Management
Issue No. 12 - August/September 2003
Gravity — a Good Servant but a Bad Master
by Peter Macks
Many companies’ rocketing successes have turned into financial disasters, essentially because CEOs had simple memory lapses—they forgot what they knew about gravity.
You don’t have to be a rocket scientist to know about gravity, yet too many CEOs behave as though they’ve never heard of it.
Gravity is often good. For instance, it’s there to keep our feet on the ground. But never take it for granted, for it can cause all kinds of trouble—and the further your feet are off the ground the worse can be the trouble. The thing you always need to remember about gravity is that it’s always there!
Large or small, 52% of Australian companies that fail will do so in their first three years. After the thrill of the blast off, their CEOs will scarcely give gravity another thought.
Others have somewhat longer memory spans, 26% of them running companies which do not crash and burn until between three and 10 years away from the launching pad, another 9% from years 11 to 20—but when they do, it’s usually because their CEOs forgot, that what goes up can come down—out of control.
Consider this profile of a company that managed to go further, quicker than most... until a conjunction of events, where its key people forgot what they knew perfectly well, proved catastrophic.
Stage one: ignition
The CEO had come from another place where he learnt all there was to know about the product—its manufacture, marketing, pricing and distribution. He (substitute “she” henceforth if you wish) had decided after much careful research and planning that he could build and sell a better mouse trap... and he backed this belief with his leadership qualities. Ambition thus ignited, he had forsaken a six—figure salary and the trappings of an enviable comfort zone, to launch his own company.
Stage two: blast off
Life savings pledged, money borrowed against equity in his home, a couple of first rate crew member...
