Why Good Companies Go Bad

What is it that makes good (and by that I mean profitable) companies, growing with a good future, go bad?  Some will point to the economy and how tough it is.  Some will cite pressures brought to bear by customers’ need for better prices and faster delivery.  Others will blame the rapid changes occurring in their business and industry.

Although all of the foregoing are symptoms, I would suggest that the real challenges reside at a much more basic level.

Think about the entrepreneur who starts a company on a shoe string.  He/she fights for every sale, fights to save every penny and fights to keep the dream alive.  Fast forward to success!  The company is profitable, growing and has a management team and employees.  The founder now has the nice house, company car and the exclusive clubs.  The future’s so bright everyone’s got to wear shades!!!

Business is a series of highs and lows, and my experience has taught me the following:

1.       Nothing lasts forever.

2.       Most owners and their management teams live off their past successes.

3.       There is no clear vision of the future.

I’ve seen a lot of examples, like the owner who:

·         Used only his income statement to measure business performance and could not understand how the bank moved him to workout

·         Invested so little in technology that he lost customers

·         Thought his customers were the problem

·         Allowed deliveries and quality to be so poor that it cost the company 1/3 of its business. 

The words that come to mind are arrogant, ignorant, denial, lazy, sloppy and asleep!

The irony here is it is more difficult to manage a growing company than in managing a turnaround.  A successful turnaround is done for the collective benefit of all involved while, on the other hand, a growing company will begin to show signs of personal agendas and individual successes as things “get better.”

What every company needs, in no certain order, are:

1.       A vision for tomorrow that avoids relying on past successes.

2.       Profitable customers who are loyal.

3.        Investments in technology.

4.       Accountability and results.

5.       Actionable plans and goals.

There is a quote I heard recently that says, “Tomorrow is the day when failure will succeed.”  If you are comfortable that you finally made it, procrastinate and deny what is happening around you, and think you can wait it out and it will get better, you are three feet from failure.  Good companies go bad due to leadership failure and then market forces.

Wake up, get engaged and go back to the future!  Things don’t have to go bad!

If you are interested in talking about your future, send me an email to set up an appointment.