Saturday, January 9, 2010

How Companies Succeed - Work on the Right Things with the Right People

Jim Collins' book Why the Mighty Fail has caused a lot of discussion with my clients; particularly since Akio Toyada the head of Toyota has stated that his company has passed through the first three steps on the way to decline:

  1. Hubris born of success,
  2. Undisciplined pursuit of more,
  3. Denial of risk and peril,
  4. Grasping for salvation, and
  5. Capitulation to irrelevance or death.
I think this is a good framework; however, for my part I boil failure down to two things:

Working on the Wrong Thing.
Organizations forget who they are. They ignore their DNA. They want to escape from the basic strategy that made them what they are. They want to become something else. Something greater because others say they should. Others like Blue Ocean and Black Swan strategists.

I'm all in favor of the Blue Ocean and Black Swan sentiment that we have to constantly monitor our environment to understand discontinuities that might alter or kill our business. But I'm not in favor of the implication that if we are under threat we have to vault to a new future that is not rooted in our DNA - those competencies that are ingrained in us and have made us successful.

Often we aggrandize the positive culture at Southwest Airlines that was built by its venerate founder Herb Kelleher. How long would it take to drive this positive culture out of Southwest? I suspect a long time. And during that time initiatives that resist this culture will fail!

Working with the Wrong People.
Today's business world is too complex to have everyone on the same page. Sure, we need agreement on a mission and some broad strategies, but that leaves a lot of room to interpret implementation details.

Implementation will cause conflict with leaders. People will always have different models, data, and understandings of what's going on in the market and the capabilities of the business to meet the challenges. Conflict on content is good. It's how leaders make sense out of chaos so they can choose a path that keeps the organization healthy, relevant, and profitable.

Conflict at a personal level is not good - it subverts conflict on content. Personal conflict is rooted in ESP: Ego, Status, and Power. These political objectives create a lack of trust and lack of openness within leaders. Quickly the organization loses its future.

So if you want to succeed the bottom line is: ... work on the right things with the right people.

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