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Avoid the Downward Spiral ©

Written by: Dennis Gerschick

Article Overview: This article explores the reasons why companies get into the "downward spiral." It also notes several reasons why executives and business owners often do not keep up with the numerous changes that affect their business.

Avoid the Downward Spiral ©

In an earlier article, I noted that a company’s goal “should be to avoid getting into the (downward) spiral in the first place – that too is harder than it sounds.” This article will explain why.

Success often leads to complacency, and complacency leads to poor results and the downward spiral. In the sports world, champions often find it very hard to repeat as champions. There are several reasons for this. One is that every competitor loves to beat the reigning champion. Another is that champions often get media attention and their attention is diverted away from the very things that made them a champion to begin with. Third, some champions start reading and believing their press clippings – they start thinking they are great. If they are great, there is no need to train as hard. They start thinking they will always be the champion and they start just going thru the motions. They are not as focused or as driven as before. Pretty soon a motivated, hungry competitor knocks them off and the process starts anew. It is the rare champion who can stay focused for a long period of time. The Boston Celtics were a very unusual team because they won eleven NBA championships in thirteen years. However, that was in 1957 - 1969. The sports world and the business world have gotten even more competitive since then so it is very difficult, if not impossible, for one team to dominate for so long.

Business can involve large and small problems. Little problems are irritants. Like Scarlett O’Hara, executives and business owners often think “Oh fiddlee dee, I’ll think about that tomorrow.” Unfortunately, tomorrow brings new problems or issues to deal with and the little problems continue to be unaddressed. Little problems that could have been fixed if they had been addressed promptly often grow bigger until they become a crisis and the company’s options to deal with it have been reduced.

Bill Gates often exhorted Microsoft employees to stay focused, motivated and to work hard because competitors wanted to knock them off. It is easier said than done. The Dow Jones Industrial Average consists of thirty “blue chip” corporations often thought of as the “cream of the crop” of U.S. companies. How many companies in the DJIA in 1960 are still there today? Last time I checked, only three. Many companies who were very successful at one point ended up going out of business. Who were the top two retailers in the United States in 1975? Sears and K-Mart. What happened to them? Both filed Chapter 11 bankruptcy petitions.

I use a lot of adages which are pithy statements that usually contain much wisdom. Most adages are true but there are exceptions to every rule. One adage that has done more damage to more businesses than any other is: “If it ain’t broke, don’t fix it.” At General Electric they modified it to read: If it ain’t broke break it, because if you don’t, your competitors will.” Champions in sports and in business constantly strive to get better – they are never satisfied with their results. The adage “If it ain’t broke, don’t fix it” really suggests that the product or service is good enough and there is no need to improve it. This attitude sets the stage for complacency and the downward spiral.

Tiger Woods is a remarkable golfer, but more importantly, a remarkable human being. He epitomizes what it means to be a champion. He was the youngest winner of “The Masters” ever (age 21) and he won by 12 strokes over the runner-up – the greatest margin of victory ever at the Masters. Most golfers would have thought to themselves: This is great! Just keep doing the same thing and win more championships. Tiger thought differently and believed he could do much better if he developed a new golf swing. Golfers generally try to get into a groove and keep the same swing. Changing it either intentionally or unintentionally (usually to compensate for some injury or pain) is to be avoided. In contrast, Tiger Woods has “retooled” or revamped his swing at least twice in his career in an effort to become the best golfer he could be. He was not satisfied with simply being the #1 golfer in the world when he thought he could be even better. How many individuals or companies have a similar attitude and are willing to risk what they have and take action to implement their beliefs?

The world is constantly changing and businesses have to change to be able to fit-in and compete in the new world. Executives and business owners should stay informed of changes in technology, demographics, political and social trends, economic conditions, what their competitors are doing, etc. Many executives and business owners do not do so for a variety of reasons which may include:

1. They are too busy to read all the material they need to in order to keep up with the relevant changes. Many executives and business owners are myopic – they focus on what they are doing but fail to see the forest for the trees.

2. They do not see the changes or trends. Alternatively, they may see the changes or trends but they do not think they are that significant, and/or they think the changes or trends are only temporary and conditions will revert back to what they have known.

3. Change scares many people because no one can always accurately predict the future. Many people find comfort in maintaining the status quo. Companies strive to stay in front of their competitors but getting too far in front of the market involves risk.

4. Many executives and business owners simply want to stay on the same path until they retire. The consequences to the company and its business are secondary to doing what they prefer and think is in their own best interest.

Business is a team sport. How does the CEO get all the players on the team motivated, focused, and working effectively as a team? That is a topic for another day, but the answers will help a company stay out of the downward spiral.

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Article Tags: bill gates, boston celtics, business owners, business world, champion, competitor, complacency, dee, downward spiral, going thru the motions, media attention, microsoft, microsoft employees, nba championships, period of time, press clippings, scarlett o hara, sports world, thirteen years, world champions



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