The Self-Destructive Habits of Good Companies: ...And How to Break Them [Hardcover]

Jagdish N. Sheth (Author)

Book Description

ISBN-10: 0131791133 | ISBN-13: 978-0131791138 | Publication Date: May 6, 2007 | Edition: 1

Why Even Great Companies Fail: Diagnose the Symptoms and Cure Them!

 

• Conquer—or prevent—the seven disastrous “addictions” that can destroy your company
• Overcome corporate denial, arrogance, complacency, “competency dependence,” turf wars, and more
• For every executive, strategist, entrepreneur, and manager who wants to sustain success

GM. Ford. AT&T. Sears. Firestone. Krispy Kreme. Digital. Kodak. Once, they were riding high, the exemplars of business excellence. Then, disaster. Is your company headed for the same fate? How do you know? How do you change course? Find out. Shine a light on the dark places in your business. Uncover your self-destructive habits before they destroy you. The blinders, culture confl icts, and corporate denial. The competitive myopia. The focus on volume, not profits. Root them out—all of them. Then, instill the good habits your business needs: the habits of sustainable profitability and market leadership. This book shows you how—in detail, from start to finish.

 

Why do so many good companies engage in self-destructive behavior? This book identifies seven dangerous habits even well-run companies fall victim to–and helps you diagnose and break these habits before they destroy you. Through case studies from some of yesterday’s most widely praised corporate icons, you’ll learn how companies slip into “addiction” and slide off the rails...why some never turn around...and how others achieve powerful turnarounds, moving on to unprecedented levels of success. You’ll learn how an obsession with volume leads inexorably to rising costs and falling margins...how companies fall victim to denial, myth, ritual, and orthodoxy... how they start wasting vital energy on culture confl ict and turf wars...how they blind themselves to emerging competition...how they become arrogant, complacent, and far too dependent on their traditional competences. Most important, you’ll find specific, detailed techniques for “curing”–or, better yet, preventing–every one of these self-destructive habits.

• The “cocoon” of denial
  Find it, admit it, assess it, and escape it
• The stigma of arrogance
  Escape this fault that “breeds in a dark, closed room”
• The virus of complacency
  Six warning signs and five solutions
• The curse of incumbency
  Stop your core competencies from blinding you to new opportunities
• The threat of myopia
  Widen your view of your competitors–and the dangers they pose
• The obsession of volume
  Get beyond “rising volumes and shrinking margins”
• The territorial impulse
  Break down the silos, factions, fiefdoms, and ivory towers

Preface xxi

Foreword    xxiii                                                                            

1          Why Do Good Companies Go Bad?   1                           

2          Denial: The Cocoon of Myth, Ritual, and Orthodoxy      19  

3          Arrogance: Pride before the Fall    45

4          Complacency: Success Breeds Failure    75                        

5          Competency Dependence: The Curse of Incumbency    105      

6          Competitive Myopia: A Nearsighted View of Competition    133

7          Volume Obsession: Rising Costs and Falling Margins    165    

8          The Territorial Impulse: Culture Conflicts and Turf Wars    199   

9          The Best Cure is No Cure at All    231                                    

10        Endnotes    249                                                                    

Index    263

Editorial Reviews

Review

"This book will help every manager who thinks they are doing just fine. Bad habits can creep up on a company until they sap its effectiveness and destroy its profitability. This is the right check list to make sure you are not crippling your own company."

--Newt Gingrich, Former Speaker of the US House of Representatives

From the Back Cover

Why Even Great Companies Fail: Diagnose the Symptoms and Cure Them!

 

• Conquer—or prevent—the seven disastrous “addictions” that can destroy your company
• Overcome corporate denial, arrogance, complacency, “competency dependence,” turf wars, and more
• For every executive, strategist, entrepreneur, and manager who wants to sustain success

GM. Ford. AT&T. Sears. Firestone. Krispy Kreme. Digital. Kodak. Once, they were riding high, the exemplars of business excellence. Then, disaster. Is your company headed for the same fate? How do you know? How do you change course? Find out. Shine a light on the dark places in your business. Uncover your self-destructive habits before they destroy you. The blinders, culture confl icts, and corporate denial. The competitive myopia. The focus on volume, not profits. Root them out—all of them. Then, instill the good habits your business needs: the habits of sustainable profitability and market leadership. This book shows you how—in detail, from start to finish.

 

Why do so many good companies engage in self-destructive behavior? This book identifies seven dangerous habits even well-run companies fall victim to–and helps you diagnose and break these habits before they destroy you. Through case studies from some of yesterday’s most widely praised corporate icons, you’ll learn how companies slip into “addiction” and slide off the rails...why some never turn around...and how others achieve powerful turnarounds, moving on to unprecedented levels of success. You’ll learn how an obsession with volume leads inexorably to rising costs and falling margins...how companies fall victim to denial, myth, ritual, and orthodoxy... how they start wasting vital energy on culture confl ict and turf wars...how they blind themselves to emerging competition...how they become arrogant, complacent, and far too dependent on their traditional competences. Most important, you’ll find specific, detailed techniques for “curing”–or, better yet, preventing–every one of these self-destructive habits.

