One thing which always puzzles me is how humans collectively behave the way they do. Here I am not talking about how individuals behave but societies at large. Open any chapter in history and it will have instances of societies or groups of humans at large behaving in a certain way. Whether it’s how German and Japanese societies behaved before and during WWII, or how Indian society was during the “British Raj” or how different Indian and Pakistani societies have been after the Raj.
Once thing which becomes immediately evident is that people in general are pretty dumb and can be convinced to do anything. Every society has thinkers and very smart people, but this surprisingly does not mean much when it comes to collective behavior. Leaders do matter, but not everyone who wants to lead succeeds. So there is a choice society makes in selection. In democracies, society has a much larger role to play in choosing leaders, but democracy is a new concept in the big scheme of things.
Another thing which I think plays a large role in how things shape up and turn out, especially regarding society, are small, happy and unhappy accidents. You can also call them tipping points in certain cases. I was watching a documentary about the last 15 days before the independence of India and how several very small things made a huge difference.
I read this great blog http://kaipullai.com/2012/01/18/four-little-things-that-shaped-india/. It gives an example of small tipping points which helped shape history but mostly go unnoticed.
While I said societies at large are dumb, humans at the individual level are insecure. You can research how deeply embedded is the concept of “flight or fight” in our psyche. If you think this behavior only existed during the Stone Age, you have not spent enough time in corporate America!
The question which started this thinking was “Why do some societies fail and others prosper?” Though it’s very difficult to do a thorough analysis of society (or civilization) at the historical level, we can make use of a small analogy and modify our question: “Why do some companies fail and others prosper?”
Before getting into this analogy, let me give two caveats. One, I am not going to discuss the struggle of an entrepreneur and what it takes to make a small company big. I am going to discuss large corporations and my observations of same.
Another caveat is let me first tell you where this analogy fails. I was reading a book entitled “Why the West Rules – For Now”. And one quote which I still remember is that “There are various reasons empires fail but there is only one reason they thrive, and that is compromise.” This does not hold true, however, for a corporation.
I worked in a couple of Fortune 500 corporations like Cisco and Wells Fargo during my life. I found that both companies are super-political and people are there to get you. But there is a small difference. At Wells Fargo, people and groups knew what they were doing; in Cisco they did not. Let me qualify, I am not doubting the hard work of Cisco employees (I am talking specifically about its IT organization as I worked there mostly). People there were sincere, but they did not know why they were doing what they were doing. It was not uncommon to see multiple IT groups working on the same or similar ideas. The goal was to get funding for the next quarter somehow, for this pretext or some other.
In Wells Fargo on the other hand, requirements came from business needs. It has also come to do with how different a financial institution and a technology company are. I am not a big fan of the Wells Fargo culture, understand. And it had a lot of flaws, but “a lack of sense of direction” was not one of them.
I also worked at Netflix for a very short duration. This was the first company I saw which did not consider the team as family but like a professional sports team. This logic definitely had some merit and led to the popularity of Netflix’s cultural deck. Though intentions were right, salaries were much higher than market and a lot of freedom was provided, internal processes and code quality were in poor shape. The company had a lot of professional sportsmen but no team. This made it closer to that of a mob than a sports team. You are given total freedom and you make a lot of money. But if anything goes wrong or you are not considered fit for some reason, you are fired at the drop of a hat. I remember a “mass firing ceremony” I attended after I completed a few months at the company. Our VP started addressing all the groups with something in the line of: “As old employees know what we regularly do…” As you can guess, six months after that, I was not on the table in a ceremony but on the menu!
With this kind of culture, you attract a specific type of people. People who are high performers at the individual level (due to talent or fear) but who despise other human beings as being lesser mortals (knowingly or unknowingly). I was both, but over time have gotten rid of the second issue to a large extent.
So what leads a big company to failure? One can say when that company stops innovating. I would say that’s a symptom, though not necessarily the cause. The cause lies somewhere else. There is definitely no silver bullet which points directly to the cause. Otherwise every company would fix it before it was too late. If Marissa Mayer is able to turn around Yahoo, it will be a really good case study.