conflicts sealed their fate in both cases. For the Incas, it was the civil war of 1527, when Huayna Cápac divided the empire between his two sons, Atahualpa and Huáscar. Both brothers called on the tribes of their respective mothers and other allies and fought each other fiercely. By the time Francisco Pizarro reached the Inca Empire in 1532, it was already severely weakened and therefore easy prey for the invaders. Nokia’s downfall was accelerated by the boardroom battle over company strategy which started in 2007 under Olli-Pekka Kallasvuo. The battle was between those pressing for a change of strategic direction, away from cheap cell phones toward smartphones, and those arguing against such a change. In both instances, powerful and seemingly invincible leaders slid away into irrelevance within a matter of a few years—on one side, the “Kings of the Andes,” on the other, the masters of the mobile phone market. Is it inevitable that a continued period of success leads to a state of hubris which contains the seeds of its eventual destruction? Is the risk of failure an intrinsic part of every great triumph?
A close look at the biggest businesses in the world, as measured by annual turnover, is a lesson in humility. In 1990, the American magazine Fortune published the first global Fortune 500 list, based on the previous year’s sales. If you compare the top ten from this list with the top businesses in 2000 and 2017, you realize the fragility of success, no matter how outstanding the company. Only five of the original leaders are still in the top ten (highlighted below) ten years later. A further seventeen years on, just four of the 1990 leaders (also highlighted) are still there:
The Top Ten in the Fortune 500 list for 1990
| Ranking | Company | Country | Turnover-1989 (US$ billion) | Sector |
| 1. | General Motors | USA | 126,974 | Auto |
| 2. | Ford | USA | 96,933 | Auto |
| 3. | Exxon | USA | 86,656 | Oil and Gas |
| 4. | Royal Dutch Shell | Netherlands | 85,528 | Oil and Gas |
| 5. | IBM | USA | 63,438 | IT |
| 6. | Toyota | Japan | 60,444 | Auto |
| 7. | General Electric | USA | 55,264 | Ind. Holding |
| 8. | Mobil | USA | 50,976 | Oil and Gas |
| 9. | Hitachi | Japan | 50,894 | IT |
| 10. | BP | UK | 49,484 | Oil and Gas |
The Top Ten in the Fortune 500 list for 2000
| Ranking | Company | Country | Turnover-1999 (US$ billion) | Sector |
| 1. | General Motors | USA | 189,058 | Auto |
| 2. | Walmart | USA | 166,809 | Retail |
| 3. | ExxonMobil | USA | 163,881 | Oil and Gas |
| 4. | Ford | USA | 162,558 | Auto |
| 5. | DaimlerChrysler | Germany | 159,986 | Auto |
| 6. | Mitsui & Co. | Japan | 118,555 | Ind. Holding |
| 7. | Mitsubishi Corporation | Japan | 117,766 | Trading |
| 8. | Toyota | Japan | 115,671 | Auto |
| 9. | General Electric | USA | 111,630 | Ind. Holding |
| 10. | Itochu | Japan | 109,069 | Trading |
The Top Ten in the Fortune 500 list for 2018
| Ranking | Company | Country | Turnover-2017 (US$ billion) | Sector |
| 1. | Walmart | USA | 500,343 | Retail |
| 2. | State Grid | China | 348,903 | Energy |
| 3. | Sinopec Group | China | 326,953 | Energy |
| 4. | China National Petroleum | China | 326,008 | Energy |
| 5. | Royal Dutch Shell | Netherlands | 311,870 | Energy |
| 6. | Toyota Motor | Japan | 265,172 | Motor Vehicles & Parts |
| 7. | Volkswagen | Germany | 260,028 | Motor Vehicles & Parts |
| 8. | BP | UK | 244,582 | Energy |
| 9. | Exxon Mobil | USA | 244,363 | Energy |
| 10. | Berkshire Hathaway | USA | 242,137 | Financials |
The list reflects the tectonic shifts of the global economy. In 1990, the United States is leading the list with six companies, followed by Japan with two. By 2017, however, there are only three American companies and one Japanese, but three from the People’s Republic of China are in second, third, and fourth place. Well-known names such as IBM (the fifth-largest company in the world in 1990; ranked 92 in 2017) or General Electric have dropped out of the top ten completely. The 1990 leader, General Motors, ranked forty-first in 2017. The oil and gas giants now dominate the list more than ever, taking six of the top ten places. Berkshire Hathaway is the first financials company to make it into the top ten.
For a long time, General Electric (GE) served as a role model for generations of business managers, ranking year after year in the top ten of the Forbes 500. How was it possible that this icon of American industry could so suddenly and comprehensively collapse? After a period of continuous decline in share price, on June 26, 2018, GE was removed from the Dow Jones Index. This was a bitter moment indeed, as GE was one of the original members of the Dow when it was launched in 1896 and had been included in the index continuously since 1907. A typical selection of those elements which guarantee decline were to be found at GE: a disintegrating corporate culture, gigantomania, blatant financial trickery, and balance sheet manipulation. In just one year, over $125 billion of the company’s market capitalization was wiped out.
One of the maxims of the business world is “the only thing that is certain is uncertainty,” with past performance being no guarantee of future performance. Unfortunately, this almost always seems to be forgotten during prosperous times, leading to some reckless decisions. In 2000, the German car manufacturer Daimler made a brief appearance in the top ten, thanks to its merger with Chrysler. CEO Jürgen Schrempp described the merger as “a marriage made in heaven.” Schrempp’s ambitious plan was the creation of a “global corporation,” ignoring all evidence of the problems which arise from mergers and acquisitions, and the skepticism of his own dealers. Unfortunately, the dealers were right: In 2009, the heavenly union ended in a forty-billion-dollar divorce. The DaimlerChrysler saga is a perfect example of a senior executive’s unchecked egomania and a failed merger strategy. We will go into greater detail about these traps and how difficult it can be to avoid them in Chapter 8 (“Ego Beats Reality”). After all, no confident and tenacious manager who has made it to the top of the greased pole is immune from an inflated ego. So, the challenge is this: How can you stay on the right side of the fine dividing line between ambition and egomania, or between visionary drive and megalomania? How can you protect yourself from your own “Indiana Jones moment”?
Wait a minute. You’re probably thinking: What’s wrong with following in the heroic footsteps of the thrill-seeking movie character? Well, to be blunt, the archaeologist Indiana Jones is anything but a role model. Yes, at the end of each of his adventures he has found the prized treasures, but only after leaving behind him a trail of dust and destruction, including ruined temples and monuments. Just like the character of Dr. Jones, played by Harrison Ford, many managers tend to confuse self-interest with service for the greater good, often doing their businesses an enormous disservice as a result; since we’ve had some personal, front-row experience with this, in the final chapter, we’ll tell you about our own Indiana Jones moments. Before that, however, in Chapter 6, we will take a closer look at the other reasons why big company mergers, like that of Daimler and Chrysler, fail so spectacularly, and explore what modern business managers might learn from the Incas and their well-crafted approach to integration.
But let’s get back to the Fortune 500. The car industry provides many examples of corporate failure, and any analysis needs to address the question of corporate values. Time will tell how Volkswagen, ranked number 7 in the Fortune 500 in 2018, will fare in the light of
