December 4, 2008
If you're reading this, you're on the Internet, and most likely, your time spent online has increased over the years. A study earlier this year by IDC, a provider of market intelligence for the IT community, revealed that Internet users are spending more time online than watching TV: 32.7 hours per week online; 16.4 hours watching TV; and 3.9 hours reading newspapers and magazines.
I know I spend a lot of time online visiting media sites and reading headlines. Today, two caught my eye. One is the latest in the ongoing saga of the Big 3 honchos pleading their bailout case before Congress, and the other is about what it takes to survive in turbulent times. There is a connection.
There simply is no easy answer to the challenges facing the auto industry, housing, the financial sector—let's face it, the entire economy. The 20,650 jobs cuts were announced among AT&T, Dupont, Viacom, and Credit Suisse Group) and plant closings announced daily, many business owners and employees may wonder who's next? They also may wonder if there really is anything they can do to avoid the death knell.
One company scrambling to stay alive is GM. As the Forbes.com article "Time is up" noted, bankruptcy or bailout, the company is going to shrink, perhaps by half, and this event will cost taxpayers a whole lot more than any of us think.
According to the article, "GM so far has asked for a $10-billion-to-$12-billion bridge loan to allow it to pay bills until the global financial crisis improves, perhaps by 2010. But no one outside of GM thinks that this will be enough to fix the company once and for all. A more likely cost, we are told by Wall Street analysts, is between $20 billion and $40 billion. Congress and the Obama Administration would probably be willing to sign the check in return for some environmental promises (making more small cars, for instance), some concessions by workers, and the departure of the top executives."
Departure of the top executives—this is the phrase that created the link between the two items I referenced earlier in this post. Remember Jim Collins, the guy who wrote the book Good to Great: Why Some Companies Make the Leap & and Others Don't? (I can't help wondering if Rick Wagoner, Alan Mulally, and Bob Nardelli read this book.)
Apparently Collins now is studying how great companies decline to mere "goodness"—or worse, irrelevance or death. Speaking at a Fortune 500 forum in Washington, D.C., on Monday, Collins noted that turbulence exposes weakness; many once-great companies have fallen fast: Circuit City, Fannie Mae, Motorola.
What has Collins found so far? According to "How to thrive in turbulent times" by Fortune editor at large Patricia Sellers, Collins has determined that decline typically is self-inflicted and occurs in stages. Stage 1 begins with hubris (overbearing pride or presumption; arrogance). Then comes an undisciplined pursuit of big bets. Stage 3 is denial, followed by stage 4—grasping for salvation. The lucky—or smart—companies don't reach stage 5, which is capitulation to irrelevance or death.
Collins said companies can reach stage 4, grasping for salvation, and turn around. He cited IBM, Hewlett-Packard, Disney, and Xerox as examples of companies raised from the near-dead. And he said he believes Xerox's Anne Mulcahy is one of the best CEOs of the past 20 years.
How did these miraculous turnarounds occur? Collins offered what many may be considered a rather simplistic answer to a complicated situation—talent. He said, "You need to figure out who is on your bus before you decide where the bus is going. The best hedge against uncertainty is to have the best people on board."
That includes the driver. Only hubris-free individuals who are in touch with reality and abhor the undisciplined pursuit of big bets need apply.