Why Good Companies Go Bad

Why Good Companies Go Bad Presented by: Deepti Lathwal

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Harvard Business Review’s on Culture and Change and Crisis Management Harward Business Essentials CRISIS MANAGEMENT The Well-Timed Strategy by Peter Navarro Why Corporate strategies fails by Donald

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Why do some of the best companies languish? Because they insist on doing only what has worked in the past. Or We can say that because they are Married to the past. They can’t divorce themselves from what worked in the past, whether it’s a core strategy, a key customer, product, service, culture or method. And there are many more reasons which we will discuss later.

Recent examples of companies that have gone from good to bad include Sainsbury’s, Parmalat, Lego, satyam, Hindustan motors to name just a few prominent examples. Microsoft, for years the gold standard of corporate excellence, stands accused of slipping into mediocrity. A few of these fallen stars— IBM or Ericsson-regain their stride, but most—such as Xerox, KMart kodak, Laura Ashley—hobble, Atlas cycle, Sahara airlines, hilton, Devoo on as pale shadows of their former glory, or like NatWest, Andersen and Padmini motors—disappear altogether.

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Most leading businesses owe their prosperity to a fresh competitive formula- a distinctive combination of stratgies, relationships, processes and values that sets apart them from the crowd.

Five categories of commitments comprise the success formula: • Strategic frames: What we see when we look at the world, including definition of industry, relevant competitors and how to create value. • Processes: How we do things around here entailing both informal and formal routines.

Resources: Tangible and intangible assets that we control which help us compete, such as brand, technology, real estate, expertise, etc. Relationships: Established links with external stakeholders including investors, technology partners or distributors Values: Beliefs that inspire, unify and identify us.

Reasons behind good companies go bad?        

Self destructive habbits. Obsolete technology. Incompetent workforce. Employer’s attitude. Accidents and Natural events. Product Tempering. Technological Breakdown. Economic and Market Forces.

Self-destructive habits of good companies

DYNAMIC OF FAILURE 

Strategic frames

Blinders

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Processes

Routine

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Relationships

Shackles

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Values

Dogma

Preventing a bad situation from becoming worse:    

Use quick and decisive action. Put people first. Be on the scene. Communicate liberally

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Gather facts continually Document your actions Use project management techniques when appropriate Be a leader

How to Avoid above mentioned factors: 

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Heed the signals of impending crises on time. Attention to details and standards. Look before you leap Don’t forget about insurance.

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Maintain relations Avoid technological crises. A sucession plan for all key positions. Appoint a growth Development leader.

Crises Management: Organize a Planning Team Develop a Plan

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Many minds better than one. Use a systematic approach. Adopt the mind of an assasin [Know what are your companies ticking bombs]

Test the plan Keep the plan up-to-date

Strategies Fall Apart When Corporate Culture is Ignored 

corporate culture underpins critical elements of any strategy's success or failure - such as management practices, decision making, performance management, and compensation strategies that ignore culture, however financially and technically sound, are likely to fail

Types of corporate culture        

Innovation and risk taking Attention to detail Outcome orientation People orientation Team orientation Aggressiveness stability Customer responsive

how great managers remake them    

Leadership development Cross culture training programs Restructuring Bringing change (organisational)

Major types of cross-cultural training programs 

Environmental Briefings 

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Provide information about things such as geography, climate, housing, and schools

Cultural Orientation 

Familiarize the individual with cultural institutions and value systems of the host country

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Cultural Assimilators 

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Programmed learning techniques designed to expose members of one culture to some of the basic concepts, attitudes, role perceptions, customs, and values of another culture

Language Training 

Provide information about things such as geography, climate, housing, and schools

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Field Experience 

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Send participant to the country of assignment to undergo some of the emotional stress of living and working with people from a different culture

Sensitivity Training 

Develop attitudinal flexibility

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