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4 of 4 people found the following review helpful
4.0 out of 5 stars The Seven Deadly Sins, Corporate Style, June 18, 2007
Maintaining the success of a corporation over the long term has a lot to do with the fortunes afforded by healthy market forces, but there can be debilitating factors afoot that do not allow companies to take advantage nor insulate themselves during inevitable downturns. These factors may be obvious from a conceptual standpoint, but as Steven Covey has proven with his bestseller, The 7 Habits of Highly Effective People, sometimes the most obvious things have to be laid out in an easy-to-absorb manner that resonates with people who are most prone to such behavior. Whereas Covey identifies positive habits on an individual level, Emory University's Jagdish N. Sheth takes the more daunting task of identifying the self-destructive habits of corporate leaders as proven by renowned companies experiencing very public failures. Not coincidentally, Sheth limits himself to seven to make the comparison with Covey all the more clear. Like Covey, the author trumpets them like the Seven Deadly Sins, and four of the seven especially take on that aura.

The most obvious is hubris. Unexpected success, especially at the magnitude that brings widespread media attention, can inflate the egos of an unprepared leadership exponentially. Key examples we have seen recently have been Ken Lay and Jeffrey Skilling at Enron; Bernard Ebbers at WorldCom; and in the related political arena, the Republican Party circa November 2006 when the leadership forced their own value system upon constituents unwilling to accept such rhetoric and legislation unconditionally. On the other end of the outward behavioral model is complacency where success is taken for granted, so much so that monopolists lose their grip on the market forces far earlier than potential competitors think about entering it with their own niche strategy. Especially guilty are monopolies of distribution and regulation, the latter in cases where the government owns the business as in the case of Air India. The territorial impulse is the third factor, the tendency to develop functional silos around a company's perceived value, which ultimately comes down to a level of unnecessary in-fighting that results in suboptimal performance. What happens here is that insulation from an uncontrollable market becomes a greater priority than looking at encouraging new avenues for value.

This last fact is critical in understanding how the fourth self-destructive habit, volume obsession, festers. Volume is seen as an overriding factor for success, even though the profit margins are eroding with the increasing desire to commoditize. Little if any attention is paid to whether one's output is becoming obsolete in an ever-changing market. According to Sheth, the less obvious factors could be the most damaging because they are insinuative by their very nature. Denial is one such habit where current realities are not even confronted, and he points to the aversion to the Green Movement as a key example of an inevitable need being ignored since short-term benefits cannot be clearly ascertained. Even more common among companies depending on specialty technologies for their profits is an inability to face any advances that would cause disruption to their business models, and this could run the gamut from online social networking to outsourcing.

