Death by Success

The things you do in the beginning, when you're the minnow-against-the-giants, to start and build a business may not work well when you're successful, when you've become The Giant.

Exactly what leads to Success can eventually lead to your downfall.

You become very good at the things that have gained and seemingly maintained Success.  Every problem and challenge you've met have been solved with your brilliance and individual style.

Why would you ever want or need to vary that approach?

Until something new comes along and it all goes wrong:
  Inevitably in Business and Life, things change (perturbations arise in Control Systems terms).
  Responding with "More of the Same", as in the past, will, at some point, not work.
  If you've grown large, it will take time to fail, you'll have notice "things aren't great".
  Many companies only ever do "More of the Same",  often amping-it-up as results don't appear.
  The results are as predictable are throwing oil on a fire.

Often I mention Sydney Finkelstein's book, "Why Smart Executives Fail" in which Finkelstein describes the results of 6 years of research.  He self-describes as "Steven Roth Professor of Management at the Tuck School of Business at Dartmouth College, where I teach courses on Leadership and Strategy".

In Smart Executives, Finkelstein and his team documents a whole slew of companies (50) that burned bright and collapsed. This book was published in 2003, covering a turbulent period of US and global business, as well as some famous cases going back decades.

The subjects of the research were chosen precisely because they were wildly successful and suffered a notable collapse. Enron and Worldcom are on the list, plus many I.T. companies such as Wang Computers.  The common thread is the collapse was avoidable and predictable.

Would the conclusions, Lessons Learned and "Early Warning Signs" be different post the 2008 GFC (Global Financial Crisis)?  I think not...

Finkelstein lists 7 naive causes of failure:
  1. The Executive were Stupid.
  2. The Executives couldn't have known What was Coming.
  3. It was a Failure to Execute.
  4. The Executives weren't trying Hard Enough.
  5. The Executives lacked Leadership Ability.
  6. The Company lacked the Necessary Resources.
  7. The Executives were simply a Bunch of Crooks.
and comments in a para entitled "Failure to understand Failure":
All seven of these standard explanations for why executives fail are clearly insufficient. (Because the companies had demonstrated excellence in becoming highly successful.)
The next 300 pages are his answer. Part I describes "Great Corporate Failures" and Part II their Causes.
This research ends with a positive message, Part III is "Learning from Mistakes":
  • Predicting the Future, Early Warning Signs.
  • How Smart Executives Learn, Living and Surviving in a World of Mistakes.
His "Seven Habits of Spectacularly Unsuccessful People"  are worth reiterating:
  1. They see themselves and their companies as dominating their environments.
  2. They identify so completely with the company that there is no clear boundary between their personal interests and their corporation's interests.
  3. They think they have All the Answers.
  4. They ruthlessly eliminate anyone who isn't 100% behind them.
  5. They are consummate company spokespersons, obsessed with the company image.
  6. They underestimate major obstacles.
  7. They stubbornly rely on what worked for them in the past.
Each of the 11 chapters has 30-50 references.  Although written and published for the general market, this isn't any "Puff piece".

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