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1/ There are many interesting and instructive thoughts on failure expressed by Fearon in his book, Dead Companies Walking. As a topic by itself, "failure" is a great subject to study. And this is a very good book on that subject.
2/ There are other really good books on the subject. One of them is by Peter Bevelin. It’s based on Charlie Munger’s famous quote. Buy this book and read it slowly. It’s the best book on the subject that I have read.
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amzn.to/2Tjxzki
4/ Books aren't the only source to learn about failure. Look around and every year you’ll find so many cases of business failure, of really dumb behaviour by managements of companies occur. People collect stamps and records. I collect cases on human folly. Including my own :-)
5/ In Dead Companies Talking, the author approaches failure from the vantage points of three kinds of people. And I really like that approach. Those people are: Entrepreneurs, Investors, and People who run the government.
6/ One of the things that Fearon tries to do is to remove the stigma around failure. He correctly points out that one of the greatest reasons for success of the Silicon valley is that it embraces failure and that failure is natural, and far more common than success. 
7/ Fearon correctly points out the role of Schumpeter idea of "creative destruction." He writes:
"It's a harsh but vital process. It weeds out subpar ideas and gives good ones like Google the nourishment they need to grow."
"It's a harsh but vital process. It weeds out subpar ideas and gives good ones like Google the nourishment they need to grow."
8/ Fearon addresses the problems we humans have when we have to deal with failure - as entrepreneurs, as investors and as bureaucrats.
9/ When it comes to managements, Fearon gives examples of massive over-confidence amongst senior business executives. I see this all too often myself and I am sure you, as a business analysts would have seen it too.
10/ For analysts and investors, therein lies a danger in relying too much on managements. Their over confidence rubs off on you and you will ending up making mistakes in not just conviction, that conviction will be reflected in large position sizes.
11/ Fearon talks about the three characteristics of people he calls as “THE MOST DANGEROUS PEOPLE IN THE WORLD.” One of those characteristics applies so well to business executives and investors.
12/ Fearon writes how governments and bureaucrats behave when they encounter failure in businesses. They are petrified of it. By not allowing businesses to fail, they make the problems worse. This is so common in India. Air India. MTNL. I could go on and on. But you get the point
13/ Munger once said “I think it’s in the nature of things for some businesses to die. It’s also in the nature of things that in some cases, you shouldn’t fight it.”
He was so right.
He was so right.
14/ In India we have always been reluctant to let businesses die. With a Bankruptcy Code in place, things are only a little better now. But we have a long way to go before we will embrace death and failure as commonly accepted in places like the Silicon Valley and in nature.
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