Thursday, February 2, 2012

Corporate Complacency and Arrogance

By Al Norval

I was reading the local newspaper last weekend and came across this article about the impending demise of Kodak. The article caught my interest since I used to work at Kodak. Although I no longer have any ties with the company, I do follow them and my heart goes out to them with the troubles they are in.

What really caught my attention was not just the story of Kodak but the underlying story of corporate hubris and what David Olive, the author calls “the corrosive effect of complacency”.

Here’s a link to the article: The Last Picture Show

Unlike today, Kodak in the past was a wildly successful company. But as we often see, success today is the forerunner of failure tomorrow. Why? Organizations come to believe their success is due to an inherent superiority they have and even worse, that this superiority will go on forever.

The ancient Greeks called this hubris, a word that means overconfident pride or arrogance. Hubris is often associated with a loss of contact with reality and an overestimation of one's own competence or capabilities. This leads to complacency which is when the rot begins to set in. We become insulated and don’t react well to changes in the marketplace or to changes in technology. We continue to believe that what was successful in the past will be successful in the future and we begin a long decline.

The article also gives some great examples of organizations who have pulled themselves out of this decline and have re-invented themselves with IBM being a classic. What did it take? Strong Leadership with a vision of where the organization needed to go. We call this vision True North and along with Strategy Deployment (Hoshin Kanri) to align and focus the organization, these organizations became leaders in their field again. That’s not to say it didn’t also take a lot of hard work.

The lessons from these stories can be summarized as:
  1. Stay humble
  2. Understand what drives customer value
  3. Grasp the Current Condition
  4. Reflect honestly
  5. Stretch the organization to True North

All organizations have their ups and downs but following these lessons will allow for more ups than downs.


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