‘Barbarians at the gate’ is a book by Bryan Burrough and John Helyar. It tells the story of the largest Leveraged Buyout in the late eighties. I liked the book and the title. It triggered some thoughts about barbarians, at or inside the gate of institutions, who may eventually zap the life and vigour of these organizations and turn them to zombies. The whole train of thought got triggered when I was reading "Too big to fail" a book by Andrew Ross Sorkin which is the ball-by-ball account of the recent mayhem in the Wall Street that spilled to all the Main Streets in the world. This book has been described as the heir to "Barbarians at the Gate" by Financial Times.
Organisations succeed and grow when they are built and/or headed by visionaries who can dream up or recognize processes, products, technologies or services that make sense and also have the ability to implement and scale these dreams. But if the organisations don’t have a process to ensure that there is a culture and succession plan that will ensure that they continue to bring to the helm such visionary leaders, gamesters and bureaucrats will rise up to fill the vacuum. Then the organisational decay sets in.
It is easy to recognise this decay when it has already manifested in the form of dissatisfied customers, loss in market share, dropping profitability and so on. However the seed of such decay could have kicked-in even when apparently everything is hunky-dory. And it is very difficult to recognize it then. Some of the early symptoms that go unnoticed till it is very late are discussed here.
Form gets priority over substance
One of the early weaknesses that can be observed with these brain dead captains is the focus on ‘process for process sake’ instead of the processes being used as a tool to manage and grow the business. The bean counters, corporate secretaries and legal eagles who have very little appreciation of the nuances of business take over.
The atmosphere so created, stifles innovation and initiative, business leaders leave and clerks and paper pushers rule the roost.
Business strategy gets driven by corporate secretaries.
Structuring and restructuring of companyto consolidate power and meet private agenda of the management becomes the priority. Sometimes this gets driven by the unholy alliance of some shareholders and the management who then works towards maximizing their self interest. The interests of the organisation, its people, customers and its shareholders at large get compromised. It can become a vicious cycle with both the management and the interested shareholders believing that what they do is for the good of the company.
The people become pawns.
People instead of being utilised as resources that drive the business and who are to be nurtured, become pawns to be shuffled around on private whims and fancies of management.
People are controlled with their weaknesses, follies, mistakes and insecurities and not enabled and encouraged. Then they fail to earn loyalty from the ranks.
“I, me, myself”
The top managers spend lots of time in office to push their private agendas and priorities ranging from managing their finances for activities of their clubs, children’s projects, their admission etc. The priorities of the organisation gets back seat.
This acts as a downer for the working class. Listen to the gossips at the water cooler and we can judge the respect the top managers command.
Moral decay
In this stage of degeneration, decisions are driven by greed;private bonus and benefits get to have priority even at the cost of long term survival. It is this moral decay that drove Wall Street to develop products and deals that turned toxic for the whole financial markets around the world. Enron, WorldCom, Satyam, Arthur Anderson, Lehman, AIG episodes are monuments of this moral decay in the recent history. Many more are around; it is just that they have not been caught.
Some organisations don’t recognise these early warnings and act upon them, and that is one of the reasons why the corporate longevity is not so high.
"I searched the whole world for a bad mind, never found one
Looked into myself, found the worst of all" - Unknown
I cannot agree with you more, Koshy. The subject of corporate decline and its causes has been widely studied - the latest is Jim Collins' book "How the mighty fall". But more important for issues you raise is Jagdish Seth's "Self destructive habits of good companies". According to Seth, "unexpected success, especially at the magnitude that brings widespread media attention, can inflate the egos of an unprepared leadership exponentially".
ReplyDeleteBTW, the quote at the end can be attributed to Kabir. He has a famous "doha" that goes - "bura jo dekhan main chala, bura na milya koy, jo mun dhoondha aapna, mujhse bura na koy". We are often so busy finding faults with others that we don't look into ourselves.
As I see it, a healthy leader should have a combination of all what you have said i.e. selfish, pushy, strategist and so on. But getting such a person is difficult and the shelf life of leaders is becoming shorter and shorter and in some cases, leaders become larger than the corporation itself.
ReplyDeleteI have seen many successful leaders, (though without intention) handing over internal organisation building to people who do not see larger picture and share the vision of the organisation and the top guy. In such circumstances, the organisation grows at an astronomical speed while internally it stinks. The worst is, if such people take the management roles, at some point, it is everybody's guess.