The dangers of success

What if great businesses end up failing simply because they let success go to their heads? Indeed, this would seem to be the conclusion drawn from an analysis of the spectacular collapse of some blue-chip firms which once seemed invincible. Computing industry pioneer Digital Equipment was one such victim of its own success. Experts show that this once-great company went down the tubes principally because it rested on its laurels for too long and failed to take account of changing market conditions. Intel also came very close to going the same route after ignoring the competition for years in the mistaken belief that its extremely dominant position on the semiconductor market could never be challenged.

The authors of the analyzed publications emphasize that longstanding success poses a very real risk. If booming businesses aren’t careful, they may easily act in ways that lead to disaster. To avoid this trap, companies are advised to keep four recommendations in mind:

– Lucidly analyze what made the business successful. The leaders of successful companies may easily become overconfident in their abilities and judgment. They must consequently make an active effort to recognize the role played by luck, as well as any shortcomings and mistakes made along the way.

– Beware of the feeling of invincibility. People who are convinced that they have the ability to succeed tend to underestimate the risk factor. In particular, companies must be careful not to ignore facts that do not fit in with their optimistic projections.

– Avoid systematically aiming higher. Just because growth has been good in the past does not mean that this trend will continue indefinitely. Indeed, the habits and expectations generated by success may cause management to lose sight of the realities it is facing

– When problems arise, don’t panic or become paralyzed. People accustomed to success stand a much greater chance of giving way to panic: they may freeze, unable to take decisive action, or, conversely, run around taking random, disorganized initiatives.