The remaining two bad habits are competency dependency and competitive myopia, which really strike me as outgrowths of the other five. Sheth defines competency dependence as the inability to re-invent oneself, whereas competitive myopia is when a company starts to align the competition with its perception of their limitations and thus underestimate what they can do. The author's perspective is hardly dire as he concisely outlines what strategies corporate leadership needs to enact to break the cycle of perpetual destruction. As he showed with his recent co-authorship of Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, Sheth is an engaging writer who easily brings a real-world context to his theories. Although not really groundbreaking, the book is a fast read and an insightful one for those executives and managers looking for guidelines around their company's growth.
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2 of 2 people found the following review helpful
5.0 out of 5 stars Should be considered mandatory reading for all company executives, June 9, 2007
In "The Self-Destructive Habits of Good Companies...And How To Break Them", a respected authority on global competition, strategic thinking, and customer relationship management expert Jagdish N. Sheth (who holds the Charles H. Kellstadt Chair of Marketing Strategy in the Goizueta Business School at Emory University) identifies seven dangerous habits even the most well-run company can fall victim to, as well as how to diagnose and counter these corporate habits before they can cause irremediable harm. These basic faults include the 'cocoon' of denial with respect to problems or issues confronting a company; the stigma of perceived (or genuine) arrogance on the part of management; the 'virus' of complacency; the risk factors of incumbency for a company's present and future needs; the threat of corporate myopia with respect to the competition; an obsession toward volume without proper attention to profit margins; and the 'territorial impulse' as reflected in the creation of factions, fiefdoms, and ivory towers within the corporate ranks and structures. Simply put, Professor Sheth's "The Self-Destructive Habits of Good Companies" should be considered mandatory reading for all company executives, and all business school students aspiring to one day become corporate managers.
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1 of 1 people found the following review helpful
5.0 out of 5 stars How to identify and avoid being a victim of the creative destruction of capitalism, August 15, 2007
My favorite section of this entire book, and that is high praise indeed given my opinion of the rest, starts on page 200. Sheth mentions how academics are often criticized for existing in an ivory tower and how the accusation is false; the real inhabitants of an ivory tower are corporate CEOs and their immediate minions. It is the job of academics to interact with raw beginners and to do the best they can to teach their students the breadth and depth of skills needed to survive in their chosen profession. From the first day they step on a college campus, students are interacting with their professors; there are very few barriers between the student and the head of a department.
However, the executives at the highest levels of a corporation are much more sheltered, which is a significant part of the problem. Many fly on private jets, have their private elevator, washroom and cafeteria. So many of them interact with only a few of their employees and almost never with their customers. The information they receive is carefully filtered and in the most rigid of organizations, it is unthinkable that a line worker would ever exchange meaningful words with an executive.
Sheth also describes many of the other problems that good companies face, although I don't believe he is complete in his analysis of why companies fail. He is quite correct that many of the companies initially succeed largely due to luck and being in the right place at the right time. However, the eventual failure of so many companies is due to the creative destruction that is an inherent feature of capitalism. The advance of technology and social mores cannot be predicted or stopped; so many companies simply outlive their economically effective life. In my opinion, that point is not stressed enough.
Sheth is quite correct in pointing out that the greatest point of failure is when companies become "fat cats", content to bask in their success and believe that the good times will continue indefinitely. Or at least as long as the current executive team remains in their positions. He also commends companies who have the policy of term limits in executive positions. By rotating executives from position to position on a regular basis, no person has an opportunity to build a "protective silo", where it becomes more important to protect their executive turf than it is to advance the company.
Another very amusing point that I agree with; is when he points out that there is less of a cultural divide between Christians and Moslems than there is between engineers and marketing people in the same company. As a former software developer, I remember some of the very hostile barbs that went back and forth between the marketing people and the programmers. We spoke a different language, not only in how the product should be built, but we strongly, vehemently disagreed about what should be said to potential customers.
In conclusion, Sheth does an excellent job in describing the history of some of what used to be the most powerful companies on Earth. Now, many of those companies no longer exist, some are in serious trouble and the successful ones are nothing like they were when they were at the peak of their power. The common theme leading to their downfall was an inability to see or even acknowledge that the world associated with their products was changing. The first step in any attempt to keep your company from being added to the list of failures is to recognize that it is possible for yours to fail. Sheth drives that point home with an effectiveness that may make you wince and take an honest look at the state of the company you work for.
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1 of 1 people found the following review helpful
5.0 out of 5 stars Stupid habits companies develop in order to create opportunities for their competitors, June 24, 2007
We have all seen it happen. A company is on top of the world and its future success not only seems assured, but inevitable. Yet, before anyone sees it coming, the wheels come off and the company is fighting for its survival, gets bought out, or broken up. How does that happen? And why does it happen with such seeming regularity? It is the rare company that can stay on top of its game for extended periods of time.

The companies profiled in the business classic "In Search of Excellence" would not be selected for such a book today. Nor could the same lessons be drawn from their current position and behavior in the marketplace. This book talks about what happens to successful companies that leads to their getting into serious trouble.

When I was in business school and heard stories of this method or process or success story that led to success, I was always wondering about the limits of such methods and where the limits of applicability were. Sometimes my questions and doubting annoyed my professors and classmates, but subsequent events have, I believe, proven the benefits of good hearted doubt.

Jagdish Sheth uses a good number of real life business stories from well known companies to illustrate his points. I also like the way he summarizes his points about how things go wrong and some suggestions on how to get things right at the end of each chapter. He begins the book talking about Digital, IBM, and Intel. Bigger names representing blue chip success would have been harder to find in the 1980s. Digitial is gone, IBM had to bring in an outsider (unthinkable before the crisis), and Intel fumbled its way into letting AMD become a major competitor in its core marketspace.

