The Self-Destructive Habits

7/29/2019 The Self-Destructive Habits

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Index

Book Overview

Destructive Habits studied in book.

DENIAL

ARROGANCE

COMPLACENCY

COMPETENCY DEPENDANCE

COMPETITIVE MYOPIA

VOLUME OBSESSION

TERRITORIAL IMPLUS


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Book Overview

The Big Idea

Why You Need This Book

Why Do Good Companies Go Bad?


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DENIAL


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Things that leads to denial

Denial of emerging technologies.

Denial of changing consumer tastes,preferences, and buying patterns .

Denial of the new global environment.


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The warning signs of denial

The I am different syndrome akin to saying Hey,were different, so theres no way it can happen to us.

The not invented here syndrome the company istoo proud to admit that someone else has come upwith a better way to do whatever it is the companydoes.

The looking for answers in all the wrong placessyndrome the company ignores, rationalizes, orblames others for its situation instead of admitting itsfault.


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How to Break the habit of denial

1. Look for it The company needs to:

a. Analyze its response to the failures of other companies.

b. Listen carefully to its managers.

c. Examine its products, personnel and processes for prejudices,preferences that arent necessary, or for resistance to change.

Admit it if and when symptoms of denial are found, the companymust admit it has the disease. If it doesnt, nothing can be doneabout it.

Assess it measure how deeply your company is in denial.

Change it the deeper you are in denial, the harder it is to change.It is still possible to do so, though; it isnt completely impossible.


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ARROGANCE


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Things that leads to arrogance

Exceptional achievement in the past warps your perceptionof present reality. General Motors

Boeing

David conquers Goliath. Microsoft

Enron & Worldcom

You pioneer a product or service that nobody can duplicate. Sony

You are smarter that the other guys. Merck

Motorala


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The warning signs of arrogance

You stop listening.

You Flaunt it.

You Browbeat others. You are high-handed.

You Curry approval.

You exhibit the NIH syndrome.


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How to Break the Arrogance habit

Rotate Management to New Challenges.

Implement nontraditional succession planning

Diversify the talent pool by recruiting from averity of educational institutions, countries

and demographics

Encourage outside perspective through

leadership institutes.

Change your leadership


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Complacency


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The companys past success came via aregulated monopoly.

The companys success was based on adistribution monopoly.

The company was chosen for success by the

government. The government owns or controls the

business.

Things that leads to complacency


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The company is in no hurry to make decisions. Its entire culture isgeared towards moving slowly speeding up goes against the grain.

The companys processes are overly bureaucratic. Decision-makingis done (and limited) by whole number of committees.

The company has a bottom-up, decentralized, consensus-basedculture. Everybody has to get on board before a decision is made.

The company is completely vertically integrated. Everything is doneinternally.

Enormous cross-subsidies are in place by functions, by products,

by markets, by customers. Average costing and average pricingprevail.

The warning signs of complacency


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Reengineer to achieve high quality, eliminatewaste, and reduce inefficiency.

Reorganize. Decentralize profit and loss by

creating and molding business units aroundproducts or geographies.

Outsource contract out all non-core

functions. Reenergize consider a new leader with a

positive, opportunity-oriented vision

How to Break the complacency habit


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Competency Dependency


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Efforts to transform the company have been

futile. 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; investor, supplier

and customer loyalty has vanished.

The warning signs of competency

dependence


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Find new applications where the samecompetency results in new value.

Determine new markets where the same

competency remains an asset. Move upstream, downstream expand the

range of your competencies by moving up or

down the value chain. Refocus company resources into areas and

arenas with more growth and profit potential.

How to Break the competency

dependence habit


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Competitive Myopia


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A company allows small niche players to coexistwith it. The focus is the big guys and the nichecompanies arent seen as a threat.

The loyalty of a companys supplier is won by a

nontraditional competitor, and the company failsto recognize that the supplier can become acompetitor.

New entrants, especially those from emerging

economies, are underestimated. The company becomes helpless against a

substitute technology.

The warning signs of competitive

myopia


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Redefine the competitive landscape. The company needs tocheck the entire competitive parameter to see where it isvulnerable.

Broaden the scope of the product or market. The companymust diversify by expanding the market for its existingproducts or expanding existing product lines.

Consolidate to squeeze out excess capacity. Buyersbargaining power must be decreased.

Counterattack the nontraditional competitors. Attack their

home turf. Refocus on the core business to concentrate limited

resources in the most successful area. (Just be mindful ofthe dangers of doing this.)

How to Break the competitive myopia

habit


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Volume Obsession


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The high-margin pioneer a company that pioneered the industry used tohave the prerogative to charge high prices since no competitors existed todrive the price down. Its when competitors do come onto the scene thatproblems develop.

The fast-growth phenomenon a successful company that hurdles all theobstacles at the start may end up focusing too much on growth

The paradox of scale the thinking is that every industry competition willultimately bring all prices down, and that that decline can becounterbalanced by reducing costs through scale. Unfortunately, thosecost savings may not materialize.

The ball and chain of unintended obligations virtually all successfulcompanies make such obligations with their employees and communities

and often they can prove difficult to fulfill, such as what you might oweyour retiring employees some years down the road.

Things that leads to volume obsession


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Identify where the companys costs are. Create an appropriaterevenue/cost alignment.

Convert cost centers into revenue centers or profit centers.

Move from vertical integration to virtual integration thecompany concentrates on the one or two things it does best and

lets others do the rest. Outsource non-core functions to outsiders with appropriate

economies of scale.

Reengineer to automate processes to improve cost efficiency.

Implement target costing nail down costs from the beginning and

hold them there, or reduce them. Become a world-class customer be an excellent buyer not by

squeezing suppliers but by making them lifelong partners.

How to Break the competitive volume

obsession


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The Territorial Impulse


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Dissension - a lot of headstrong lieutenants

instead of one strong general

Indecision decision-making is an agonizing

or even impossible process

Confusionone side doesnt know what the

other side is up to

Malaisenobodys happy

The warning signs of territorial impulse


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Engage in effective internal marketing theleader must bring all the people together in acommon cause.

Push the managers out of the ivory tower

rotate the people in and out of differentfunctional or geographic silos.

Create permanent cross-functional teamsorganize permanent management teams that

include representation from all silos. Reorganize around customers or products rather

than around function or geography.

How to Break the territorial habit

The Self-Destructive Habits

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