Don’t Lead Your Company into Trouble

Posted on | July 5, 2009 | 2 Comments

I recommend entrepreneurs and senior executives check out How The Mighty Fall, the latest book from Jim Collins, the author of Built To Last and Good To Great.

For those who’re now running hard to save their companies after in hindsight having been over confident in the run up to the current downturn, this book might give you a chance to reassess where you’re at and what you could do to save a bad situation. Maybe even you’ll find a way to pull ‘a rabbit out of the hat’. The theme I am exploring here is: you first have to know and manage yourself before you can do anything meaningful for others (like i.e. your customers, your shareholders and your key stakeholders, or even your spouse – those people who have come to depend on you and your firm).

Now although Collins focuses his attention on 11 high profile examples of big company failure, his new book has plenty of lessons for entrepreneurs and executives in mid-sized and smaller companies. I can say this with confidence because I seen lots of those types throughout the course of both my corporate and consulting careers. The type I’m referring to might see themselves being one of the “I’m Superman” crowd. What Collins’ book helps to point out is that even when this type find out they’re not “faster than a speeding bullet, more powerful than a locomotive, and able to leap tall buildings in a single bound”, they’re still a potential danger to themselves and their companies. If I’m talking about you, sorry, I’m only trying to help – so don’t take this too personally and do a turtle on me and those who depend on you.

What Collins discovered in studying very successful companies that went on to falter is the following:

more ways to fail than there are ways to become great

companies can all too quickly collapse as a result of fraud,
scandal or catastrophic bad luck

if your company is on the road to failure or
serious under performance, it will go to go through 5 distinct
stages in its fall from grace

Hubris Born of Success
- I call this ‘catching the swelled head disease’
Undisciplined Pursuit of More
- you could call this ‘loosing both your head & your way’
Denial of Risk and Peril
- call this ‘not seeing the looming red brick wall’
Capitulation to Irrelevance or Death
- this known as ‘judgment day’

In a coming post, I’ll address why too many are unable to see any ‘brick walls’ looming right in front of them, let alone pay attention to the potholes in the road or cliffs that line their route. But for now, let me address what is the best way to avoid phase 1 or 2 mentioned above so you can keep to Jim Collins’ other 5 phase formula, the one in his Good to Great book. That is: a) use the Roman technique and b) commit yourself to being the type of business exec Warren Buffet likes best – humble.

The Roman technique is a great defense against situations where a) boards and management teams fall into the abyss of mindless ‘group think’ or b) entrepreneurs succumb to the hubris born of success, and the story of it is as follows:

During the period of the Roman Republic before Julius Caesar and the emperors that followed, when a Roman general was victorious in battle, he would return to Rome and parade in triumph down the Via Appia to the Campus Martius, or military parade ground. There he would turn over command of his legions to the power of the Roman Senate for no Roman general was allowed to bring his legions into the city. The reason for this, and why they were required to camp on the outskirts of town, was to maintain civilian authority and prevent military coups.

As the victorious General paraded in his chariot to the cheers of the Roman people, preceding him would be his defeated enemies who were now slaves and the carts laden with treasure taken from the newly conquered lands. And standing behind him in the chariot would always be a slave who held a crown just above his head, never placing it on his head and whispering all the while in his ear, over and over, “Sic transit gloria mundi…How fleeting glory is in this world”. Today the line might go: Hero today…too easily bum tomorrow… we are just men and women.” Source: http://www.politico.com/

Now for literary types or those who need more drama to be convinced, here’s a poem by Shelley:

I met a traveller from an antique land
Who said: “Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
`My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away”.

So where can you get your own ‘slave’, a caring unbiased third-party who’s much more likely to see what you may not and let you know. Why here! That’s why I’m in the management and advisory business – to help people like you and your company get out of, and stay out of, trouble and then find lots of ways for you to maximize both your results and your company’s market value.

– by Tony Johnston
Compass North Inc.

Comments

2 Responses to “Don’t Lead Your Company into Trouble”

Corporate Boards: 14 Questions for You | Biz Money Matters
October 9th, 2009 @ 11:25 am

[...] topics I covered in the following previous blog articles: Don’t Lead Your Company into Trouble; CEO Hubris, Fraud & How to Prevent It; Why CEO’s Are Blind To Trouble!; and Lehman Bros: [...]
Failure to Adapt Kills 2 Many Companies | Biz Money Matters
December 17th, 2009 @ 10:52 pm

[...] – from Biz Money Matters: Why CEOs are Blind to Trouble! Don’t Lead Your Company into Trouble [...]

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Posts by:

Tony Johnston
President
Compass North Inc.

Tony provides executive management and advisory services that help companies get MORE !!

sales / profits / cashflow
financing / exit valuation

Tony delivers the leadership or leadership support needed that can make remarkably outstanding results happen operationally, economically, financially and in the eyes of customers, lenders & transaction counterparties.

If you are a decision maker in a company that wants MORE, give him a call at 416-342-5652 or check out the Compass North Inc website [click here].

Tony's ability to help companies achieve important/challenging goals is well demonstrated by his long record of success, which includes:
- 4 successful turnarounds lead
- $66 mil+ increase public
  company's value
- $34 mil value harvested
  from biotech cofounded & lead
  as CEO
- $12 mil/3x investment gain
  in 2 years delivered for
  VC partners
- $2.5+ bil in public & private
  market debt, equity and
  M&A deals done
- 1 successful company IPO
- 4 new businesses organized &
  grown: Biotech; Securitization /
  Mortgage Servicing; Third-Party
  Logistics (3PL); & Consulting