The seven mistakes Sheth points to are: Denial (the cocoon of myth, ritual, and orthodoxy), Arrogance (pride before the fall), Complacency (success breeds failure), Competency Dependence (the curse of incumbency), Competitive Myopia (a nearsighted view of competition), Volume Obsession (rising costs and falling margins), and the Territorial Impulse (culture conflicts and turf wars).

The discussion of each of these is quite interesting and I am sure you will recognize them from your own work experiences over the years. It is too bad how we are prone to such errors, but humans are quite fallible. We tend to stick to something we think is working until we are forced to change. Unfortunately, things are changing around us, and the very habit of "sticking with" actually deadens the abilities to see why our approach is no longer working.

The last chapter discusses why it is better to never need the "cures" he describes in each of the chapters. It is much better to wake up before the crisis and keep your company alive and thriving by preemptive action. I agree with him. However, I expect that the culture of business will require that too many companies have to go through these wrenching trials in the future as they have in the past.

Recommended.
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3 of 4 people found the following review helpful
5.0 out of 5 stars Far too easy to fall into any of these traps..., July 28, 2007
In terms of business books, I've always found it interesting how today's hot model corporation can become tomorrow's disgraced icon. You wonder what went wrong at what point to lead them down the wrong path. This pattern is covered in the book The Self-Destructive Habits of Good Companies: ...And How to Break Them by Jagdish N. Sheth. I think a number of the leading companies in today's headlines could take some lessons from these pages.

Contents: Why Do Good Companies Go Bad?; Denial - The Cocoon of Myth, Ritual, and Orthodoxy; Arrogance - Pride Before the Fall; Complacency - Success Breeds Failure; Competency Dependence - The Curse of Incumbency; Competitive Myopia - A Nearsighted View of Competition; Volume Obsession - Rising Costs and Falling Margins; The Territorial Impulse - Culture Conflicts and Turf Wars; The Best Cure is No Cure At All; Endnotes

Each chapter in this book goes into a particular trait that can doom a company's long-term survival. For instance, denial often manifests itself with a company believing that its success is due to some inherent greatness that will always be there. In reality, success is often something determined by chance interacting with a good idea. Once the rest of the world catches up, that idea advantage disappears regardless of how much the company may deny that the environment has changed. Sheth does an excellent job in providing examples of companies who have fallen prey to each problem. For denial, it's Xerox ignoring emerging technologies, A&P ignoring the changing tastes of the American shopper, and GM ignoring the growing excellence of foreign autos. Granted, it's easy to apply hindsight to see how these situations unfolded, while at the time the decision to pursue a particular direction does not come with a guarantee of any particular results. But still, knowing these different problems beforehand can help to guard against making the same mistakes.

Being in the technology industry, I could relate to many of these situations. A certain large software company in the Pacific Northwest could easily qualify for a number of them. Armed with this material, it becomes a bit easier to imagine how endgames might play out. And if you're a stock investor, this book could easily save you lots of money by allowing you to examine company stock in the light of past industry failures. Either way, it's an interesting read, one that's sure to have you looking at your own organization and wondering if you're next...
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4 of 6 people found the following review helpful
5.0 out of 5 stars How to keep an organization out of the ER, May 6, 2007
In Firms of Endearment, Jagdish N. Sheth and co-authors Rajendra S. Sisodia and David B. Wolfe explain how world-class companies profit from passion and purpose. The focus is on sustainable good habits. In this volume, Sheth takes a different approach in response to the question "Why do good companies go bad?" The focus is on habits that are counter-productive, in some instances self-destructive. Because habits (both good and bad) are learned behaviors, not inevitabilities, it is possible to acquire them or eliminate them. Sheth correctly stresses the importance to any organization of having leadership at all levels and in all areas. Without it, it is impossible to avoid, recognize, or overcome one or more of the seven "destructive habits" that Sheth identifies and then discusses.

