Embracing business myths harms company performance both during tough economic times, as well as when the economy is strong. During economic downturns, embracing business myths leaves companies so much more vulnerable to decline. And adhering to those myths during good times leads to missed opportunities and to lackluster performance, at best.

I see many examples of companies leaving profits on the table by embracing business myths. Many of these myths are widely accepted--some are less so. But, business history is littered with companies that don't do as well as they could because they embrace myths.

Some of these myths were discussed in previous issues of this newsletter. For example, it is a myth that high risk brings high reward in business enterprises--what really brings high rewards is prudent risk. Another example: much of what is said about the disadvantages of experience is also a myth.

Common myths plague companies pursuing growth strategies. It's a myth that expanding into many new areas fosters successful growth. Yet companies often go this route, especially when growth has slowed or when conditions become intensely competitive. Ditto for acquisitions. Embracing the myth of growth into diverse new areas via numerous empire building acquisitions, that end up poorly integrated and ill fitting, is a common misstep. But for many companies, the mythical nature of these endeavors emerges only after the company is in trouble and finds itself forced to take corrective action by going back to basics.

Often, widespread or highly prominent business failures must occur before business myths are exposed for what they are. Or, it may take a highly visible alleged rule breaking success--like Starbucks in its growth years or Google--to discourage companies from adhering to rules that turn out to be myths. Also, as competing and growing become a greater challenge, more of these myths are being identified and debunked.

Still, some existing myths are reinforced and new myths continue to develop from misinformation about how business works. This can happen, for example, when a particular aspect of business success is researched or investigated very narrowly, and findings are widely publicized without a strong grasp of how they fit into a broader business context. Or, something may catch on merely because it has the appearance of being a bonafide business success factor, when generally it is not.

There are ways to help determine whether a business success principle is or is not a myth. Thus, evidence for a particular success rule should be carefully evaluated to assess whether or not the principle is valid, rather than myth. Additionally, it is important to assess how the principle applies to your particular situation. With this approach, companies avoid being misled by many of the myths and can achieve far greater success.