looking for healthy growth and steady change, supported by proactive change management, which requires its employees to adjust and adapt without overstretching them.
Leadership
Except in periods of serious crisis, autocratic leadership is counterproductive. Successful organizations rely on mutual exchange and good governance all the way up to the top. This fosters a “defensible culture of trust” in which good performance is rewarded and poor performance is sanctioned, without turning the organization into an eat-or-be-eaten shark-infested pool. All this requires a reflective and level-headed top management which acts consistently and decisively.
And yet, as convincing as these factors appear with the benefit of hindsight, introducing them into the day-to-day running of a business is highly challenging. Who can say with any degree of certainty whether we are enjoying a period of healthy growth, rather than starting to overheat? Or whether the business culture still supports an acceptable degree of competitive spirit, rather than promoting mercenary attitudes?
Moreover, there is that fundamental dilemma which the management visionary Jim Collins highlighted in his essay “How the Mighty Fall” about businesses ruined by their own success-induced complacency. A business (or its leadership) must start to change course before its problems are clear for all to see. This must happen in a period when everything still appears to be running smoothly. “Amazon is not too big to fail,” Jeff Bezos said recently. “In fact, I predict one day Amazon will fail. Amazon will go bankrupt. But our job is to delay it as long as possible. If you look at large companies, their lifespans tend to be thirty-plus years, not a hundred-plus years.”
Probst and Raisch concede that it is psychologically challenging to “change a strategy that, at least superficially, appears to be successful.” But it is not, apparently, impossible, as Bezos’s remarks above prove, assuming he turns these observations into actions to prevent the failure he refers to. It certainly takes an enormous amount of humility, combined perhaps with a healthy fear of failure, to make such a statement when heading up one of the most successful companies ever seen on this planet. Indeed, the Amazon boss’s insights would have been useful guidance for the Incas, who might then have slowed down their rapid expansion earlier, before increasing resistance had made their empire too expansive to govern.
Collins’s analysis of the factors that lead to the downfall of large corporations significantly ties in with the work of his colleagues in Geneva. Based on his analysis of a combined six thousand years of company history, he highlights the key reasons for companies’ decline: managers taking success for granted, greed for more power, higher revenue, greater size, and the denial of risks and threats. Once problems can no longer be ignored, frantic rescue attempts ensue, followed shortly by complete capitulation. But Collins, too, is making his observations with the benefit of hindsight. In reality, the burning question is this: How do we, the executives responsible for the day-to-day management of our businesses, recognize the early warning signals? How can we counter the logic of decline in the early stages? How do we raise our level of awareness; how do we gain deeper insights beyond the day-to-day business? The following chapters address these and other questions. At the end of each chapter, we summarize the most important takeaways under “Inca Insights.” So, let’s get started!
Inca Insights
•The moment of greatest strength and success is also the moment of greatest vulnerability.
•Analyze your weaknesses, especially when you are starting to feel invincible!
“Becoming Number One in everything you do has to be your prime objective. However, being Number One doesn’t mean being the biggest.”
Gerd Stürz, Head of Life Sciences (Germany, Austria, Switzerland) at EY
1 A Compelling Vision (or the Pitfalls of Ambition?)
A company’s glossy brochure or website usually includes a “vision statement” and, if you ever want to flatter a senior executive, just describe him or her as “a visionary.” But, in the real world, is a vision statement always useful for motivation? For many decades, this certainly was the case for the Incas—up until the point when their ambition led to a dramatic downturn in fortune. Even today, the maps of their empire are still impressive, as they illustrate a period of continuous expansion achieved in just six decades and stretching around 2,500 miles down the west coast of South America. At its peak, the Inca Empire included parts of modern-day Ecuador and Peru, Bolivia, Chile and Argentina. What lay behind this rapid and almost insatiable appetite to conquer? The Inca lords found affirmation in their vision: “Bring Order to the World.” Inca Pachacutec took a name which translates to “World Reformer” or “Savior of the Earth,” and the empire’s expansion started during his reign in 1438. The Inca “global corporation” viewed bigger as better and biggest as best, rather like today’s global players in Silicon Valley—although in the end their enormous empire became practically ungovernable, so retreat was not an option. Any similarities with today’s big businesses are more than just coincidence. The Incas considered every enemy of a tribe they had conquered to be a new enemy for them, which meant more military campaigns and constant further expansion. Toward the end, their ambitious vision turned into a risk which accelerated the downfall of the empire, simply because subjugated tribes could no longer be integrated quickly enough. Many of these tribes willingly joined forces with the Spanish conquistadors and ultimately helped bring down the Inca Empire.
The extent of the Inca Empire in the fifteenth century
But clearly, for an extended period of time, the bold core vision of the Incas to bring order to the world held a magnetic appeal. Over many decades, it drove the actions of the elite, the export of farming and irrigation techniques, the use of resources, and the deployment of the crafting skills of the “assimilated”—always with one goal in mind: the methodical expansion of their sphere of influence and the construction of a smooth-running state apparatus. Nobody went hungry in the Inca Empire; there is no archaeological evidence of any malnourishment, something that cannot be claimed about Europe in the fifteenth century. That said, hardly anyone enjoyed any personal liberty in the Inca Empire. Whole villages were resettled, tradesmen packed off to major population centers, and forced labor employed. The reason why the Inca vision of an ordered world was both appealing and compelling across a wide geographical area also has to do with the fact that it was perfectly suited to the times. Starting in the eleventh century, climate change—drought inland and devastating rainfall on the coast—led to famine and continual conflict. Following a period of chaos, the Inca proposition to bring order to the world was obviously so attractive that many of the indigenous peoples were happy to accept a “friendly takeover” offer, putting up little or no resistance.
Many large businesses are launched with a modern vision, which guides and inspires strategic decision-making and everyday actions. This sort of vision can inspire, cajole, and motivate. Some well-known examples include Bill Gates’s ambitious target to get “a PC on every desk, in every house” and Google’s claim “to provide access to the world’s information in one click.” Both these visions define the beginning of a new era which both Microsoft and Google have decisively influenced and continue to do so.
Likewise, Jeff Bezos’s vision to make Amazon “the most customer-friendly business in the world” and Steve Jobs’s typically succinct definition—“a vision is how you will make the world a better place”—not to forget his equally modest claim to be making a dent in the universe. In this sort of company, the Inca proposition to bring order to the world does not seem too far out of place. Anyway, Jobs took it on himself,
