All that is born must die
“No one and nothing, remains the same
Everyone has to learn to say goodbye
Everything changes in fact and in time
All that is born must dieThey Wonder What Changed
- David Whalen
Corporations and Organizations are no different than biological organisms. There are three distinct sets. The first lot is impatient and restless. They keep exploring the unknown frontiers, discover the new territories, unearth hidden treasures. They are brave but brittle. They are path breakers but probably lack tenacity. Sabre Toothed Cat and Wooly Mammoth. The second lot may not be glory seekers but they are adept at adapting to the changing times. They are malleable and hence survivors. Rats and Cockroaches as species have actually done well for themselves. And the third lot? They wonder what changed. They refuse to acknowledge that the winds are changing. They set their sails in the wrong direction or don’t set the sails at all. They are slow and stubborn. They eventually perish too. The dinosaurs.
Many an organisation is formed with a burning ambition, grand vision and unmatched passion of their founders. Then any of the three things happens.
Unfortunately for an organization, somewhere along this adventurous voyage, the corporations enter the choppy waters. Several things change. Customer preferences, technology, government rules, international treaties, wars, frauds, maverick competitors, copyright violators, inflation, recession. All or any of this can simply knock the wind out of the sail. History is replete with examples of such companies. From Eastman Kodak to Enron to Lehman Brothers.
More often than not the initial success gives the incumbent management disproportionate confidence into its own abilities or actual size of the opportunities or both. What follows is inexplicable diversifications, random and ambitious take overs and wild punts. RJR Nabisco is a classic example where a maverick CEO bets so big that it just pulls the plug on his large and successful corporation.
Sometimes it’s just the opposite. Nothing of significance really happens externally in the environment or internally within the organization. And the corporation just trudges along. No fresh ideas, no rigor and completely out of touch with the external environment. This kills the excitement. It is akin to the Second Law of Thermodynamics. This Law says that the total entropy of an isolated system always increases over a period of time. Meriam Webster Dictionary defines entropy as a “measure of unavailable energy in a closed system or degradation of matter. Synonyms of entropy are ‘chaos’, disorganization’ and ‘randomness’. I always thought this definition fits so well to several corporations where complete isolation from the reality leads to complete morass. They are ready to decay and die. Nokia and Research in Motion (makers of Blackberry) turned into such isolated systems which never really grasped the changing times. The degradation eventually swallowed both the organizations.
Magic potion for immortality? At least give me one for longevity
MAN has not yet succeeded in two of his insatiable desires. Alchemy, to turn any metal into gold and Magic Potion, to get a ticket to immortality. There is really no such thing as immortality. Neither for a species nor for corporations. But what is not impossible is longevity. If we accept that anything that is created will cease to exist one day then the question is how long can one delay the inevitable? It appears that there are only a handful of commercial institutions who have survived vagaries of time. Baretta, gun maker, incorporated 1526; Grolsch, brewer, incorporated 1615; Haig, distillery of scotch Whisky, incorporated 1627; London Gazette, Newspaper, incorporated 1665; Lloyds, insurance, incorporated 1688; Twinings, tea, incorporated 1706; Sothby’s, bookseller, incorporated, 1744. Amongst the latest Fortune 500 list there are only 13 corporations which are over 150 years old. Some of the notable names are Citigroup, Colgate-Palmolive, DuPont, J P Morgan Chase, Bank of New York Melon.
Fortune 500, Not So Fortunate After All
Contrast this with the fact that only 61 or barely 12% of the Fortune 500 companies in 1955 still existed in the list in 2014. The website aei.org reports that the average age of a publicly listed corporation has come down from 75 years to less than 15 years in the last 50 years.
Deathwish of a Moth
So is there a secret recipe or a magic potion for longevity? If there is, I have no idea. I also don’t know if there exists a survivor’s guide book with a step by step prescription for a long life of an organisation. Corporations, after a few decades of their inception either go bust or get gobbled up by larger corporates which in turn go bust eventually.
Though we have no secret recipe for longevity let alone immortality, I can certainly think of a tool kit which hastens the process of decay. This is an attempt to decode the fatal attraction which organisations so often exhibit to embrace their own mortality. Let’s see how these simple to follow tips can guarantee a CEO that his or her organisation doesn’t last to see the next decade.
