Beware Success
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Last week, Business Week ran great piece on Toyota that included the following lead: "Akio Toyoda thinks he knows what’s wrong with Toyota, the world’s biggest car maker. Success has made it cocky."
"Cocky" is a good word. A milder word might be "overconfident." "Arrogance" would be a little stronger. It's a bad thing.
Pride is one of the Roman Catholic Church's seven deadly sins.
The Bible warns that "Pride goes before destruction." (Proverbs 16:18)
In Greek drama, Hubris is followed by Nemesis.
Remember General Motors? Before it was a welfare recipient, it was a car company. Supposedly GM had cracked the code of good management. When Peter Drucker wrote The Concept of the Corporation, the "corporation" was General Motors.
The Great Atlantic and Pacific Tea company was another company that looked like it would never get in trouble. In its day, people wrote articles about it that sound very much like the ones they write about Wal-Mart today.
IBM, Bethlehem Steel, and Goldman, Sachs looked like they had figured it out. Hardly anyone predicted that they would fall on hard times.
It's human nature, I think. When you're really successful for a while, it's easy to believe that the laws of nature, human nature, and economics don't apply to you. You lose your discipline, stop concentrating on the things that brought you success, and start believing your own press clippings.
Because you're reading about how good you are, you don't notice when little things start to go wrong. You don't pay attention to the details. And, suddenly it seems, you're in trouble.
Boss's Bottom Line
Whether it's your company or your team, the time when you're most likely to start the downward slide is the time when you're sure that success will go on forever. It won't. You'll be rewarded with success as long as you do the things to earn it. When you stop doing them, the laws of nature, human nature and economics will be there waiting.
Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.
Categories: Leadership,Failure,Success
Tags: Success Leadership
Wow, this really caught my attention. Don't CEO's know that competitors will copy their company's success? Even though you're ahead this week, you have to keep running to stay ahead.
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I think they all know it in their head, Loren. But keeping after it day after day after day is hard work. What's also interesting is that the one sure source of sustainable competitive advantage is people, with their knowledge and relationships, and very few companies act like they believe that.
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In some respects, it might become the tortoise and the hare issue here. Some companies get so far ahead of their competitors that they decide to "take it easy" for a while, perhaps not even consciously. If that happens, you become less vigilant about what is going on and you begin to feel insulated from any threats to the company. Before you know, someone else has caught up to you, some revolutionary idea has taken hold, or your investments go south and you are in a world of hurt.
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That's a good point, Matt. People and companies feel like they've "earned a rest." So they decide to take it easy for a while. But you start to die when you stop seeking challenges.
It's hard to keep yourself challenged when you're at the top of your game. You have to work at it and consciously seek challenges because they don't come naturally anymore.
Michael Jordan's induction speech at Basketball Hall of Fame was a recitation of the many ways he kept finding ways to challenge himself to better performance.
When Linus Pauling was awarded the Nobel Prize in chemistry, someone asked him, "What do you do after you win the Nobel Prize?" Pauling replied: "Change fields."
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Spot on, Wally. Unfortunately, the ones that need to see how close they are to destruction are also the most blinded by pride and arrogance. Keep up the good work! Bret
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That's often true, Bret. The more you think you can do no wrong, the closer you get to the edge.
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I am a big fan of Toyota’s (I have three) yet when my son needed a car we bought a Mazda…why?
I have bought/leased Toyotas for 15 years, so I went to my local dealer and had a new experience...arrogance. Arrogance is learned, and I by product of the shadow of the leader. Their core focused changed at leadership and it trickled down.
So just as quickly as I drove to that dealership I went two doors down and bought a Mazda, not significantly less money, but I “felt” they valued me, my business.
Toyota’s lack of market knowledge was showing and as I discuss in my blog : Attention leaders: Don’t look now but your lack of market knowledge is showing… http://nosmokeandmirrors.wordpress.com/2009/07/03/attention-leaders-dont-look-now-but-your-lack-of-market-knowledge-is-showing/ .
Mazda brought quality up to Toyota standards and all being equal I buy from people who make me feel like they value my business.
As I said to the salesperson…you sell Toyota’s not Lexus, get over yourself and understand your market!
Mark Allen Roberts
www.outbsolutions.com
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Thanks for adding that personal experience. When you buy a product, you're actually trading your money for the entire experience of buying and owning it. There are lots of opportunities for the manufacturer and the dealer to make you happy. Or not.
