| Success is a lousy teacher. It seduces smart people into thinking they can’t lose.
– Bill Gates quoted in “Thoughts,” Forbes, vol. 175, no. 13, June 20, 2005. Quoted by the author.
Why this obsession with pitfalls? This is my fourth pick of growth storybooks.
Nearly thirty years ago I joined a great-guns business group. It had successfully transitioned to a scientifically managed professional organisation after initial hands-on driving by its visionary promoter. Iconic innovator, employer, market performer and corporate citizen, the name did us proud. Then a series of adverse developments shook the power sector in the mid-80s. Despite full order-books, radical restructuring, sustained product upgrades and category-leadership till date, the name obscured. Loyal and resilient managers lost face. It hurt to see a legendary industrialist crushing himself, owning failure of his formerly successful ways. Opinion-leaders harangued us everywhere... Ironically sponsored by that company, I had learned about harnessing strengths, monitoring ‘deficit factors’ and their shift doing a course on growth strategy. I continue to see dynamic environs effecting successful and failed businesses.
Robert J. Herbold headed Operations at Microsoft during its fourfold growth phase of 1994 to 2001 following 26 years at P&G, having headed Marketing and R&D there. He contrasts his pick of moribund companies with enduring successes. While I first balked at the ‘same old list’ I was refreshed by the incisive observations. Further, I found several cases where risks lead to threatening situations but eventually to victory, whereas risk-aversion is fatal. Aided by clear do-and-don’t lists, the lessons are a treasure, certainly to our bada sa’abs.
GM began to design unexciting cars from risk-aversion and cost-cutting but signed uneconomical contracts with United Auto Workers. Instead, Charles Ghosn restored Nissan’s market share by “a sense of crisis mixed with passion.” For 20 years, Chrysler has been reversing each success of exciting new models by over-staffing and sloppy production. Boredom is Herbold’s Trap #1, caused by clinging to ‘legacy’ formulae for security and proven successes. Kodak went slow on the digital front to its own peril. CEO Olsen considered DEC “still a growth company” despite virtual edging-out by Sun and IBM, while Bill Gates, faced with the lead of WordPerfect among legal professionals, asked: “How can we ever truly lead this business if the most discriminating users we are inferior?” at a product review and went on to seek answers. Toyota avoided legacy thinking by extensive Kaizen training; efficiency drives; JIT across the value chain; placing each product development under a Chief Engineer to interface marketing, planning and manufacturing; flexible manufacturing via Global Assembly Lines to produce of almost all models at any plant and finally, great products - Lexus 400 that took on Mercedes, Jaguar and BMW – and the Prius petrol-and-electric hybrid that was to sell 400,000 units last year. Other traps are: Pride – allowing obsolescence; Boredom - clinging to stale and dull brands; Complexity – ignoring complicated processes; Bloat – rationalising poor speed and agility; Mediocrity – Condoning poor performance; Lethargy – comfort, casualness; Timidity – non-confrontation; Confusion – mixed messages.
Remedies include: Face reality, then aggressive tackle vulnerabilities; Reapply what works; Uniqueness is essential to a product, as are well-analysed bets; Constantly revitalise core products; Be distinctive in each brand; Focus relentlessly on details and execution; Don’t wait for complexity-caused crises; Assign top talent to tough issues; leadership is the key to speed and agility; Raise the bar in selecting people and expectations; Don’t be afraid of fresh talent; Broader the experience, the better; Get a product to overhaul the culture; Avoid the internal-focus curse; Break up fiefdoms; Assemble a team you believe in; Beware of vague accountability; Prevent schizophrenic communications; Make expectations crystal clear - and finally – never rest on your laurels!
Udit Chaudhuri
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