If you ask 10 CEOs why good companies fail, you’ll get 10 different answers. They’ll say corporations are like complex, modern-day sports car engines. They have so many moving parts it isn’t funny. Any one of them could go haywire and, next thing you know, you’re flying off a cliff.
It’s true; winning in competitive global markets is not easy. You have to create innovative products that delight customers. You have to invent breakthrough technology. You need insanely great marketing. You have to manage complex supply chains.
Did I forget anything? Oh yeah. Your executive team has to perform flawlessly. And therein, lies the rub. The reason why you’re likely to get so many different answers about why companies fail is that you’re not likely to find many executives who will just walk right over to the mirror and say, “That’s why.”
Corporations are not just faceless entities that make products and build brands. They’re organizations that are run by people. And those people are responsible for making every important decision that can make or break a company. That’s right, every single one of them.
Some management consultants talk about concepts like competency, strategy, vision, strengths, planning, effectiveness, core values, execution, company culture and change management. They’ve got all sorts of jargon, buzz words and popular fads. I see it a bit differently.
When you cut through all the BS, it always comes down to one thing. People. If you observe the people in charge, ask some good questions, and poke around a bit, you can usually figure out what’s really going on. And what’s really going wrong.
At the heart of every troubled company is a CEO who is not as competent as he needs to be, more complacent than he should be and more dysfunctional than he can get away with.
If you look under the hood of once-great companies that have stalled or crashed in recent years – BlackBerry, Nokia, Sony, HP, Kodak, Radio Shack, Yahoo – that’s exactly what you’ll find: leaders who drove them into the ground or, in some cases, off a cliff.
Bad leadership affects everything from corporate strategy and decision-making to product differentiation and organizational effectiveness, but if you want to do anything about it, you have got to treat the cause, not the effect.
There are all sorts of reasons why companies fail, but at their core, you will always find the same thing: Leaders that don’t spend enough time in front of a mirror.
Image credit Alex Proimos via Flickr
A version of this originally appeared on FoxBusiness.com.