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How Ironic! I was just discussing car topics with my coworker today. I found the exact car I wanted at a local dealership and met with the sales manager twice to discuss purchase/lease options.... he was completely arrogant throughout both meetings and barely gave me any information. You would think he would have wanted the sale! I ended up driving to a neighboring state to purchase the exact same vehicle and found their customer service to be over-the-top!! Due to one managers poor customer sercie and arrogance, the local shop lost a sale. And just today I found out they are closing their doors!
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Thanks for sharing that experience. The dealer is not the company, but dealers are notoriously difficult to deal with. That's why so many people hate buying a car.
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Hi Wally,
Do you think it is constructive for companies to brainstorm about their potential downfalls? What do you think will bring down WalMart?
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I think that brainstorming about possible problems is a good idea, Brian. It's the essence of Andy Grove's book, Only the Paranoid Survive. I think there are other things you can do as well. Listen to your customers. If you're in frequent contact, you'll hear about problems while they're still faint signals. Some companies have top execs spend an hour a week on the customer service phones to get that done. Debrief new hires after they've been with you a month or so. They've still got a fresh view of the company then and they see things you don't.
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In addition, customers who are vocal online are a fabulous source of wealth of information as to what your company is slipping on. With today's information age, there is no reason a company cannot go online and find out what customers are saying about them or gather suggestions for improvement. Dell is doing this with their IdeaStorm website. I've seen a lot of blogs and forum posts of customers that are unhappy but also from customers that are happy with a company's service or product. A lot that leaders in those companies can learn from if they don't discount it and search for it.
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Great point. The online world, especially social media, have given us a whole new window on the world of reputation.
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The branch of tree that bears fruits leans down. When leaders assume higher responsibilities, they become more humble. Success can go to the head, or it can go in the heart.
When it goes to head, arrogance drives actions. When it goes to heart, self-confidence becomes a driver of actions.
Great post!
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Thanks for the kind words. I think you've added a great and insightful line to the conversation with "When it goes to head, arrogance drives actions. When it goes to heart, self-confidence becomes a driver of actions." Thanks.
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Hi Wally. I think this is very important for any current successful company to remember. I'm glad the leadership of Toyota realizes this before it was too late. As with some of other companies you listed, its often the leadership that is the last to realize this - even when their employees and customers point to the signs.
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Thanks for adding that insight. I don't think we know if they've caught it early enough. Only time will tell. There's a wonderful scientific example of nonlinear systems called the "Sandpile Effect" that might be at work here. If the pile of problems has been building for a while, we might be at a point where only a bit more is required to begin the slide to chaos.
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Hi Wally,
Doesn't Jim Collins explain all this in his latest book "How the Mighty Fall"? I haven't read it myself but have read about the five stages of decline in a BW article recently.
The first stage is Hubris born out of success. Large companies can become insulated with success, the leaders lose vision and success virtually becomes an entitlement. When the rhetoric of success replaces understanding and insight into the reasons for success, decline follows. Luck occasionally plays a major role in success, and those that fail to realize and accept the role that it may have played may just have overestimated their own merit and capabilities and have succumbed to hubris. With the current economic downturn, we can see this applicable to companies all around us.
Thank you for your insight.
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Collins does say that, but, like most of his work, the material on business failure is affected by the way the research is done. And Collins also tends to draw cosmic conclusions that leave things out.
In the case of business failure, he discusses hubris and the postulates a staged failure model. That's certainly true for some situations. But there's more than one way to fail. There are companies that are poorly managed. Some are done in by changing market conditions. Some are inadequately funded. Competition does in a few. Some pursue growth at the expense of good sense because the market "demands" it. And some executives make strategic decisions based on the way company strategy affects their paycheck.
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I'll never forget a presentation by Oren Harari several years ago. He made this statement. "The number one predictor of business failure is not what you might think (you know lack of funding, lack of talent...). The number one predictor of failure is previous business success."
That phrase speaks volumes. If you want to keep your organization, avoid overfeeding them, where they just might become fat and happy.
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Thanks for coming by, Rodney. I can agree with everything after "If you want …"
I completely disagree with the Harari statement as rendered above. I think that the data show that far more companies get in trouble on the way to success than fail after achieving great success.
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