Large companies like big ships, take a long time to turn, slow down or speed up.
Like the Titanic, when trouble is noticed it’s often too late.
But for the time being, the figures/finances still look good or even great – though trouble is afoot.
Those figures are usually historical such as last quarter’s profits, sales, inventory and costs.
The signs that trouble is afoot are actually known to senior leadership/management.
They know and do nothing that works.
Here are the top four signs:
- Significant value breaches in the way the company deals with employees, suppliers, customers and community. There is no quicker way to hit an iceberg than by values breaches. The research is overwhelming – good ethics is good business.
- Myopic focus on shareholder value: As the link argues, focus on shareholder value is a dumb idea with serious consequences.
- Loss of top talent: The companies haven’t figured out that their top talent actually has better values and expectations than their leaders, can’t see an acceptable future and go.
- Dysfunctional culture: Culture is a primary determinant of sustainability of growth and viability. Leaders who ignore its value do so at great peril.
Negative Examples: current and past allegations and fines regarding Coles, Woolworths and Aldi; VW and their current emissions fraud; 7-Eleven and their franchisees.
Positive Examples: Atlassian; Virgin; Google
Negative Example: Big banks and most large listed companies where significant shares are held by institutional investors.
Positive Examples: Virgin; Apple; General Electric
Negative Examples: This is an issue that remains top of mind for too many companies, mainly those that are publically listed on stock exchanges.
Positive Examples: Google; Microsoft; Apple; Atlassian
Negative Examples: Many former big banks and large mature public companies like Goldman Sachs, Barclays and Enron.
Positive Examples: Atlassian; Google; Adobe
Each of those four signs is related to two big stupid ideas – that money is more important than everything else and that the short term matters more than the long term.
Since institutional investors such as superannuation funds are the more influential shareholders, and whose managers are incentivised on quarterly performance, the flow on effect to the company’s leadership is also that of quarterly performance.
Financial incentives beyond what’s ‘enough’ is proven to be detrimental where cognitive thinking is required and it is staggering that it persists.
It can only be due to the unadulterated personal greed of the recipients and their benefactors.
It takes guts for leaders to act in a timely manner to address the signs.
Fear, habits and ignorance dominate and the leadership hasn’t the courage, the better practice or the learning to resolve the problems and their companies eventually hit an iceberg of their own making.
Which leaders are responsible for this? Primarily the board and the C-level executives – it’s the law of gravity.
What do you think?
