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11 Mistakes Billionaires Learned the Hard Way

11 Mistakes Billionaires Learned the Hard Way

It’s been said it’s easier to learn from your mistakes, but you don’t always have to, particularly in business. Working your way to the top can be extremely difficult and mistakes in the business world can be costly. It is important for the entrepreneur to learn not only from their successes, but also from their failures. Although there’s much to gain when it comes to experience, you can save a lot of time and money by learning through the mistakes of others.

Even today’s top grossers have had their dull moments. Here are 11 mistakes billionaires learned to avoid the hard way:

The 1 Percent
    1. Failure to research.

    When making an acquisition or starting a new business, research is essential. Is there competition? Is there a big enough market? Is your acquisition worthwhile? In 1999, the world’s richest man, Carlos Slim, did not do his research and acquired CompUSA for $800 million, only to see the company’s value plummet because desktop computers were quickly being replaced by laptop computers and other emerging technology.

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    2. Fixation on the wrong investments.

    Few things are worse than a missed opportunity. Focusing on the wrong investments can bring disastrous results. Take Bill Gate’s mistake of ignoring search engines, for example. Focusing on the loss of profit that came from piracy lead Microsoft to completely ignore the development of the search engine. This neglect left plenty of space for other companies, such as Google and Yahoo, to fill the gap. By the time Gates realized he had made a mistake, it was too late. Presently Bing has picked up some of the search engine market, but in 2011 it cost Microsoft $2.5 million more than it earned.

    3. Lack of communication.

    When offering goods or services, communication from the top directors to the employee team and from the employees to the customers is vital. You cannot expect the members of your team to immediately know what you are thinking and this is a mistake billionaire Larry Ellison experienced first hand. After acquiring Island Air, Paul Casey was quickly appointed as CEO. The lack of communication that ensued regarding the changes resulted in various flight delays (one of which was seven hours long) and many disgruntled customers.

    4. Cutting vital costs.

    Maximizing profits and cutting unnecessary costs is a natural part of business. However, it’s easy to get lost in the profit frenzy and so one should be careful such costs do not damage quality or the brand. Take for example the case of billion-dollar company Hewlett Packard. Once known for innovation, everything started to go wrong once innovation was replaced by cost cutting. Current owner and CEO Meg Whitman has seen stock price plummet 39% from one year ago.

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    Billionaire Status

      5. Letting good opportunities go.

      If you think you have a good idea or your research has proven your idea to be a sound choice, go for it. Do not let a good opportunity go by, because just like you are capable of coming up with great ideas, so are other people. Larry Page of Google learned this the hard way. In 2003, after he noticed the success of Friendster, he offered to purchase the then social media giant instead of focusing on developing his own. The offer was turned down and the result was disastrous, as Facebook swooped in to take the social media market by storm. Google+ was eventually released in 2011, and to this day has yet to match the social capital and earnings of Zuckerberg’s giant.

      6. Refusing to explore other options.

      Not all acquisitions are in great shape, and sometimes the industry you want to focus on may be shrinking. These things can difficult to accept but it is important to know when to explore other ventures. Billionaire Warren Buffet admits to having made this mistake when purchasing Berkshire Hathaway on emotional impulse in 1964. A New England textile company at the time, he kept the original business running at a loss for 20 years, before finally giving up and focusing on the company’s other, more profitable ventures.

      7. Cultivating a negative image.

      When you are a billionaire and have a brand to protect, you must behave like it. Anything negative that is said about you will reflect badly in your company and this is a mistake Alice Walton, heiress of the Walmart empire, has committed. Walmart is already involved in numerous controversies regarding the giant’s effect on small businesses and wages paid to workers. Walton’s own Texas escapades, which included a DWI, are negative publicity and include a mug shot no PR executive can wipe from Walmart’s already negative record.

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      8. Allowing credibility to plummet.

      A lot of business ventures depend on credit lines. It is important to remember that this is not only about paying your bills, but also about paying them on time. Used-to-be billionaire Eike Batista saw his oil and mineral empire plummet from more than $30 billion to a mere $200 million once key stakeholders lost trust in him after he failed to deliver the results he’d promised. Once Batista lost credibility in one area, he quickly lost it in all of them, and was forced to watch his empire shrink.

      9. Hiring the wrong people.

      Hiring is an important part of every business. Human capital is what makes a company prosper, but when hiring, keep in mind the ideals of each new hire and whether or not they fit with the company. A bad hire in an important position could be disastrous. Billionaire philanthropist Manoj Bhargava admits the worst business mistake he’s ever made is hiring the wrong people—those who enter his charity wholesale business hoping to help themselves instead of helping others.

      10. Being afraid of postponing.

      It is important to jump in to big opportunities; however, it is also important to do self-assessment to know whether or not you and your team are prepared for the next move. Billionaire Oprah Winfrey cites her TV network, OWN, as one of her biggest mistakes. Her blunder? Launching when she wasn’t ready to launch and doing so only because she said she would.

