When companies start to fail, it can be a long time before anyone notices. It's only looking back that the source of the decline can be pinpointed. But there are always warning signs, none of them big in themselves, which taken together should provoke some sharp, focused action. And Google is showing them all.
Magazine Covers. Once the CEO is on the cover of magazines, watch out: illusions of infallibility are bound to follow. Remember Dennis Koslowski, featured by Business Week as 'the most aggressive CEO in America'? Soon enough, he was in jail. At London Business School, Donald Sull argues that, between 1995 and 2001, ¾ of the CEOs who appeared on magazine covers were fired within a year and none out-performed the market.
Books. When business school professors start to call, watch out. Their case studies and text books glorifying corporate brilliance may come back to haunt you. Skilling and Lay provided ample material for hagiographic Harvard case studies of Enron. They should have been spending more time looking at their balance sheets.
Stock price slide. When the business is still apparently doing well but the stock price starts to tumble, everyone gets very good at denial. The market's wrong, nobody knows anything -- these catchphrases soon harden into mindsets. Before you know where you are, you're out of range of even the strongest signals.
Google's stock slide in the last few months can't be doing much for morale either.
Customers are idiots. It's easy to become so obsessed either with your own publicity or your own processes that you forget where all the money comes from: customers. Last week, at Google's Zeitgeist conference, when a customer complained that the battery on his Google phone didn't last very long, Larry Page, in essence, just told him he was wrong! Who made you Larry? Customers. Who do you depend on? Customers. You have to love them, not tell them they're stupid.
Women start to leave. The scuttlebutt in Silicon Valley is that Google may be great for guys, but not for girls. We're not talking numbers here, but culture. Companies that don't do diversity well pretty soon forget how to absorb dissonant information. Which means they don't see the writing on the wall.
Donald Sull says these symptoms lock businesses into commitments and positioning which become too rigid for turbulent markets. I'm sure that's true. But the overarching problem is that corporate narcissism does to companies just what it does to people: drowns them in their own glory. Companies need competitors who can, like the slaves hired to temper the egos of Roman emperors, remind them that they are mortal. The absence of competitors may be every CEO's daydream but it's only the devil who always gives you what you want.