Gary Wendt, CEO of GE Capital during its heyday, once said to me that the secret of his continuing success was the fear that his business could fall off a cliff at any moment. Without that fear, the cliff often appears more suddenly.
We've recently witnessed the fall from grace of a number of premier, blue chip companies. Once-paragons of corporate success, firms like Johnson & Johnson, Toyota, and Goldman Sachs have all endured embarrassing public mishaps, leaving us questioning: How could these once best-in-class companies stumble so badly?
First of all, this is not a new phenomenon. Almost every well-known firm has gone through at least one -- if not many -- sudden and unanticipated rough patches. Remember IBM's struggle to survive when it was late to the personal and small computer party? Or GE's disastrous purchase of Kidder-Peabody? How about Motorola's failed attempt to build a low-level satellite communications network? These were great companies with top-notch leadership, solid management processes, and access to the best and brightest strategists. Yet they stumbled anyway.
Peter Drucker once said that the biggest curse a company can have is twenty years of success. It's true. Managers of successful firms tend to become complacent and even arrogant, assuming that past performance will continue and that the formulas that worked previously will work in the future.
Another psychological dynamic contributing to sudden vincibility is that successful business leaders usually have a strong interest in protecting their current products, customers, and investments -- and therefore may unconsciously overlook or avoid trends or technologies that might threaten that base. That's why the late C.K. Prahalad used to recommend that a company's strategy should be developed by its thirty-year-old rookies instead of its veterans: The new guard will be more vested in the future than the past.
Even as individuals, each of us is subject to the same dynamics as successful companies. If we're doing well, our over-confidence can devolve into complacence, thinking that our future will continue on the same trajectory as our past. And when that happens, we hesitate to venture into new territory, to learn new skills, to develop new relationships. We stay with what we know has worked, assuming that our careers are secure.
We now live in a world in which that sense of security can disappear in a heartbeat -- whether your company falls off the cliff, or makes significant changes to avoid the cliff. Like an investment disclaimer for individuals, past performance is no guarantee of future success. So to keep on your guard, ask yourself these questions:
* What would you do if your job was suddenly eliminated, outsourced, or relocated?
* How are you preparing yourself today to compete in tomorrow's global economy?
* How can I reapply my skills to other areas if my industry no longer has opportunities?
You may not need answers to these types of questions today. But better to address them now -- instead of the moment when you're falling off the cliff.
Have you experienced an unexpected and rapid change in your job security? What did you do -- and what preparation would you suggest to others?
Cross-posted from Harvard Business Online