Ideas & Debate

Why great companies fall from grace to grass

The stories of Kodak and Nokia are all too familiar cases of very successful companies that failed to engage their creative juices when it demanded such. file photo | nmg
The stories of Kodak and Nokia are all too familiar cases of very successful companies that failed to engage their creative juices when it demanded such. file photo | nmg 

I have been reading a book, Why Great Men Fall by Wayde Goodall and it is such an eye-opener. I feel like scales have dropped from my eyes and cobwebs removed from my ears. I recently found myself reflecting about a similar problem that society has been experiencing; the decline of very successful organisations or corporate giants much to the dismay of stakeholders.

In my reflections, three pitfalls (what I’d call the 3Cs) came to mind as to why great companies fall: Conceit, Complacency and Corruption.

Firstly, is conceit. Call it hubris, call it arrogance, call it pride, call it ego. The mentality of “too big to fall” becomes the guiding principle.

I recently bumped into the horrific saga by the very profitable United Airlines that saw it suffer backlash from its customers with a lot of criticism and judgement flooding the courts of public opinion.

As the story goes, the airline needed to accommodate its employees in the overbooked flight hence decided to jettison one of the passengers. What was disturbing, however, was the dragging of the uncooperative passenger down the aisle resulting in his injuries.

Somehow, the airline’s corporate needs became of greater importance than its customer’s rights. Don’t forget that this is a customer who had paid for the seat. As the New York Daily News rightly put it, the age-old axiom, “the customer is always right,” met its match against another axiom of modern day business, “the customer is only right when it suits us.” This is now business arrogance at its best.

The lesson here is the need to embrace humility. Companies, no matter how successful, should never stop putting their stakeholders first whether employees, customers or shareholders.

The second stumbling block is complacency. In other words, being too comfortable at one’s successes and achievements to a fault. Sometimes our success can be the very cause of failure especially when we make the success into a monument and we become so comfortable around it that we stagnate and stop endeavouring.

It’s always inspiring when people turn their failures to success but the converse is never a sweet thing. As a result of complacency, you’ll hear of big companies that were so successful that they stopped innovating. The stories of Kodak and Nokia are all too familiar cases of very successful companies that failed to engage their creative juices when it demanded such.

Complacency also means efforts to please customers cease being a priority. Forging good employee relations also stops. We have seen great politicians, businesspersons, sportsmen, artists who have conquered seemingly insurmountable challenges yet brought low from the heights of their successes due to complacency. The solution here is to raise the bar continually, working hard and smart, pursuing the right strategies and endeavouring to get better even when very successful and with little competition.

Third is corruption: When ethics and morals are thrown out of the window, failure is looming. Fraud, dishonest gain, untrustworthiness are some of the symptoms. You’ll even hear some employees claiming, “this is not a Church”, or “this company does not belong to your mother” as a way of justifying their corrupt practices.

Corruption can also thrive when the organisation’s control environment or corporate governance structures are weak. It’s like a huge tent whose stakes are weak; it cannot hold during a stormy day. In our church, the theme for the year is, “enlarge your tents, strengthen your stakes” in appreciation of the fact that blessings or success shall come our way but they should find us with strong structures that can support that very same success.

Successful companies should make every effort to ensure that their control environment and corporate governance structures are adequate and effective. Otherwise when a company succeeds and grows faster than its structures, fraud, scandals and other unethical behaviour easily flourish.

We have heard in the news of scandals like the Enron scandal, the FIFA scandal, and many more; the least I say of these the better. The antidote to these ills is integrity and ethical practices.

Setting the tone at the top right to support ethics is important so that this may have a trickle-down to the entire organisation. Strong corporate governance structures and an effective control environment also come in handy.

Billy Graham has graced the Gallup list of most admired men in the world for the record 60th time. This is more than any other man in history. In fact, the runner up to Billy’s record is Ronald Reagan who has only featured 31 times. Billy, though an ordinary imperfect human being like all of us, has managed to avoid most of the things that have brought many great men down.

[email protected]; Twitter: @DavidDavidKE