“Every institution is vulnerable, no matter how great. No matter how much you’ve achieved, no matter how far you’ve gone, no matter how much power you’ve garnered, you are vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top.” – Jim Collins, How the Mighty Fall
In the preceding part of this article, published a month ago, I sought to establish that a company can be run down and gradually destroyed by its founder. That the same person who invested sweat, money, time, savings, relationships, career, family can also be the same person behind the weakening and eventual destruction of that company. It is puzzling yet true.
This decline-to-death scenario can occur over five years or less. I know of a company that even though it got an injection of over five hundred million short and mid-term loan, is largely moribund after just about two years. Several reasons account for these type of situation and we mentioned some in the first part ranging from parochial hiring decisions to subjective selection of vendors and suppliers; adversarial firing and resignation practices and concentration of decision rights on the owner.
The word of caution is provided by Jim Collins in his book, How the Mighty Fall: “It turns out that a company can indeed look like the picture of health on the outside yet already be in decline…”In this concluding piece we look at a few more reasons behind owner led decline.
Diverting money to fund personal lifestyle or pet ambitions
I am yet to hear of any company that did not need to continue reinvesting the money being made back into the business. A business enterprise is like a baby. No one gives birth to a baby and then takes a vacation away from the baby. After the baby arrives there is need for constant feeding and nurturing. Same for a business. You birth it and need to continue to plough money back into it.
A path to guaranteed decline is when you begin to withdraw money to run other pet projects and ambitions of yours. Some have been siphoned into politics, spouse’s project/business, touring the world, expensive habits or acquisitions etc.
While you may still have your expensive equipment, you may lack cashflow needed for materials and other incidentals. Diverting money instead of reinvesting it into the business is akin to draining a person of oxygen – is just a matter time before death comes.
Customer Handling and Relationship Management
I have a friend who once told me that one of the reason he left a company was because after a customer pays for an item the organisation seems to disown them. When they come for additional enquiries or complaints they find it difficult to see the CEO (even when the CEO is around). A constant unending inflow of customers is the desire of every business.
Any attitude or practice that jeopardises this constant inflow of customers, particularly that goes on unchecked for some time is a sure recipe for decline-death. Some owners do not genuinely love the customers. To find out, just check the attitude of the people that work with her. They do not genuinely understand that customer experiences can lead to more customers coming or leaving your business.
Some business owners make the mistake of assessing customers with the mindset that they are allowed to provide great service to one and poor service to another. Others unconsciously disdain the first set of customers that patronised them particularly after they have achieved a modicum of success.
“Daily the needs and expectations of the customer are being altered, disregarded, ignored, and even abused. A thesaurus search would show that maltreatment means mistreatment, abuse, harm, damage, cruelty, injury, hurt, neglect. And these words aptly describe different shades of the ordeals faced by customers around Nigeria.
The customer is largely seen as a means to an end – a tool to be manipulated and exploited. It isn’t a win-win transaction because the customer almost always loses something. She sometimes loses money, or time, or self-esteem. Sometimes it’s as though the customer is a bother to be shrugged off like a bad habit. This has gone on for far too long. There is the prevalence of selective amnesia that makes a service provider forget that he/she is also a customer to a host of other businesses/organisations”. – Aruosa Osemwegie
Super-Micromanaging and Delegation
Another path through which business owners engineer a progress decline of their enterprises is through what I call, Super-Micromanaging and Delegation. Curiously I have seen senior leaders and CEOs go to great extents to hire a person and then when this ‘great’ talent arrives and starts working they are the same ones who constrain or restrict or sabotage the person’s expression.
Let me share a leading light idea here: there is only as much as you alone can do. Let me put this in clear English: Delegate or Die! You cannot be in more than one place at the same time. If all the most important actions revolve around you then decline is creeping in . . . albeit ‘like a thief in the night’. You help to strengthen your staff and grow them for your use in the future by delegating today. “Why do people hire staff when they know what the staff is meant to do already?”
Since they can do it better . . . since they know what the person should do, why don’t you just get it done by yourself? So you would be the CEO, COO, CMO, CIO, CHRO, CFO, etc all rolled in one. If you ask me I don’t think that is possible but it seems some people think it is. Hire great people and release them to do the job. Don’t lose your health and then lose the business.
“What you want to hear”culture
If you are a CEO or an organizational leader you must let your people know that you can handle bad news or undesirable news. This habit some have of inadvertently creating an environment where people quarantine some news away from you is a recipe for disaster and decline. Might I ask a question: “Why do people go to great extent to hire human beings when what they want are robots or ‘yes-men’?”
If you want people who would sing your praises, then hire a band. If you want people who wouldn’t have the audacity to disagree with you then buy robots or computers. If you think being a millionaire CEO or being so many years older confers on you knowledge beyond which a much younger person cannot phantom then do all the work yourself.
I am not trying to be sarcastic, I am just extrapolating these thoughts from the body languageI seem to see or hear sometimes from business owners. If they only tell you the kind of things they feel you prefer to hear one day they would keep away from you what you need to hear. A culture of “what you want to hear” also breeds a culture of silence. Either one of them is the road to perdition.
Gossip, Divide and Rule, and the likes
Then another closely related virus to the last one is business owners who sponsor or encourage gossip and rumour mongering. I think some well-meaning leaders and owners innocently allow this. This predilection for gossip we deride today and we say to them, “Come off it”. Go and sin no more. But I hear some do it deliberately as a ‘divide and rule’ (D and R) strategy.
Divide and rule is where you seek to remain the rallying power centre by ensuring or encouraging dislike/distrust amongst your staff by helping to pit one against the other through the sale and distribution of gossip or private information. Allowing or turning a blind eye to rumour mongering and utilizing D and R techniques are guaranteed paths to company demise . . . albeit unobtrusively. You don’t even want us to go Patrick-Obahiagbon on you on this matter by forcing us to go additional length to exculpate the extent of this ill.
People you like vs People you don’t like vs People who look or talk like you
Handling people issues subtly based on people you like or don’t like isn’t a winning strategy. Some hire people like them as against looking for people that fit the role and the organisational values. Dealing with your workforce selectively based on similarities with you or personal preferences portends all sorts of danger.
You lose focus from the objective for hiring the staff and then begin to deal with non-issues. It discourages others outside of that class who are putting in their best. It would also blindside you from objective assessment of any situation that involves that staff.
A potpourri of reasons
Other ways people inadvertently run down their business include:
- Not having respectful conversations with staff, suppliers, and vendors
- Not staying in the business enough to supervise and motivate people
- Building a personality-based vs a systems-based organisation
- Incessant use of salary deductions as punishment or a compliance technique
- Not having or consulting a Board or a Board of Advisors
- Overplaying the desire to trust people instead of growing a professionally managed organisation
- Having non-existent or poor accounting practices
- Slack or non-existent internal controls
- Overbearing demand for compliance from staff without a clear effort to grow engagement with employees
There are a myriad paths to unobtrusively running your own company down. The whole idea of this two-part article is to get heightened awareness from readers. Now our subconscious is awakened, we can avoid these ills for ourselves and also help friends and family.