality Straight Up!

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Click on thumbnail to select post:

  • Great Deceiverism 101  Explanation or Theory? Therein lies the rub.Posted in For Your ConsiderationUnreasonable Faith
  • One Step at a Time  The  not-so-mysterious origin of lifePosted in For Your ConsiderationUnreasonable Faith
  • The Mind’s Siren Call  Being certain is a primrose pathPosted in For Your ConsiderationUnreasonable Faith
  • Constrained Hallucinations  How the brain uses science to perceive the worldPosted in For Your ConsiderationUnreasonable Faith
  • Entropy Redux  Why our universe isn’t boringPosted in For Your ConsiderationUnreasonable Faith
  • Entropy’s Rainbow  The statistically likely path to complexityPosted in For Your ConsiderationUnreasonable Faith
  • Cassandra Smiling  Science, politics and a march in the rainPosted in For Your ConsiderationUnreasonable Faith
  • EPA Rehash  A suddenly partisan NASA faces its futurePosted in Thoughts
  • The Hermeneutics of  Bunk  Alan Sokal and postmodernism’s black eyePosted in For Your ConsiderationUnreasonable Faith
  • A Dunning-Kruger Universe  Everyone, it seems, has a “theory”Posted in For Your ConsiderationUnreasonable Faith
  • Our Need to Know  We crave certainty, even when it is only an illusionPosted in CoachingThoughtsUnreasonable Faith
  • A Saguaro’s universe  Building a cactus starts with the Big BangPosted in For Your Consideration
  • If someone can’t tell you how they would know that they are wrong, they don’t have a clue whether they are right.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • Once seemingly incomprehensible, the origin of life no longer seems such a mystery. Most of what once appeared as roadblocks are turning out to be superhighways.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • Being certain lights up our brains like a junkie’s next hit. Literally. Unfortunately, being certain and being right are two very, very different things.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • The unique worlds we each consciously inhabit – the only worlds we will ever experience – are constrained hallucinations, products of hypothesis testing by our predictive brains.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • A month’s worth of sunlight could pay the entropy bill for a billion years of biological evolution. Entropy is evolution’s best friend.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • Entropy is often maligned as the enemy of order. In truth, without the inexorable march of entropy, the universe would be a very boring place.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • On a cold day in April, 2017 scientists gathered in Washington DC and cities around the world for the March for Science. Their message was a single powerful idea. Truth is not a political expediency. Reality cannot be ignored. In the year that has followed the vital importance of that message has only grown.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • When I look at NASA’s new Administrator, Jim Bridenstine, it is his fellow Oklahoman Scott Pruitt’s EPA that jumps to mind. As politically uncomfortable science is pushed aside, NASA’s history of nonpartisanship appears headed for an abrupt end. Will a strongly partisan NASA have a target on its back?

  • Some years ago, NYU physicist Alan Sokal wondered whether anti-science postmodernists could recognize politically-correct-sounding nonsense even if he rubbed their noses in it. The unwitting subjects of the Sokal Hoax jumped at the bait.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • Some people are sure they know more than the experts, but it can take a lot of knowledge to realize just how wrong an idea is.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • The human brain craves the sensation of knowing like a drug addict craves the next fix. If real knowledge is uncomfortable or not at hand, we are quite content to just make something up, then convince ourselves it’s real. In a world where knowledge matters, that’s dangerous.

  • The iconic saguaro cactus gives the desert an otherwordly beauty. That beauty does not exist in isolation. It embodies the fascinating and awe-inspiring processes that have shaped the universe, going all the way back to the Big Bang itself.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

Over his 30 year career as an internationally known astrophysicist, Dr. Jeff Hester was a key member of the team that repaired the Hubble Space Telescope. With one foot always on the frontiers of knowledge, he has been mentor, coach, team leader, award-winning teacher, administrator and speaker, to name a few of the hats he has worn. His Hubble image, the Pillars of Creation, was chosen by Time Magazine as among the 100 most influential photographs in history.
©Dr. Jeff Hester LLC, 5301 S. Superstition Mountain Dr., Suite 104 #171, Gold Canyon, AZ 85118