Why Some Firms Plan to Fail: 4 Warning Signs

I have always felt there is much to be learned from the mistakes of others, like knowing when a spate of trouble is heading to town like a flock of pigeons to strafe your statue.  Take for example coal miners.  Coal miners use canaries as safety measures; when the canary dies, the pigeons cannot be far behind.

Given the poor leadership skills demonstrated by of some of today’s business leaders, maybe businesses should invest in canaries. Build a little arboretum in the lobby. When the canary dies plan on taking the next decade off.

The Wall Street Journal published predictions of ten businesses that will fail in 2013.  Included on their list are American Airlines and RIM (Blackberry).  Another article suggests Dell, Sears and Rite Aid may want to hold their Christmas parties earlier this year.  Those of us with our fingers crossed are hopeful that Facebook will soon join the list.

Did the clairvoyants forget a firm or two?  Perhaps.

Some businesses fail from no fault of their own.  The economy tanks, the price of raw materials goes through the roof, or a competitor develops a less costly way to deliver a product or service.

Other businesses fail simply due to their own ineptitude—hubris born of arrogance, leadership with a self-imbued apotheosis.

Some businesses work hard to fail.  Hypothetically, assume a certain firm is the market leader in its field.  Market conditions are normal, and the firm is not set upon by any of its competitors.  In any given year the firm’s leadership knows it should expect to make a small profit.  But its leadership, which is incapable of hiding their own Easter eggs, knows from experience that nothing they do seems to be able to grow revenues significantly.

A segue.

Permit me to foment a notion—any firm having a self-labeled “leadership committee” should already begin covering its statuary to protect it from the guano.  To move away from the pigeon metaphor momentarily, leaders who believe they need to label themselves as leaders already have two strikes against them.  Real leadership is observed, it is apparent; it does not require a label.  Leadership does not a consistory—an ecclesiastical council—make.  H. Norman Schwarzkopf and Jack Welch didn’t need a leadership committee to attest to their raison d’être.

At one time or another we have all seen this scenario played out in our offices.  Sally asks.  “Have you seen Mr. Metcalf?”

“He’s in the leadership meeting,” replied Bill.  “I’ve heard he’s toast.”

Metcalf was the senior vice president of sales.  Traditionally, the CEO, who chairs the leadership committee, taps his victim three times on the head with a hammer to signify the individual has been fired.  Bill held Sally’s hand and they waited to see if the smoke coming from the chimney of the conclave was white or black.  White smoke would mean Metcalf’s successor had been chosen.

Yahoo’s new CEO just did the hammer tap on their CMO yesterday.  She had to do it by phone because the CMO was on vacation—the CEO told the woman she was relieved of her role only ten minutes prior to the press release announcing the CMO’s replacement.  In an attempt to appear human, or to assuage her guilt, the CEO then asked to former CMO to remain at Yahoo.

I digressed, did I not?

To boost revenues, said firm, the one with the leadership committee, was in the market for a savior, someone all too willing to tell leadership what they wanted to hear.  Leadership wants to double revenues, and lo-and-behold they find the one person on the planet capable of convincing them that he can do what they were unable to do.  It never occurs to the leadership that hiring a hand-picked, self-anointed savior flies right in the face of the premise “there ain’t no free lunch.”  It just goes to show you that if you go looking for trouble you are sure to find it.

Cue the white smoke.

“Please welcome to the firm Vlad the Impaler, our new Jekyll and Hyde turnaround agent and part-time bon vivant,” implores the firm’s short-lived CEO.

The underlings, who dubbed the savior Skippy, learned quickly what Skippy had in his bag of tricks.  Trick number one is that every email sent by Skippy began with the word ‘team.’  There is no “I” in team, but there is “me”, as in “This is Entirely About Me”.  There was no team, but Skippy knew that by using the word he would be viewed by leadership as having created a team.

I am here to help.”  Trick number two.  Say anything enough times and people will believe it.  The cynics in the group are keeping a tally sheet of all of the revenues created by Skippy.  Total additional revenues created by tricks one and two—zero.  But leadership was happy.  They now had a ‘team’ and they had someone who could ‘help’.

Trick three; be wary of anyone who claims to “have your back”.  More than likely this means they are standing behind you.  Anyone who has ever used a garrote knows it works best when applied from behind.

Skippy’s best trick was his ability to perform remarkable feats of prestidigitation with spreadsheets.  Skippy’s use of color and his ability to use the text-wrapping feature was known to elicit tears during the leadership meetings.  What Skippy knew that none of the leaders knew is that by overloading the chart with numbers, and by splashing generous amounts of color in the rows and columns, he could create the illusion of success—visually perceived images that distorted objective reality.  Trick the eye and the executives by making them look where you want them to look.

One way to spot whether failure is alive and thriving in your organization is to look at the other employees.  If half of them look like they are going to a funeral and the other half look like they just came from one, things are not well.  When your colleagues stand around the coffee room intermingling like strangers at a wake, the time has come to send someone to the lobby to check on the health of the canary.  Unfortunately, sometimes narcissists shoot the canary just to brighten their day.

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