Readers will appreciate the format Sheth has selected which includes two sections within each chapter: "The Warning Signs of [X]" and "How to Break the Habit of [X]."He devotes a separate chapter to each of the seven. Then at the end of each chapter, he summarizes key points in greater detail than do most other authors of business books. These three devices facilitate, indeed expedite review of key points later. Throughout the narrative, Sheth examines a number of exemplary companies such as Digital, IBM, Intel, Xerox, A&P, General Motors, Merck, Motorola, and Singer Sewing Machines. In the final chapter, "The Best Cure Is No Cure at all," Sheth correctly notes that breaking bad habits begins with an awareness of them. He advocates what he characterizes as "anticipatory management" (as opposed to "status-quo management") that, if effective, avoids the need for a "cure," hence the relevance of the chapter's title.

Sheth invokes an extended analogy to make several important points. "As in human health, corporate health is better served if self-destructive habits never have a chance to get a foothold. Just as with humans, if the self-destructive habit forms, it may be too addictive to stop. Or it may be allowed to go on until irreversible damage occurs. Or the cure may be so invasive that the company suffers additional negative consequences or never recovers. And the cure may be expensive and require lifelong maintenance. It would be much better, as we know from human health care, to encourage wellness instead of treating illness."

In reality, of course, most organizations suffer from "organizational illness" in one form or another at one time or another. (Consider developments -- both positive and negative -- at General Motors, Ford, and Chrysler since the end of World War Two.) For various reasons, some companies survive while others do not. Those who read this book probably have ideas of their own as to how to avoid or break each of the seven self-destructive habits. More to the point, each reader has a clearer understanding than Sheth possibly could how her or his own organization can -- and should -- avoid or break a habit such as denial, "The cocoon of myth, ritual, and orthodoxy" or as James O'Toole characterizes it, "the ideology of comfort and the tyranny of custom."

With humans as with organizations, the worst habits are the most difficult to break precisely because they are appealing (i.e. tempting), addictive, and self-sustaining. Those who absorb and digest the material in this book with appropriate care will be much better prepared to help their organization avoid or break its bad habits but, as Sheth would be the first to point out, it will probably be at least as difficult (if not more difficult) to institutionalize "preventive medicine" as it will be to "cure" a pattern of behavior or specific ailment. Sometimes, only a severe crisis can get people's attention and, regrettably, it may then be too late.
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5.0 out of 5 stars Self-Destructive Habits destructs need for other biz books, February 4, 2009
Originally, I was reluctant to purchase yet another business book for my MBA coursework. But, as I got into Sheth's "Self-Destructive Habits of Good Companies," I appreciated the look into many corporate examples across an array of industries. A running theme that leads to destruction is denial, and granted this is not a "how to" book by any means, but it opens the mind to various scenarios that all business execs, middle managers and entry-level individuals should consider, if they wish to be successful in their endeavors.
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4.0 out of 5 stars Seven sins, seven habits, hundreds of companies that commit them, January 6, 2009
Dozens of companies are used as case studies to highlight the seven 'self-destructing habits' that can inflict even good, successful companies, that lead to their decline or even demise.
Engaging style of writing, a constant stream of companies with sometimes fascinating nuggets of information that most would be unaware of, and a succint boxed list of bullets at the end of each chapter that lists the "Things that lead to ...", "The Warning Signs of ...", and "How to break the habit of ..." should be useful enough in its own right.

One of the major points that the author makes is that functions in a company need to be better integrated and functioning cohesively to avoid the (seven) self-destructive habits. While working as independent, self-contained units may have been the fashion some time back, and even provide a sense of independence and success, and may indeed work in some cases, some of the times, in many others it may breed a sense of fiefdom, inertia, and paralysis, and more so in not-so-good times when the need is to revisit old assumptions, this silo-ed setup can actually hamper progress.

