By Arjun ap.
Why more and more businesses are failing, today? If we’re willing to strip away all the justifications, excuses, and explanations for business failures, and be just honest in our analysis, we’ll find only one plausible reason – poor leadership.
While knowledgeable about literally hundreds of customers, management in a broad scope is either dysfunctional or lacks the basic skills to scale its business, protect its corporate image, support its customer base, or counter competitors. Even today there are CEOs who never heard of strategic planning or standard operating procedures.
The list of failed businesses is filled with companies that managed to make a product and a name for themselves and then faded into oblivion.
What has changed that is producing more business failures than recent memory? The economy, right? Competition ………….. of course.
While this may be true and it certainly was a convenient excuse for a while, today, things are different. Industry in general has reached maturity and some segments have even reached a commodity status. Today, global competition is vicious. And management teams and boards can no longer get away with the apologies of the past.
It’s time for industry to grow up and fix its leadership problem. People owe a lot to industry over the years. It helped many to enjoy long, rewarding careers, and helped the standard of living to continue to grow and thrive for so many decades.
And therein lies the problem. It is so ingrained in the way industry operates that most just take it for granted. Unfortunately, that won’t work anymore.
Here’s the basic problem. Just because a start-up makes it and goes public doesn’t mean the top management team knows how to take the company to the next level or that the members of the board know how to guide him. Often the top managers are learning from a relatively novice CEO who just happened to have founded the company.
These people are not born with a management gene that gifts them with an incredibly effective skill-set. But boards often act as if this is the case with their CEO’s.
A distraction here is many companies have stood the test of time. Microsoft, Apple, Cisco, Intel, HP, Wal-Mart, Virgin Airline and many others are great companies. What is lost though is for every one of them; there are a thousand others that failed along the way because their management couldn’t cut it.
Survival today is a case of natural selection, survival of the fittest. But it is not the fittest technology or new product though. Today it is the fittest management team.
IBM is a good example of a company that adapted. They adapted, but it had nothing to do with technology and everything to do with mature management, and highly capable leadership.
Repairing Industry’s Leadership Problem
1. Somewhere along the way, boards stop governing and start rubber-stamping. They lose sight of their responsibility for mentoring executives and ensuring they develop.
2. Many boards keep founding CEOs around long past the point of their ability to grow the business.
3. All companies face major hurdles where growth begins to stagnate. When the signs of this are first visible the board needs to be proactive and far more aggressive in their expectations of management when it comes to a strategy change.
4. Boards’ literature on the effects of reputation management as a decisive factor of company success is still scarce. Previous researches, however, have evidenced a high variety of benefits related to corporate reputation as corporate branding, employee retention, market price and firm performance.
5. Because industry is so fast-paced and competitive now the old incestuous, good-old-boy networks are toxic. Lack of perspective, objectivity, external insight, direct customer feedback, and the status quo are all toxic.
The remedy to all of these is more active governance from the board. This is particularly important when it comes to their role in mentoring the top management team.
Arjun is an independent researcher, writer, speaker and a consciousness activist. He writes for Activist Post and Natural Blaze.
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