Jun 24, 2011
The Ten Commandments for Business Failure
Part One, Commandments 1-5
By Philip Elworth
I recently read an interesting book by Donald Keough, who was CEO of Coca Cola Company during the introduction of New Coke. He has some intriguing insights into business failure. What I find most interesting is the number of companies I have seen who are following at least some of these commandments.
#1-Stop taking Risks. Every one of my successful clients is a risk taker in a well defined sense. They are not foolish; they understand the environment and are willing to take a calculated risk to move the business forward. When they stop doing this, it will be time to execute an exit strategy, because if you are unwilling to risk the assets of the company you cannot insure the future existence of the company.
#2 Be Inflexible. This is much related to #1 above. These owners and managers are so set in their ways that they cannot see a different way of operating. They cannot innovate or grow. As the saying goes, if you are not growing you are dying. I have seen companies that no matter how much trouble they are in just will not change the way they operate. In the end you must change to succeed. Like Ford was once quoted as saying, they can have any color they want as long as it is black. That only worked for a short period of time. Stay flexible my friend.
#3 Isolate Yourself. I know all of us at some point in our careers just wanted to be left alone. But if you are not involved in your business, your customers, your employees and your vendors you are missing out on great opportunities to learn and grow. But to fail, being in an executive bubble is the way to go. One sure fire way to accomplish this is to yell and scream at your employees. I know of no better way to be isolated then to lash out at those around you. Think about it; is this any way to operate?
#4 Assume Infallibility. Never admit a problem, find a way to blame it on someone else. Customers are often the best culprit. If you do not listen to your customers or your employees on a face-to-face basis you are taking a posture of infallibility. If your information is all second hand, you are at least one person behind. One secret of success is first hand information, which sometimes may point to you being the problem.
#5 Play the Game Close to the Foul Line. I was recently in a meeting with a banker on a turnaround situation. The banker stated that as long as we played straight they would work with us. Play games however and they are through. This is tough language when a business is on the line but what better way to fail than to play games. You need to understand that your employees see this behavior and it is often observed by customers and vendors as well. The bottom line is that trust is still the glue that holds things together. I have never lost sleep over honest behavior.
The next installment of this article will be Commandments 6-10.