We examine the present in light of the past
so as to better understand the future.
John Maynard Keynes

* With apologies to Karl von Clausewitz

Masters of the Universe

The most dangerous thing a business can do is become so successful that it outstrips its competitors and dominates the market. And yet, of course, that is what nearly every business leader dreams of doing.

In Managing for Success, I refer to cultures of mindless self-belief, one of the ‘toxic cultures’ that I mentioned in my last post. Cultures of mindless self-belief result when the company begins to believe in its own greatness. It becomes convinced that it is smarter, more innovative, more intelligent, more profitable and generally better than any of its competitors. This is the ‘smartest guys in the room’ mentality that we saw at Enron; in the book, I also describe Lehman Brothers and Ford Motors under Henry Ford, two companies that became enamoured of their own greatness and arrogantly – and wrongly – assumed that nothing could touch them.

Mindless self-belief manifests itself in a number of ways. One is a kind of Olympian detachment from the real world: everybody else can do what they want, but we’ll carry on as we are because we know we are the best. This in turn leads to complacency, the ‘too big to fail’ attitude we saw at Lehman Brothers but also more generally the belief, as Jagdish Sheth says in The Self-Destructive Habits of Good Companies, that ‘bad things can’t happen here.’

Sheth argues that complacency stemming from past success is one of a company’s most dangerous enemies. In Managing for Success, I go a little further. I also believe that past success can lead companies to become arrogant and contemptuous of others: including customers. I worry whenever I hear anyone in business talking slightingly or dismissively of customers, as if the latter were too stupid to know what they really wanted and should take what the company gives them and be grateful.

When people begin talking and thinking like that, then they are putting their business in jeopardy. Customers know when they are being played for fools, and especially in these days of social media, they know how to retaliate.

A degree of self-belief is of course important, and in another post I will talk about the corrosive effect of fear on businesses. Pride in achievement is important too. People need to feel that what they are doing is worthwhile. But pride alone is dangerous. Pride needs to be tempered with recognition that nothing is perfect, that no competitive position is secure for long, and that no business is invulnerable.

Reflecting on past success often tells us that we succeeded only because the other guys made even more mistakes than we did; or, simply, we got lucky, were in the right place at the right time with the right idea. But that kind of reflection is rare among managers and business leaders. Far too many look in the mirror and think only of how handsome they are, without pausing to count the wrinkles.

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Adi Gaskell commented on
Management Consultancy

Pradee commented on
Oh, no, not another book on management!

Laurie commented on
Another one bites the dust - reflecting on my new book on management failures