Sách Harvard Business Review - Why Good Companies Go Bad

One of the most common business phenomena is also one of the most perplexing: when successful companies face big changes in their environment, they often fail to respond effectively. Unable to defend themselves against competitors armed with new products, technologies, or strategies, they watch their sales and profits erode, their best people leave, and their stock valuations tumble. Some ultimately manage to recover—usually after painful rounds of downsizing and restructuring—but many don’t.

Why do good companies go bad? It’s often assumed that the problem is paralysis. Confronted with a disruption in business conditions, companies freeze; they’re caught like the proverbial deer in the headlights. But that explanation doesn’t fit the facts. In studying once-thriving companies that have struggled in the face of change, I’ve found little evidence of paralysis. Quite the contrary. The managers of besieged companies usually recognize the threat early, carefully analyze its implications for their business, and unleash a flurry of initiatives in response. For all the activity, though, the companies still falter.

The problem is not an inability to take action but an inability to take appropriate action. There can be many reasons for the problem—ranging from managerial stubbornness to sheer incompetence—but one of the most common is a condition that I call active inertia. Inertia is usually associated with inaction—picture a billiard ball at rest on a table—but physicists also use the term to describe a moving object’s tendency to persist in its current trajectory. Active inertia is an organization’s tendency to follow established patterns of behavior—even in response to dramatic environmental shifts. Stuck in the modes of thinking and working that brought success in the past, market leaders simply accelerate all their tried-and-true activities. In trying to dig themselves out of a hole, they just deepen it.

Because active inertia is so common, it’s important to understand its sources and symptoms. After all, if executives assume that the enemy is paralysis, they will automatically conclude that the best defense is action. But if they see that action itself can be the enemy, they will look more deeply into all their assumptions before acting. They will, as a result, gain a clearer view of what really needs to be done and, equally important, what may prevent them from doing it. And they will significantly reduce the odds of joining the ranks of fallen leaders.
Victims of Active Inertia

To see the destructive potential of active inertia, consider the examples of Firestone Tire & Rubber and Laura Ashley. Both companies were leading players in their industries, and both failed to meet the challenge of change—not because they didn’t act but because they didn’t act appropriately.

As Firestone entered the 1970s, it was enjoying seven decades of uninterrupted growth. It sat atop the thriving U.S. tire industry, alongside Goodyear, its crosstown rival in Akron, Ohio. Firestone’s managers had a clear vision of their company’s positioning and strategy. They saw the Big Three Detroit automakers as their key customers, they saw Goodyear and the other leading U.S. tire makers as their competitors, and they saw their challenge as simply keeping up with the steadily increasing demand for tires.

The company had become a monument to its own success. Its culture and operations reflected the vision of its founder, Harvey Firestone, Sr., who insisted on treating customers and employees as part of the “Firestone family.” The Firestone country club was open to all employees, regardless of rank, and Harvey himself maintained close friendships with the top executives of the big carmakers. (In fact, his granddaughter married Henry Ford’s grandson.) Firestone created fiercely loyal managers, steeping them in the company’s family values and in its Akron-centered worldview.

The company’s operating and capital allocation processes were designed to exploit the booming demand for tires by quickly bringing new production capacity on line. In the capital-budgeting process, for example, frontline employees identified market opportunities and translated them into proposals for investing in additional capacity. Middle managers then selected the most promising proposals and presented them to top executives, who tended to speedily approve the middle managers’ recommendations.