ENVIRONMENT/BANKOFAMERICA

The Business Paradox: Success Leads to Its Own Destruction

By Business Leaders FOXBusiness

Every executive or business leader who’s survived over the long haul is probably aware of the self-limiting properties of success. I’ve seen that insidious pitfall in action countless times. Business success and its offspring overconfidence and inertia are the silent killers of careers and companies.

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Mark McCormack called it “the Business Paradox” in What They Don’t Teach You at Harvard Business School: “the better you think you are doing, the greater should be your cause for concern; the more self-satisfied you are with your [past achievements], the less you should be.”

In Only the Paranoid Survive, former Intel chairman Andy Grove explains that, “business success contains the seeds of its own destruction.” Grove worried about everything from technological and competitive inflection points to internal inertia and complacency.

Having been profoundly influenced by McCormack’s advice in the 80s and competed head-on with Grove’s Intel in the 90s, it should come as no surprise that I’m a big proponent of their philosophies. Clearly, long-term success means never being satisfied with your own or your company’s accomplishments.

But if there’s one thing I’ve learned, it’s that even the soundest advice can have negative consequences if taken to extreme. And wouldn’t you know it, business leaders are certainly known to do that from time to time.

While using “what have you done for me lately?” as a guiding principle for your own career may work out fine, when it comes to your company culture and the effect it might have on stakeholders, it’s sort of a mixed bag. There are potential consequences you should be aware of.

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Take customers, for example. If you’re wondering what they want, “more” and “better” are pretty safe bets. That said, constant product revisions and updates can create chaos in the market, especially if there are apps or other products and services that depend on yours. Think Apple iOS or Google Android, for example.

Employees may be of two minds as well. No, I’m talking about the obvious, that top performers will love it while laggards will hate it. Frankly, I’m of the mindset that you can’t get rid of lousy performers fast enough. If this motivates them to head for the exit sign, I’d say “don’t let the door hit you in the butt on your way out.”

It’s one thing for you – the boss – to never be satisfied with your achievements and always be looking forward to the next thing. For many of us, that just comes with the territory. But employees will need to be recognized and rewarded for a job well done. And if the effort happened to be one of those mad 24/7 races to the finish line, they may need a break, too.

Meanwhile, a company that’s constantly looking over its shoulder or over the horizon for any kind of strategic threat will be tempted to change direction frequently, perhaps even on a single data point. The problem is that frequent change – even improvements – can be incredibly disruptive and end up doing more harm than good.

And while I would never advise you to think of employees as anything but unique individuals, there is some truth to the notion that the younger generation may be more comfortable with higher frequency change than the rest of us. Then again, Grove was no youngster when he ran Intel, so take that concern with as much salt as you like.

If you look at this from an investor’s perspective, you’ll once again run the risk of being pulled in two different directions. There’s the Warren Buffet type who’s after long-term shareholder value versus some activist investors who are more about getting in and getting out with some healthy profits.

While you might be tempted to take a “middle of the road” tact with some or all of these constituents and situations, that would not be a very good idea and I’ll tell you why. This is not so much a question of balance as it is about tradeoffs and common sense. And no, they’re not the same thing.  

While it’s true that success is its own worst enemy, how you counter that usually involves processes or, in some cases, lack thereof, that makes sense for you, your company, and its products and culture. There is no one-size-fits-all model for this sort of thing.

Perhaps it’s true that “only the paranoid survive,” but how you go about surviving should be unique to your own DNA.

What do you think?

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