• The “cocoon” of denial
  Find it, admit it, assess it, and escape it
• The stigma of arrogance
  Escape this fault that “breeds in a dark, closed room”
• The virus of complacency
  Six warning signs and five solutions
• The curse of incumbency
  Stop your core competencies from blinding you to new opportunities
• The threat of myopia
  Widen your view of your competitors–and the dangers they pose
• The obsession of volume
  Get beyond “rising volumes and shrinking margins”
• The territorial impulse
  Break down the silos, factions, fiefdoms, and ivory towers

Preface xxi

Foreword    xxiii                                                                            

1          Why Do Good Companies Go Bad?   1                           

2          Denial: The Cocoon of Myth, Ritual, and Orthodoxy      19  

3          Arrogance: Pride before the Fall    45

4          Complacency: Success Breeds Failure    75                        

5          Competency Dependence: The Curse of Incumbency    105      

6          Competitive Myopia: A Nearsighted View of Competition    133

7          Volume Obsession: Rising Costs and Falling Margins    165    

8          The Territorial Impulse: Culture Conflicts and Turf Wars    199   

9          The Best Cure is No Cure at All    231                                    

10        Endnotes    249                                                                    

Index    263

See all Editorial Reviews

Product Details

• Hardcover: 304 pages
• Publisher: Wharton School Publishing; 1 edition (May 6, 2007)
• Language: English
• ISBN-10: 0131791133
• ISBN-13: 978-0131791138
• Product Dimensions: 9 x 6.1 x 1.2 inches
• Shipping Weight: 1 pounds
• Average Customer Review: 4.8 out of 5 stars  See all reviews (12 customer reviews)
• Amazon Best Sellers Rank: #667,715 in Books (See Top 100 in Books)

More About the Author

Dr. Jagdish (Jag) N. Sheth is the Charles H. Kellstadt Professor of Marketing in the Goizueta Business School at Emory University. Prior to his present position, he was at the University of Southern California (7 years); at the University of Illinois (15 years), and on the faculty of Columbia University (5 years), as well as the Massachusetts Institute of Technology (2 years). Dr. Sheth is well known for his scholarly contributions in consumer behavior, relationship marketing, competitive strategy and geopolitical analysis.
Professor Sheth is highly sought out as a keynote speaker at many industry, academic and public forums. He has worked for numerous industries and companies in the United States, Europe and Asia, both as an Advisor and as a Seminar Leader. His clients include AT&T, BellSouth, Cox Communications, Delta, Ernst & Young, Ford, GE, Lucent Technologies, Motorola, Nortel, Pillsbury, Sprint, Square D, 3M, Whirlpool, Wipro and many more. He has offered hundreds of presentations in at least twenty countries. Dr. Sheth is frequently quoted and interviewed by the Wall Street Journal, New York Times, Fortune, Financial Times, Economic Times and radio shows and television networks such as CNN, CNBC (India) and BBC. He is also on the Board of Directors of several public companies including Cryo Cell International (NASDAQ), Wipro Limited (NYSE) and Shasun Chemicals.
In 1989, Dr. Sheth was given the Outstanding Marketing Educator award by the Academy of Marketing Science. In 1991 and again in 1999, he was given the Outstanding Educator Award by the Sales and Marketing Executives International (SMEI). Dr. Sheth was also awarded the P.D. Converse Award for his outstanding contributions to theory in marketing in 1992 by the American Marketing Association. In 1996, Dr. Sheth was selected as the Distinguished Fellow of the Academy of Marketing Science. In 1997, Dr. Sheth was awarded the Distinguished Fellow award from the International Engineering Consortium. Dr. Sheth is also a Fellow of the American Psychological Association (APA). 2004 marked a stellar year for Dr. Sheth as he was awarded both the Richard D. Irwin Distinguished Marketing Educator and the Charles Coolidge Parlin Awards which are the two highest awards given by the American Marketing Association. In 2006, Dr. Sheth was awarded the RHR International Award for Outstanding Consultant by the American Psychological Association (APA) Division 13 (Consulting Psychology) and the Elsivier Distinguished Educator Award by Strategic Marketing Association.
A prolific author, in 2000 Dr. Sheth and Andrew Sobel published a best seller, Clients for Life (Simon & Schuster). His book, The Rule of Three (Free Press), coauthored with Dr. Rajendra Sisodia, altered the current notions on competition in business. It was published in 2002 and has been translated into German, Italian, Polish Japanese and Chinese. It was the subject of a seven part television series by CNBC (India) and was a finalist for the 2004 Best Marketing Book Award from the American Marketing Association. His most recent book, Tectonic Shift: The Geoeconomic Realignment of Globalizing Markets was published in 2006 by Sage (India). His latest book, The Self-Destructive Habits of Good Companies:'and How to Break Them, will be published in May 2007 by Wharton School Publishing.

Customer Reviews

Most Helpful Customer Reviews

2 of 2 people found the following review helpful:

4.0 out of 5 stars The Seven Deadly Sins, Corporate Style, June 18, 2007

By 

Ed Uyeshima (San Francisco, CA USA) - See all my reviews
(TOP 500 REVIEWER)    (HALL OF FAME REVIEWER)    (VINE VOICE)    (2008 HOLIDAY TEAM)    (REAL NAME)   

This review is from: The Self-Destructive Habits of Good Companies: ...And How to Break Them (Hardcover)

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.

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

By 

Midwest Book Review (Oregon, WI USA) - See all my reviews

This review is from: The Self-Destructive Habits of Good Companies: ...And How to Break Them (Hardcover)

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.

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

By 

Charles Ashbacher (Marion, Iowa United States) - See all my reviews
(TOP 500 REVIEWER)    (VINE VOICE)    (HALL OF FAME REVIEWER)   

This review is from: The Self-Destructive Habits of Good Companies: ...And How to Break Them (Hardcover)

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.