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How to Guarantee Your Company Will Fail

November 13, 2011

People do stupid things when they are afraid. They pull back resources when they should be reaching out. They make knee-jerk decisions about policies and practices. They allow their fear to overtake courage. The word dis-courage means just that. To dismiss courage. To disassemble courage and strength.

As a previous post showed, the real difference between failure and success is simple. Success is getting up one more time than you fall down. Success requires the Belief that you can get up one more time.

Companies are making incredibly stupid decisions:

  • Ignoring long-time good clients and customers.
  • Creating policies that drive customers away.
  • Reducing payroll and employees so low they can’t operate their businesses.

I coined a term during our last big recession in 1981: Corporate Anorexia and was scolded by an editor at a Hawaii paper for creating an inflammatory term. She said, “Oh Beth, we can’t say that it’s an unkind characterization of corporations that are struggling.” (This was my first alert about the coming Political Correctness insanity from a recent Berkeley grad…)

Great ideas are often thought of simultaneously. It’s their time to be born. Several months later, I read another article using the same term. Corporate Anorexia is the state where a company has reduced its stamina and resources to the point of starvation and failure.

Informal Leaders

I’ve worked as a speaker and consultant in thousands of organizations.  Most companies make it, not because of leadership at the top, but because of  informal leadership within middle management and longtime frontline employees.

Granted, as we say in Hawaii, “The fish rots from the head down.”  There are many examples of bad leaders destroying great organizations. But middle and front line management often provides the inspiration that makes a company great.

How to Guarantee the Company will Fail

Let’s look at a typical Corporate Anorexia tale. (Names have been changed to – well – keep me from litigation!)

Ethel in Marketing knows the customers. She has spoken to hundreds of them and understands their heart, their desires, their frustrations. Tom over in engineering understands what makes them crazy and how to fix it. Janey, a 20-year veteran in the purchasing department knows which orders to expedite and which can be handled at a more leisurely pace. Bob, the CEO, is the 7th CEO in the company’s history. He knows how to play the big game. How to hobnob and say all the right words at the company picnic. He’s a numbers guy and he loves to have collegial conversations about business, “the street,” derivatives, and golf, Bob may think he is the company. He’s not.

In some companies “Bob” is a visionary and a great leader. Sometimes he’s a figurehead. How do we know the difference? Pay attention to how the CEO handles a financial crisis. Watch as Bob creates stricter customer policies that are more company-centered than customer-centered. Watch the fallout when Bob decides Ethel , Tom, and Janey are too expensive because of their longevity, and he replaces them with green twenty-somethings. Or he doesn’t replace them at all. Read about Bob’s large payout when the company starts to take a dive and Bob decides to golf elsewhere.

We will then be treated to the sad story of the market and the economy taking Bob’s company out. However, if you talk with Ethel, Tom, and Janey, they will remind you they recommended treating the customers well during the downturn, cutting them some slack, creating ways to keep the customers happy. They could have called old customers and helped them solve problems. They could have worked deals in supplies and equipment. They would have told Bob not to create anti-customer policies. But these informal leaders weren’t there to mop up after Bob.

Punchline? If competitors were smart, they scooped up Ethel, Tom and Janey. The competitors are weathering the economic insanity very well because of that one smart move.

Are you savvy enough to hire people with smarts and keep the ones who make their jobs look easy? Just because they make it look easy doesn’t mean they aren’t earning their pay. Make sure you understand the unintended consequences before you kill your golden geese. And if you see a competitor making a stupid move, swoop in and hire the stars they were too blind to appreciate.

Beth

© 2011 Beth Terry Seminars, Inc. All Rights Reserved

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