I own two small businesses and one of my biggest fears is that I do things that people hate.
When people start to hate the things your business does, you’re in trouble. Your reputation starts to slowly but surely erode and the shine you once enjoyed turns in to a dull patina.
What comes last is irrelevance in your market and you know what that means.
The 5 Stages of Organizational Decline
How does this happen? In my Business 100 class that I teach at a local community college we have an important concept called the 5 Stages of Organizational Decline.
The 5 stages are:
- Hubris born of success
- Undisciplined pursuit of more
- Denial of risk and more
- Grasping for salvation
- Capitulation to irrelevance or death
After explaining the concept I mention the names of a few companies that are well known and in serious trouble. I then ask the students to place them in to one of these stages.
A Valuable Lesson From Siebel
When I was at Oracle in the late 90’s and early 2000’s we had an arch competitor in Siebel. They actually were an outgrowth of Oracle as the man who started Siebel was once an employee named Tom. I believe he was unable to see his vision come to fruition at Oracle so he left and went on to start his own company.
Siebel did quite well for a while as a pure CRM player.
They sold a lot of software as a Best of Breed company and seemingly had a better solution than we did at Oracle. The problem was that they were starting to get arrogant about it. They thought Best of Breed was the way to go and they kept pursuing more and more customers without seeing the forest for the trees.
What they didn’t realize was that customers were starting to tire of integrating multiple Best of Breed programs to make a great suite of software they could run on. System Integrators like PwC and CapGemini were having a field day making it all work, but the times were a changing and customers were starting to hate the complexity.
Ultimately Siebel was on the ropes grasping for salvation as customers moved to full suites from single vendors like SAP and Oracle. Siebel was acquired by Oracle in September of 2005 as the latest of a series of major acquisitions that saw Oracle double its employee base.
What do businesses do that you hate?
I posed this question on my Facebook Page and heard a few answers ranging from rental car companies pushing all that extra insurance to small businesses saying they accept credit cards, but then trying to talk you out of using credit since they’d like to avoid the fees.
Then there’s my huge pet peeve about paying to check bags on a cross-country flight.
Take A Look In The Mirror
Take a good hard look at your business.
- If you’re no longer doing so well might you be in one of the 5 stages of decline?
- Are you starting to get a little cocky about your success?
- Have you started expanding the business in undisciplined ways going in to areas where you clearly don’t have the expertise?
- Did people tell you it was risky, but you ignored their earnest statements?
And here’s the biggie: Have you stopped listening to customers because you believe you know what’s best for them?
All ongoing businesses are subject to the painful peril of going in to organizational decline. Be ever vigilant that it doesn’t happen to yours.
As Dell, BlackBerry, and Best Buy will attest, it’s mighty hard to reverse the spiral once you’re headlong in to it.