Carry the Donkey on the Shoulder
The story goes that a farmer and his son are walking a donkey home in the scorching Sun. They pass a group of raucous villagers who laugh heartily at them and say aloud why aren’t they riding the donkey. Hardly have the father and the son mounted the ass when they come across another bunch of righteous villagers who took a pity at the donkey for carrying two healthy men on its back. The father then dismounts only to encounter elderly villagers who gesture angrily at the son and wonder why the young man is letting his old father walk. When father rides the donkey, ladies of the village snigger at the old man saying how the selfish old man is making the little fellow walk in the sun. Exasperated the duo finally ties the donkey to a pole and carry it home. So first tip, follow every advice of everybody whoever comes along the way. Consultants, Board members, Stock brokers and Analysts, Management Gurus. Just try to please them all.
Imitor Proximus Tuus
Imitate your neighbor. The next tip is to copy your competitors. Copy their products, their structures, hire their employees, learn their “best” practices and practically anything else you can lay your hands on. When in doubt, do what your competitor or a bunch of them are doing and pray that the wisdom resides with the competitor. If so many of them are doing it then it must be damn right. And what best way to shut up the pesky analysts than to copy a worthy competitor or two. Didn’t they all ride the Subprime bandwagon together?
Fresh Air May be Allergic
Call your one downs for infinite meetings. Set up an army of administrative staff to set up elaborate meeting agenda, take minutes of the meetings, circulate a list of actionable items for the next meeting. Form committees. Ask these committees to keep elaborate documentation of their deliberations, selection criteria of their members, evaluation of the performance of their members in these deliberations and the works. Create an atmosphere where employees not in the committees should feel insecure and strive to get into one. Question the usefulness of the employees who are not ‘seen’ in those committees. This is sheer fun. See how employees plot against each other to get into one of those committees. Develop structures and evaluation scores to measure employee effectiveness on the basis of their participation and performance in these committees. Give higher weightage to employees who spend time in the committees than those who simply squander away time with the customers, vendors, suppliers, investors et al.
Build a Tomb of Foundation Stones
Remember the adage, ‘well begun is half done’? Well, leave the other half to your successors or to the lowly employees. God is in the Big Picture. You are the visionary, the pioneer. Details are for the ordinary who enjoy the mundane. In the times of Twitter why waste time writing an epic. Besides, who doesn’t love good sound bytes? You must fear the long treacherous journey of execution. Because the actual time spent in execution may keep you from the glaze of the world. You can’t afford that as you have to make the next announcement of that big exciting idea.
Demolish the Old Structures
When in doubt you may just change the whole damn structure of the organization. The verticals, the horizontals, the matrices, the thick lines and the dotted lines. Everything and for everybody. This is sure fire way to cause huge anxiety within the ranks making them look up to you for direction and for some sense. This also keeps the organization occupied and creates an impression of a purpose. That is most important. They will love you. Media, your Board, Analysts et al. Practically everybody likes the (wo)man with a purpose. Best part of this trick is you can always blame anything there is to blame on the previous structure. And whoever has any gumption to question your logic can be easily silenced lest he end up taking the onus for the earlier mess.
Evolution of homo sapiens is a continuous process from the hunter gatherers some 70,000 years ago to the modern times of world wide web. And no one individual can claim to have been indispensable to mankind. No one can claim that but for him or her this species would be still hunting with crude stone tools. And that’s right. So never mind if your employees leave. Never mind even if they leave in droves. If one is dispensable then so are many. You can always replace them with the new hires.
Obviously this is not an exhaustive but certainly the effective list. If a CEO so chooses (s)he can certainly keep an eye (or both) open to ensure that the corporation (s)he presides over, has no access to this self help guide.
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www.fortune.com : 150 year old fortune 500 companies
www.themysteriousworld.com : oldest animal species
www.dogsofthedow.com : largest companies by market cap
www.nbcnews.com : notable companies which have disappeared
www.businessinsider.com : iconic brands that no longer exist
www.aei.org : average age of fortune 500 companies
Sensex companies in 1986 – only 6 remain in 2016