There is no shortage of examples of companies that went belly-up. Broadly speaking, some companies go under because of technology disruption. Some failed because they were highly leveraged. Others flamed out because of third-world competition. But as a CEO there are 5 sure-fire ways you can kill the company:
1. Believe your sales team when they tell you things will get better next quarter or next year.
This is sales-speak for they don’t know what’s wrong and just buys them more time to find another job. I watch orders like a hawk. Every single day I get an orders report and if there is a material decline from the normal run rate or budget, I start asking questions.
2. Believe your sales team when they tell you they can’t raise prices.
Sales people will always tell you that because they don’t want to have an uncomfortable conversation with their golf-buddy customers. Sometimes you can’t raise prices if you have a commodity and lots of low-cost competition. But raise them where you can. And raise them at least once a year. Don’t let your customer get used to living in a no price increase world.
3. Believe your marketing people when they tell you the market has no room for new products.
That is marketing speak for they have no idea. The reason they have no idea is that they only consider products the company is capable of developing. In other words, “same old, same old”. No market wants “same old, same old” If that is all you have it is time to radically restructure your company so it can launch “new to the world” products.
4. Trust in the old adage “the company has been around for 100 years and will be for another 100.”
Just look at the biggest companies at the turn of the century that have gone out of business. In fact, only two companies from the Forbes 1917 list of largest public companies are still around-AT&T and General Electric. And look what has happened to GE. If the venerable GE could crumble, you better bet your company could too.
5. Keep your Board and employees in “happy-land”.
Happy-land is a place where everyone is well, happy. Happy-land looks like this: Margins are good and always will be. The competition is on the run. Demand for our products will always be there. The future looks good in happy-land because that is what people want to believe. Don’t let them. Living in happy-land is a recipe for disaster. Always remember this: Just because you are paranoid does not mean someone is not out to get you. So be paranoid. And keep reminding your stakeholders of the danger that is ever present in the world of business.
Bottom line, the way to avert the possibility of failing is by constantly changing and improving by investing in new products and developing new markets. It is inevitable that the markets and products you’re in today won’t even exist in 10 years. So don’t stay there and don’t go under, evolve.
Steven L. Blue is the President & CEO of Miller Ingenuity, an innovative company revolutionizing traditional safety solutions for railway workers, and author of the new book, Metamorphosis: From Rust-Belt to High-Tech in a 21st Century World. For more information, please visit www.StevenLBlue.com, www.milleringenuity.com and connect with Blue on Twitter, @StevenLBlue.