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Nothing succeeds like success? Think again!

August 2007
Nothing succeeds like success? Think again!

Nothing succeeds like success? Think again!

IBM, G.E. Sony, Intel, McDonalds, Coke, GM, Boeing, - they are the cr�me de la cr�me of the business world, and the common thread that seems to run through them is not their success story but their fall from grace at some point. These companies are only the tip of the iceberg, according to brilliant academician and marketing guru, Dr Jagdish Sheth.

Dr Sheth's thought provoking presentation on the 26th June on why nothings fails like success if top notch companies become addicted to self destructive behavior, is based on ten years of deep study and is captured in his new book, ‘The Self Destructive Habits of Good Companies.'

A question Duane Ackerman from Bellsouth, asked Dr. Sheth many years ago about why good companies failed, triggered off the research and search for an answer. What Dr. Sheth found was the fact that most companies destroy themselves by picking up bad habits on their way to success. One third of the companies listed in the 1970 Fortune 500 list vanished by 1983, through acquisition and mergers. Now the number is more than 50 percent.

In his usual thought provoking style Dr Sheth outlined seven key reasons why good companies run into rough weather - denial, arrogance, complacency, competency dependence, competitive myopia, volume obsession, and territorial impulse.

The first key habit that leads companies into trouble is denial. Dr Sheth said, "Denial comes from a company making it big and attributing it all to itself. The truth is that all too often, companies succeed by accident." Trouble also happens when the top brass is in denial about a changing global environment and changing consumer tastes.

Arrogance, the second key reason, is another attribute to be wary of. It usually follows in the heels of super success and companies start believing in the hype they see about their achievement. Dr Sheth said, "Like denial, arrogance too has a way of blinding corporate eyes from reality."

Complacency, the third reason, is a key self destructive habit, and comes from resting on past laurels, assuming that the future will be predictably as good and that scale would protect the entity from any setback. "AT&T is an example of that complacency," said Dr Sheth. AT&T's monopoly bred complacency and it couldn't handle the competition. The fourth reason, core competence, is usually the secret of a company's success but that can slide into competence dependence, creating road blocks to success.

Competitive Myopia, the fifth reason is when a company only focuses on the competition that is right there in front of them, and aren't far sighted enough to realize that other companies lurking around can also pull the rug from under them. Examples like Coke worrying about Pepsi, GM, Ford and Chrysler chasing each other, RCA worrying about Zenith, only show that other companies can come in and create a tougher competition and walk away with a huge chunk of the market and in some cases totally destroy the leader of the pack.

Volume obsession, where a company spends too much to make money, is the sixth reason cited by Dr. Sheth. Then there is the issue of territorial stakes, the last reason, where as companies grow they create divisions like regional offices/international operations. "What had been one, with a kind of organic, intuitive wholeness and health," now becomes seemingly splintered. These units may not be willing to work together and it becomes a case of disunity in diversity.

All these key self destructive habits have and can wreak havoc in many a corporate success story. But being ever the optimist, Dr Sheth reminded the audience that he strongly feels that just as complacent human beings who become addicted to bad habits can with discipline and willingness to change their lives, become healthy again, there are ways by which these self destructive habits of successful companies can be nipped in the bud and even avoided..

"In the case of companies, the crisis might take the form of an emerging competitor, a sudden erosion of market share, or a technological advance that threatens to leave the company behind. Such developments can spell doom, or they can serve to shake companies out of their destructive behavior patterns," said Dr Sheth and concluded, "The message is positive: if you're willing to examine yourself honestly enough to discover your weaknesses, you can ultimately transform yourself."

The presentation was jam-packed, and after a lull of many years, TiE-Atlanta too seems to be reinventing itself with stellar presentations throughout this year.

~Kavita Chhibber

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