“Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward, for a while, even if its leaders make poor decisions or lose discipline… People become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place.”
His point, of course, is that sometimes a successful organization takes that success for granted — we are successful because we are doing the right thing, because our customers love us, because our products are the best on the market. We get so focused on doing what we are doing, that we don’t ask hard questions: Why are sales increasing? What did we do to earn that 15% increase in profit? Is what we are doing to be successful today going to make us successful tomorrow?
Going back to the story that opened this article: Stone, the manager at Eastern, finds his organization in a tailspin and does not understand why. Of course, there is always a “rest of the story”… Looking back, the company was truly successful — sales and profits were strong, it was a well-run company — but it was not a feed and grain firm that understood its success and, at least in part because of its success, it was not a feed and grain company that was in touch with its market.
Over the past three years, the ups and downs in the economy had taken a toll on a key competitor in Eastern’s market. This competitor had struggled and was dying a slow death. As this competitor was doing all it could to stay alive, some customers were switching to Eastern, a more stable alternative. In a different area of the market, the economic stimulus had brought some major road construction projects that had made getting to another competitor more difficult; and again, some customers had brought more of their business to Eastern as a result. Finally, service levels had slipped a bit at Eastern. The dump facilities weren’t great, drying capacity was a bit limited, and a general decline in customer service had caused some customers to decide to ramp up their on-farm investment in grain storage and handling over the three-year period.
Things had come unglued when the failing competitor’s facility was purchased by a well-run national organization and the road construction was finally finished, giving customers convenient access to other options. The point here is that the manager in our story firm simply did not understand his firm’s success and did not take notice of some of the things happening in his marketplace.
A closer look would have revealed the business they were getting as a result of the construction — just pure luck/circumstance — and a closer look would have revealed that some customers were in the process of making their own investments in grain handling facilities.
The manager at Eastern was not incompetent, but his success made him complacent. He was not reflective. He did not ask hard questions about why he was picking up new business and why he was losing a few customers. He assumed he was picking up the new customers because he was good, and the ones he was losing were just not important.
Andy Grove of Intel fame made the expression “only the paranoid survive” a mantra for many managers. This expression reflects the mind-set that a vigilant manager brings to work every day. Asking hard questions and truly understanding why you are successful is the fundamental first step in staying on top.
A sense of urgency
John Kotter’s book, A Sense of Urgency, does a great job of helping managers think about how to “pick up the pace” in their organization. The focus here is the question: What could the manager at Eastern have done to avoid the complacency that eventually undermined his firm’s performance? There is little question that the agribusiness world is evolving at what seems an ever-faster pace. How does an organization keep vigilant and continue to evolve without falling into a frenzy of unproductive activity that does nothing but burn out good employees?
According to Kotter, “urgent behavior is not driven by the belief that all is well or everything is a mess, but instead the world contains great opportunities and great hazard… urgent action is not created by feelings of contentment, anxiety, frustration or anger, but by the gut level determination to move, and win, now.”