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      11. Taxes? What taxes?

      It hasn’t been proven whether or not billionaires avoid taxes more than the average citizen. However, a tax scandal is one of the most difficult things to recuperate from. The Beanie Baby creator, billionaire Ty Warner, barely escaped jail for allegedly owing $25 million in taxes, a report that will undoubtedly damage both his brand and reputation.

      Billionaire Make It Rain

        These are 11 mistakes that forced billionaires to clean up their act. As an aspiring billionaire, you should be able to learn from the mistakes of others and take these eleven points to heart as you continue your journey.

        Have you hit a stumbling block before that taught you a valuable lesson? If so, I would love to hear about them in the comments below.

        Featured photo credit: Flickr via flickr.com

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        Last Updated on April 23, 2019

        How to Set Stretch Goals and Keep Your Team Motivated

        How to Set Stretch Goals and Keep Your Team Motivated

        Stretch goals are a lot like physical fitness. When you adopt a physical sport such as running, continual practice leads to increased stamina, growth and progress.

        While commitment to the sport improves performance, true growth happens when you are stretched beyond your comfort zone. I know this from personal experience.

        For years, I was an avid runner. I ran with a variety of running groups in the Washington, D.C., area and in Columbus, Ohio, where I lived prior to moving to the nation’s capital in 2011.

        While I was initially fearful about slacking off on my exercise habit when I moved to D.C., running enthusiasts in the area provided continual motivation, inspiring me to lace up my shoes day after day. Much to my surprise, many of the area’s running stores (including Pacers and Potomac River Running) boasted running groups that met in the mornings and evenings. So, it was relatively easy for a newcomer like me to connect with like-minded peers.

        I was never a particularly fast runner, but I enjoyed the afterglow of the sport: being completely drained but feeling a sense of accomplishment; setting and reaching goals; buying and wearing out new tennis shoes. The sound of throngs of feet pounding the pavement in semi-unison is still enough to bring tears to my eyes. Yes, I sometimes tear up at the start of races.

        Of all the groups I ran with, the Pacers Store group that met on Monday nights in Logan Circle boasted the fastest runners. I met up with the group week after week only to be the slowest runner. It was difficult to muster the courage to get up every week and meet the group knowing what was waiting for me: sweating and watching the backs of fellow runners.

        Each time I joined the group, I was stretching myself without even realizing it. Instead of feeling like I was transitioning into a better running, for a long time I felt I was torturing myself.

        Then something remarkable happened. I went for a run with a different set of runners and noticed my time had improved. I was running at a faster pace and doing so with ease. What was once uncomfortable for me I now handled with ease.

        The reason I was becoming a better runner was because I was taking myself out of my comfort zone and challenging myself physically and mentally. This example illustrates the process of growth.

        Fortunately, we can create situations that stretch us in our personal and professional lives.

        What Is a Stretch Goal?

        A stretch goal – as authors Sim B. Sitkin, C. Chet Miller and Kelly E. See detail an article “The Stretch Goal Paradox” in Harvard Business Review[1] – is something that is extremely difficult and novel. It is something that not everyone does, and it’s sometimes considered impossible.

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        In general, you establish stretch goals by doing things that are difficult or temporarily challenging.

        For instance, when I was first promoted to a senior communications management role, I knew I needed to beef up my relationships with media personalities. I set a goal to once a month book a day of media interviews in New York City – which is home to many media outlets, including SiriusXM radio, CNN, NBC News, HuffPost, VIBE.

        This was a huge goal because it meant not only identifying the right people to meet with but convincing them to meet with me and my team. While I didn’t end up meeting the goal of doing a full day of media interviews in New York City, I met more people than I would have met had I not established the goal and instead stayed in the comfort of my D.C. office.

        It is important to note that just because you establish a stretch goal doesn’t mean you’ll achieve the goal each time. However, the process of trying is guaranteed to provide some level of growth.

        The Importance of Creating Stretch Goals

        The beginning of the year is a perfect time to assess where you are excelling and where there is room for you to grow. I typically start the year by creating a yearlong strategic plan for myself.

        I think about the things that are necessary to do and things that would be cool to do. I assess the people I should know and think through how to meet them. Then I ask myself if the goals are realistic and what would need to happen for me to achieve them.

        Over time, I have learned that there are five things I can do to set stretch goals:

        1. Get Outside of Your Head

        If I exist within the confines of my imagination, I imperil my own growth and creativity.

        If I examine my accomplishments and celebrate them in isolation of others’ accomplishments, my vantage point is limited.

        I want to be comfortable with what I accomplish, but I also want to be motivated by watching others. In some respects, stretching is about expanding your network of friends, associates and mentors. These are the people who will propel or slow your growth and development.

        Since two are better than one, I always value being able to share my progress with others, seek feedback and then map a plan for success.

