destructive habits in organizations and projects

Project Communications Management

Project Communication

Management

Lecture 9

Destructive habits in organizations and

projects


Why Do Good Companies Go Bad?

• In a nutshell: Good companies fail when

they are unable or unwilling to change

when their external environment changes

significantly.


7 Habits

Denial

Arrogance

Complacency

Competence Dependence

Competitive Myopia

Volume Obsession

Turf Wars


Denial


What leads to Denial?

• Denial of emerging technologies.

Denial of changing consumer tastes.

Denial of the new global environment


Signs of Denial

• “Hey, we’re different, so there’s no way

it can happen to us.”

The company is too proud to admit that

someone else has come up with a better

way.

The company ignores, rationalizes, or

blames others for its situation instead of

admitting its fault.


How to break the habit of denial

Look for it



Assess it



Change it


Arrogance


What is Arrogance?

• Offensive display of:

Superiority

Self-importance

Pride

Disdain (contempt)

… because of an inflated sense of self


What leads to Arrogance?

• Exceptional achievement in the past

David conquers Goliath

The company pioneers a product or

service


Signs of Arrogance

• The company stops listening

The company becomes extravagantly

eager to show off.

The company begins to act like a bully,

both internally and externally.


Signs of Arrogance

• The company becomes high-handed and

abuses rules

The company favors those who validate its

views and gets rid of those who are

critical.


How to break the habit of

arrogance? • Rotate management to new challenges.

Implement nontraditional succession

planning.

Diversify the talent.

Change the leadership.


Complacency


What is Complacency?

• Complacency is the sense of security and

comfort that derives from the belief that

the success that’s taken place in the past

will continue indefinitely.


What leads to Complacency?

• The company’s past success came via a

regulated monopoly.

The company’s success was based on a

distribution monopoly.

The company was “chosen” for success by

the government.

The government owns or controls the

business.


Signs of Complacency

• The company is in no hurry to make

decisions.

The company’s processes are overly

bureaucratic.

Everybody has to get on board before a

decision is made.


Signs of Complacency

• The company is completely vertically

integrated.

Enormous cross-subsidies are in place –

by functions, by products, by markets, by

customers. Average costing and average

pricing prevail.


How to break Complacency?

• Reengineer to achieve high quality,

eliminate waste, and reduce inefficiency.

Decentralize profit and loss by creating

and molding business units around

products or geographies.


How to break Complacency?

• Outsource – contract out all non-core

functions.

Reenergize – consider a new leader with a

positive, opportunity-oriented vision


Competency Dependence


What is Competency

Dependence? • Somebody else can be doing a better job,

and if a company is unable to figure out

what to do, it has become competency-

dependent


What leads to Competency

Dependence? • R&D dependence

Design dependence

Sales dependence

Service dependence


Signs of Competency

Dependence • Reengineering, reorganization, retooling

have been tried and still no good results.

The thrill is gone and the company is in a

funk.

Stakeholders are leaving


How to break Competency

Dependence? • Find new applications where the same

competency results in new value.

Determine new markets where the same

competency remains an asset.


How to break Competency

Dependence? • Expand the range of your competencies

by moving up or down the value chain.

Refocus company resources into areas

with more growth and profit potential.


Competitive Myopia


What is Competitive Myopia?

• When they define their competition too

narrowly and acknowledge only direct and

immediate competitors


What leads to Competitive

Myopia? • The natural evolution of the industry.

.


What leads to Competitive

Myopia?

The clustering phenomenon.


Signs of Competitive Myopia

A company allows small niche players to

coexist with it.

The loyalty of a company’s supplier is won

by a nontraditional competitor.


Signs of Competitive Myopia

New entrants, especially those from

emerging economies, are underestimated.

The company becomes helpless against a

substitute technology.


How to break Competitive

Myopia?

Broaden the scope of the product or

market.

Consolidate to squeeze out excess

capacity.


How to break Competitive

Myopia?

Counterattack the nontraditional

competitors.

Refocus on the core business to

concentrate limited resources in the most

successful area.


Volume Obsession


What is Volume Obsession?

• Too much money is being spent for the

company to make money.


What leads to Volume

Obsession?

The high-margin pioneer.

The fast-growth phenomenon

The paradox of scale.

The ball and chain of unintended obligations


Signs of Volume Obsession

Guideline-free, ad hoc spending.

Functional-level cost centers.

A culture of cross-subsidies.

Stakeholders say numbers are not good.


How to break Volume

Obsession?

Identify where the company’s costs are.

Convert cost centers into revenue centers

or profit centers.

Move from vertical integration to “virtual

integration”.


How to break Volume

Obsession?

Outsource non-core functions.

Reengineer to automate processes to

improve cost efficiency.

Implement target costing

Become a world-class customer.


The Territorial Impulse


What is Territorial Impulse?

• As companies grow they tend to organize

themselves into “functional” and later

“regional silos”. However, the various

units into which companies organize

themselves don’t always get along well

with each other, for various reasons.


What leads to Territorial

Impulse?

The corporate ivory tower.



Impulse?

Growth requires the institution of formal

policies and procedures.



Impulse?

The informal, spontaneous culture is

extinguished.



Impulse?

A company’s culture is dominated by one

functional specialty.


Signs of Territorial Impulse

Dissension - a lot of headstrong

lieutenants instead of one strong general

Indecision – decision-making is an

agonizing or even impossible process


Signs of Territorial Impulse

Confusion – one side doesn’t know what

the other side is up to

Malaise – nobody’s happy


How to break Territorial

Impulse?

The leader must bring all the people

together in a common cause.

Rotate the people in and out of different

functional or geographic silos.


How to break Territorial

Impulse?

Create permanent cross-functional teams.

Reorganize around customers or products

rather than around function or geography.

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