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Successful Companies Bring About Their Own Demise (Part 2)-Following IBM and Chrysler
Following up on part 1, we will be talking this time about IBM (computer business) and Chrysler (car manufacturer). If you haven't read the first post, please follow this link https://www.ivoireconsultancy.org/blogs/ivoire_article_view.php?id=41.
Just to recap on the first post. We listed four different types of companies that bring about their own demise: (1) Start-ups, technology companies (2) The master builder (3) Inventors (4) The Salesman
Let's start with IBM the technology company.
IBM made the highest quality computers in the world. They had a team of geniuses made up of design engineers craving for quality, durability and reliable products. The company was known for reliability and durability. IBM was making lots of money and profits were pouring in.
But soon, a culture based on engineering, turned into a technocratic company. Engineers were celebrated and became the masters of the company. Other departments such as sales, marketing, and finance were overlooked or given less priority. Managers took less notice of the marketplace. Performance indicators were thrown out of the window and design standards were all what managers understood. Research for perfection, and better products was all that counted. However, this was very time-consuming and the needs of customers for more economical, more user-friendly computers were ignored.
In fact the successful technology company trusted by million of customers, was showing signs of weaknesses in the sales area. The company was too passionate about producing the next best computer that would make headlines. Their managers insisted that all that mattered were quality and technical details. They forgot that producing a quality product alone is not the purpose of a commercial organisation. The purpose is to attract buyers and satisfy their requirements.
In the end, IBM was producing over-priced computers that the average consumer could not afford. Initiatives stalled and a bureaucratic culture began to appear. After losing $5.6 billion in the second quarter of 2005, IBM sold its computer business to Lenovo, the Chinese computer firm. In the same year, IBM stopped making computers. Around 10,000 or so of its employees either left the company voluntarily or was made redundant.
Chrysler the Salesman
Anyone who read about Lynn Townsend will know that he was a typical financial genius who became Chrysler president at an age of 42. His motto was 'sales aren't just made; sales are pushed'. Under his presidency, Chrysler doubled his market shares in the US as well as in the world. That was impressive. The organisation strategy was formulated around sales, sales and sales through aggressive advertising and promotion. Through dealership contracts, Chrysler was able to penetrate major markets that help propel their different brands to new heights. As a result, engineering was neglected. New models were produced at much faster pace, putting a huge strain on the company operations and factories.
Quarterly numbers soon replace the company main strategies. Regrettably, a brilliant marketing strategy turned into ordinary proliferation. The company became too political, highly centralised and bureaucratic. Salesmen thought they could sales anything, as long as it came out of the factory; big mistake! They couldn't keep pace with the many products manufactured by Chrysler. While consumers were longing for more economical and smaller cars, Chrysler were going the opposite way. In the end the financial crisis of 2008 brought the company to its knees. What was going on behind the scenes years ago came to light thanks to the recession.
What can we learn from those two examples?
Leaders, who have brought success to an organisation, rarely change their recipes. In fact, they become overindulgent, overconfident and prone to excesses. They become drifters and seldom take the market pulse in order to assess customers changing preferences.
Organisations aiming for quality attract talented individuals now and then to fill some of their units, for big financial rewards. Unfortunately, their organisations almost immediately become unbalanced, giving prominence to a single department over many for the pursuit of a single goal. Strategies stall and reorientation becomes impossible. Only power and politics matter. Departments that have so called 'talented individuals' resist change and a monolithic culture takes over the corporate culture. This culture soon permeates the company systems and structures. Challenges will be avoided during decision-making processes and everything will be done according to the same routines.
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what should i choose CAT or GATE?
friends I am in 6th sem of my engineering from computer science field and till now I have no clue about what career I must opt for.I have interest in software development and also I love to do programming ,In my 5th sem I made a software that was in top 100 teams selected by IBM in competition having over 50000 teams,my percentage in college till now have been avg 77% .But I belong to middle class family and want to start with good income.Thats why i am confused over what should I prefer?please help me by answering.
Well cats are cool because they kind of mind their own business, although they tend to poo in secret hard to reach places. Gates on the other hand have no downsides for most people but don't make good pets, your choice I guess.
Although if you are from a middle class family and will have a good income maybe you can afford both. Put the gate between the cat and hard to reach potential poo danger areas.
HCI Enters 2010 with New Executive Team Top Executives from Corporate Executive Board, First Advantage, IBM and IIR ...
The Human Capital Institute (HCI) today announced a new team of senior executives, selected to lead HCI into its next stage of international growth. HCI is entering its sixth year as one of the fastest growing executive associations in the world, with over 175,000 members in 170 countries worldwide.
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