Today, many company business collapses can be linked to leadership failures. We'll take a closer look at WeWork, General Electric and Kodak — three well-known companies that struggled because of leadership failures. But, first, let's examine some of the reasons businesses experience a decline:
They may have ignored changes to their customer needs and buying habits, insufficiently responded to market disruptions, relied on outdated technology, taken their brand clout for granted, allowed products to continue long after the life cycle indicated was wise, held tightly to flawed business models or employed leaders with weak ethical standards.
One recent example of leadership failure is WeWork. WeWork’s cofounder and former CEO, Adam Neumann, had the charisma to draw people into his vision, but the jig was up when the company’s odd IPO paperwork was filed in August. Turns out, WeWork’s S-1 document did not make the business case or much business sense. The IPO was called off. Neumann stepped down from his role, and layoffs are expected.
A second example of an ethical lapse was how GE leaders used murky accounting schemes to mislead investors. Another leadership failure at the former stalwart of American business includes GE's short-term focus on Wall Street, which led to a cutthroat company culture that was unable to survive in the long term.
A third example, Kodak, did not experience a decline because of technology advancements, as some have assumed over the years. Kodak engineers had designed a digital camera, but leaders chose not to market it. Kodak’s obsolescence was self-inflicted by poor leadership.
When leaders fail to embrace the modern complexity of business, including the interrelatedness of stakeholders, their organizations will likely falter and may even fail. Therefore, change is not optional, but the challenges organizational leaders confront are complex and often occur suddenly and simultaneously, leading to chaos. I previously wrote about the dangers of organizational chaos and how it can erode a leader's confidence and strategic focus.
Crossing one’s fingers in hopes your market stays stable is not a viable long-term strategic plan. Leaders who respond best to changes can win — and keep — customers, as well as their best employees. Leaders who predict change can create circumstances and environments for their organizations to thrive. I've developed a system called the Five A’s of Leadership Now to help empower and enable such leaders.
1. Stay alert.
Monitor relevant strategic indicators to immediately spot developments that could impact the organization and its customers. Create a quarterly dashboard to include information about stakeholders, technology and skill sets that could impact your business, and utilize an open feedback loop between leaders and employees. This loop can help you quickly learn about new ideas and customer input to support company objectives. Some leaders would say they are too busy to spend time on staying alert, but you can encourage engagement by making the dashboard and feedback loop simple to execute.
2. Anticipate shifts.
Predict market, customer and staff changes and challenges in order to shape the future rather than trail behind competitors who shape it. Assess whether your forecasting methods are serving you well or if updates to the process would be beneficial. Nurture a culture of learning rather than one of “up and out,” which sets an unreasonable expectation of promotion and exit. A potential obstacle to anticipating shifts may be that leaders burdened by short-term requirements or recurring crisis situations are often unavailable to think long-term. Therefore, build in mechanisms to force long-range views. Consider “war gaming” to give leaders the opportunity to think long-term about the business, customers and market.
3. Align resources.
Align all resources, including people and processes, to support moves that preserve or improve market position and objectives. You can do this by recognizing talent so you can develop talent, compensate for talent gaps and strategize based on needs. Your HR department can support this tactic with its solid human capital planning practices. Once this practice is established, update it annually during the performance review process to ensure it remains relevant to business needs. You should also identify clear goals for strategic initiatives to reduce the likelihood of competing objectives between departments. Managers and HR can sometimes categorize people and overlook competencies beyond daily performance. Overcome this obstacle by creating opportunities for people to build a robust track record that aligns with their goals.
4. Stay agile.
Be prepared and structured so swift adjustments are possible, yield a competitive advantage and enable long-term sustainability. Gauge change readiness of key leaders and the organization through an assessment or survey, and consider the structure needed for execution. For example, would contractors enable access to a skill set that would speed execution or improve quality? Execution often includes some conflict because there can be more than one right way to deliver. Expect conflict, and encourage it in a professional way so the best ideas can emerge.
5. Accelerate results.
Capitalize on the momentum of a committed team intent on leading the industry and accomplishing the mission. Create operational mechanisms that build in accountability, learning and recognition. These could include quarterly strategic review meetings, post-program performance reviews shared across functions or even use of the internal messaging system. Also, consider boosting confidence with rewards, stretch assignments and leadership roles for staff who perform well. Keep in mind that high performers can be overworked, underappreciated and burned out. Rely on your one-on-one meetings and interactions to discern whether your high performers remain at their peak level.
By implementing these five leadership strategies, the hope is that you will be able to honor all stakeholders, contribute to your organization’s long-term sustainability and prevent collapses caused by leadership failures.
4.Why do organizations decline? What steps can top management take to halt,decline, and restore organizational growth?
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stage, top management initiates a radical reorganization to halt decline. A new top-management team initiates reorganization, which includes streamlining operations.5.What is organizational inertia? List some sources of inertia in a company like IBMor GM.
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6.Choose an organization or business in your city that has recently closed, andanalyze why itfailed. Could the organization have been turned around? Why or whynot?
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Discuss the type of crisis experienced and the changes that should be made to theoperating structure. Consider the problems associated with these changes.
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P H A M H O A N G H I E N , M B A , P G . ( C S U )
P H A M H O A N G H I E N , M B A , P G . ( C S U )averse.Students are asked how the ethical code can be used to help prevent this typeof behavior.ANALYZING THE ORGANIZATIONStudents will analyze the life cycle of their organization, considering when it wasfounded, what strategy it pursued, what stage it is currently in, how it managed growth,and symptoms of decline. They predict any potential future problems.CASE FOR ANALYSIS
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