I was facilitating a development session for a HR team when a question was raised: why do companies fail?
Now this is a loaded question with a million ways to answer it.
From the blatantly obvious evil management (think Enron) to being unable to anticipate nor adapt to the changing times (remember Kodak, Blockbuster and Polaroid?) to corporate chiefs just making bone-headed decisions (GE’s Jeff Immelt and his backup jet), the list goes on.
But I find the simplest answer is often the best.
With almost two decades working in and with organizations both as a corporate man and then later as an executive advisor, I can say to the core of my being that it ultimately boils down to the human side of the enterprise.
“It’s having the wrong people,” I said. “You have the right people, nothing else matters. You have the wrong people nothing else matters.”
“You have the right people,” I continued, “it doesn’t matter how scarce the resources are or how severe the circumstance you’re in, they will always find a way.”
“You have the wrong people, it doesn’t matter how advanced the technology you possess and how much financial capital you have, they will always find an excuse.”
Now, this is nothing new to many of the readers. One way or another, we all know this intuitively at the least and by experience at best.
So as I reflected on it, I was able to narrow down the focus and identify at its most fundamental level how companies fail:
Somewhere, someone deep inside the organization didn’t do what they’re supposed to do at the exact time and specific number of output needed.
Put it plainly, it’s a failure in execution.
Whether business, non-profit or church, an organization is an operating system. It is an assemblage of interconnected activities aligned in pursuit of achieving a specific outcome. And like any system, a malfunction of just one piece has massive repercussion and affects the entire operation.
When someone fails to execute at the level required, another person will have to compensate for the incompetence that occurred, which in turn affects the quality of their ability to execute their own task, ultimately requiring another person to recoup the shortcoming.
Hence the domino effect of failure in execution cascades to the entire system.
If one incompetent person can affect the whole system, imagine what happens if ‘excuse-ion,’ not execution becomes the culture.
Putting it all together.
In closing, organizations primarily fail when there’s a breakdown in execution at its most fundamental level.
So having right people is the basic building block of a vibrant operation for the right people will always find a way to get things done come come hell or high water.
Remember, you don’t need multiple holes to sink a ship. The hole also doesn’t need to be big one.
——————————————————
Florentino Hernando is the Managing Director of FA Hernando Consulting, a management consulting firm with the mission to build great companies
fahernando 