After more than 30 years of running my own businesses, and consulting with other leaders on the operation of theirs, I’ve identified the top reason why good companies go bad. And it may not be what you think.
It’s not the entrant of a new competitor in the market, increased government regulation or the lack of access to capital. These are external catalyst events. Events that can be overcome.
The number one reason good companies wither and die is internal: the person controlling the organization refuses to adapt.
See if any of these look familiar: The organization had a strategy that worked well in the past and the leader sticks with it, regardless of the results. The organization invested in plants and machinery that are now obsolete, but the leader refuses to see it, or do anything about it. Their customers’ needs and tastes have changed, but the organization’s product and service offerings haven’t.
These leaders believe that if they do what they’ve always done, they’ll get what they’ve always gotten. Well, like many business clichés, this one isn’t true either.
What is true is that it’s insane to do the same things in the same way and expect the same results—in an ever-changing environment. When was the last time you experienced change at your organization? Last year? Last week? As you’re reading this? And that rate of change is quickening.
The more rapid the pace of change affecting the organization, the more severe the consequences of sticking to those same ways.
As a leader you have to do more than just respond to change, you have to drive it. Innovation shouldn’t be an afterthought, it should be ingrained in your organization’s culture.
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