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        2. Focus on a Couple Areas at a Time

        When setting goals, it is important to focus on a couple of areas at a time. Most of us are only able to focus on a few things at a time, and if you feel you are unable to tackle all that is before you, you may simply disengage.

        I see this in so many areas of life:

        When people get in debt, if they believe the debt is insurmountable, they refuse to look at incoming bills for fear of facing down the debt. Unfortunately, many businesses go awry when setting stretch goals.

        In “The Stretch Goal Paradox,” Sitkin, Miller and See note:

        “Our research suggests that though the use of stretch goals is quite common, successful use is not. And many executives set far too many stretch goals. In the past five years, for example, Tesla failed to meet more than 20 of founder Elon Musk’s ambitious projections and missed half of them by nearly a year, according to the Wall Street Journal.”

        Goal-setting is like a marathon, not a sprint. It doesn’t all need to happen at the same time, and pacing is extremely important if you want to get to the finish line. It is better to focus on a couple goals at a time, master them and then move on to the next thing.

        3. Set Aside Time Each Year to Focus on Goal-Setting

        When I was a managing director for communications for the Advancement Project, I spent the first part of every year facilitating a communications planning meeting.

        The planning meeting began with the team members assessing the goals the team had established in the preceding year, and whether those goals were realistic or not. If we failed to meet certain goals, we broke down why that happened. From there, we brainstormed about possibilities for the current year.

        For instance, one year we set a goal of pitching and getting 24 opinion essays published. This was audacious because no one on the eight-person team had the luxury of focusing exclusively on editing and pitching opinion essays to publications around the world. We would need to focus on pitching in between the rest of our work.

        We hit this goal within the first eight months of the year. Remarkably, in total, we ended up getting 40 opinion essays published that year, which was an indication that our original goal was too low. We upped the goal to 41 the next year, and amazingly, we hit 42 published opinion essays or guest columns.

        From this experience, we not only learned what was feasible, we also learned the power of focus.

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        When we focused as a team on getting the commentary on our issues out in the public domain, we were successful. The key in all of this is that there was a ton of discussion around which goal we’d pursue and why.

        Equally important, as a manager, I didn’t set the goals alone; the team members and I established the goals collaboratively. This ensured buy-in from each individual.

        4. Use the S.M.A.R.T. Goal Model to Set Realistic Goals

        S.M.A.R.T.

        is a synonym for specific, measurable, attainable, realistic and time-bound. For the sake of this article, the realistic portion of the acronym is most important.

        While you want to set audacious goals, you want to ensure that they are realistic as well. No one is served by setting a goal that is impossible to accomplish.

        Failing to meet goals can be demoralizing for teams, so it’s important to be sober-eyed about what is possible. Additionally, the purpose of setting goals is to advance and grow, not depress morale.

        For instance, my team would have been discouraged had I begun the year asking it to pitch and place 40 opinion essays if we didn’t already have a track record of placing close to two dozen essays.

        By using the S.M.A.R.T. formula, we were able to achieve all that we set out to do.

        5. Break the Goal up into Small Digestible Parts

        I am a recovering perfectionist. As a writer, being a perfectionist can be counterproductive because I can fail to start if I don’t see a clear pathway to victory.

        The same is true with goal-setting. That’s why I join Lifehack’s fellow contributor Deb Knobelman, Ph.D., in noting that it is critically important to break goals into bite-sized chunks.

        When I had a goal of doing daylong media meetings in New York City, I had to think through all the barriers to achieving that goal and all the steps required to meet the goal.

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        One step was identifying which reporters, producers and hosts to engage. Another step was writing a pitch or meeting invitation that would capture their attention. Another step was thinking through the program areas I wanted to highlight and the new angles I could offer to different reporters.

        Since reporters want to cover stories that no one else has written, I needed to come up with fresh angles for each of the reporters I was engaging. An additional step was thinking through who from my team I’d take with me to the various meetings.

        I was clear that, as a talking head, as public relations reps are sometimes called, I needed the right spokesperson in order to land repeated meetings with different outlets.

        A final step was thinking through what I needed to bring to each meeting and which reports, videos and testimonials would buttress our claims and be of interest to media figures.

        As I walked through what was needed to bring my goal of doing daylong meetings to reality, I realized that not only was the idea within reach, but I was excited to tackle the challenge.

        From that point until now, I have learned to break down goals into smaller parts and tackle the smaller parts on the path to knocking the goal out of the park.

        The Bottom Line

        These are my recommendations for setting stretch goals, and there are a ton of other resources to support you in the workplace and in your community.

        For instance, LinkedIn’s Lynda.com platform has a wonderful suite of leadership development videos, including ones on establishing stretch goals. This is a paid resource but may be worth the investment if you lead a team or want to invest in tools for your own growth and development.

        Featured photo credit: Avatar of user Isaac Smith Isaac Smith @isaacmsmith Isaac Smith via unsplash.com

        Reference

        [1] Harvard Business Review: The Stretch Goal Paradox

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