The seven habits listed are:
Chapter 2. Denial: The Cocoon Of Myth, Ritual, And Orthodoxy
Chapter 3. Arrogance: Pride Before The Fall
Chapter 4. Complacency: Success Breeds Failure
Chapter 5. Competency Dependence: The Curse Of Incumbency
Chapter 6. Competitive Myopia: A Nearsighted View Of Competition
Chapter 7. Volume Obsession: Rising Costs And Falling Margins
Chapter 8. The Territorial Impulse: Culture Conflicts And Turf Wars

While it is true that companies could suffer from more than one self-destructing 'habit', these habits are sometimes used in a loose manner. Does Detroit suffer from design dependence, or denial, or a mix, or a third, fourth, fifth trait too? Not clear.

The style of the book is not academic. There is no grand theory of failure that is sought to be built here. Rather, the author lists habits that he states can and do mostly lead to companies failing, and then parades dozens of companies in support. The narrative style is somewhat similar to Ram Charan. While Ram Charan uses personal anecdotes from his numerous consulting engagements with companies and CXOs, Sheth in this book describes companies and how they stumbled, or in some cases declined all the way to extinction, as a way of illustrating these habits.

IBM, Microsoft, Motorola, (Encyclopedia) Britannica, GM, AP, Merck, Sony, Singer, Nutrasweet/Equal, Lego, DeBeers, USPS, AT&T, Boeing, Enron, Worldcom, Sony, Timex, Xerox, ... - makes you wonder if a second edition of this book may have some newer, familiar names like Toyota, Google, VMWare (which is already struggling), Salesforce.com, Facebook.

If you write about companies in a time set too much in the past, the lessons have been mostly taught (not necessarily learned), there is not much new that can be presented, and the context too much in the past to interest the average reader. Just how many times do you want to be taught about the Dutch Tulip mania? If you write about companies in the present, you run the risk of getting things horribly wrong, or basing your analysis on facts that are not completely known at the time of writing. The same is somewhat the case with this book. The discussion on Boeing and Airbus is a case in point, where the fortunes of these two companies have been oscillating between success and failure for more than 10 years now. Airbus' taking the lead from Boeing, Airbus' success with the A380, then the failure with numerous delays and technical and manufacturing glitches, to Boeing's success with the Dreamliner project, and then its miseries over ethics scandals....

Of particular interest to many people would be the several pages devoted to GM, especially given the near-death throes that the American auto industry seems to be in these days. These pages are hugely informative and readable in themselves, and may well prompt the reader to wonder in exasperation, several times, how could these companies have been so oblivious to fast-approaching disaster!

************ Excerpts:
From Chapter 2:
"What he (Jack Smith, in the early 1980s) found was that GM needed more than twice as many people as Toyota to build the same number of cars. But when he presented his findings to GM's executive committee, they reacted with total disbelief and dismissed his report."
...
"The editorial (Seattle Times in the 1980s) asked prophetically, 'How many Detroit workers will lose their jobs when oil prices soar again and gasoline rockets past a dollar a gallon?' ... Then, to reinforce its own bias, Detroit built crummy small cars. When nobody wanted them, the automakers could say, 'We told you so.'"
...
"According to (BMW CEO) Panke, if you removed all their labels and badges, 'you would have a hard time recognizing who's who, what is what.'"
...
"... in April 2005, Dan Neil, the auto writer for the Los Angeles Times, gave a negative review to GM's new and much-hyped Pontiac G6. ... Looking at all 11 brands (including those offshore), he concluded that GM's overall strategy must be to remove any unique characteristics in its automobiles for the sake of global efficiencies. ... GM's response to the article? The company pulled all its advertising from the Los Angeles Times until further notice."
...
From Chapter 3:
In case you have any doubts, consider the fact that GM actually nurtured Japanese imports in its own dealer showrooms...
"it made the strategic blunder of allowing its own dealers--Pontiac, Buick, and Olds--to carry Honda, Toyota, and Nissan."
******

Also read:
Good to Great: Why Some Companies Make the Leap... and Others Don't
Execution: The Discipline of Getting Things Done
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5.0 out of 5 stars Common Sense, February 8, 2008
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A lot of it is common sense, but you won't notice it until you read about it.
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5.0 out of 5 stars Excellent insight!, November 21, 2007
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Very practical, trustworthy, hand on insight. Gives you a lot to think about, and unfortunately also some "deja vu" experiences. Should be mandatory reading for all managers in companies doing well!
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