Why
do some of the best
companies
languish when
markets
change?
Because
they insist on doing
only
what has worked in the
past. |
Why
Good Companies
Go
Bad
by
Donald N. Sull
Many
leading companies plummet from the pinnacle of success to the depths of
failure when market conditions change. Because
they’re
paralyzed? To the contrary, because they engage in too much activity—activity
of the wrong kind. Suffering from active inertia, they get stuck in their
tried-and-true activities, even
in
the face of dramatic shifts in the environment. Instead of digging themselves
out of the hole, they dig themselves in deeper. Such companies are victims
of their own success: they’ve been so successful, they assume they’ve found
the winning formulas.
But
these same formulas become rigid and no longer work when the market changes
significantly.
When
companies understand that action can be the enemy, they are less likely
to join the ranks of the fallen. Before asking, “What should we do?” and
rushing into action, managers should ask, “What hinders us?” They should
look deeply at the assumptions they make about their business and industry.
And they should pay particular attention to hallmarks of active inertia:
strategic frames becoming blinders, processes hardening into routines,
relationships becoming shackles, and values hardening
into
dogmas. |
