The rise and potential fall of great organizations

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We’ve all heard the saying, “Rome wasn’t built in a day, but it burned in one.”

In actuality, that is not true. Indeed, Rome was not built in a day, but she most certainly did not fall in one day either. Although scholars debate the specific causes of Rome’s demise, her world dominance had been threatened for years—both from within and from without.

As the once powerful leadership became increasingly unstable, they were no longer equipped to battle the fiscal irresponsibility, political corruption, loss of core values and even disloyalty amongst soldiers. Ultimately Rome could no longer protect her borders.
Although the Fall of Rome took place thousands of years ago, many organizations today face strikingly similar challenges. In fact, I receive calls weekly from companies concerned about issues that threaten to erode the very foundation upon which they are built.

Externally they may face fierce competition, disruptions within the marketplace or a change in the landscape of their industry. Internally they may lack vision, strategy, values, fiscal oversight or professional ethics. Their company culture may not encourage nor reward team collaboration. What results is often the loss of clients or members, a reduction in employee morale and a tarnishing of the brand—all of which negatively impact the company’s bottom line.

Although organizations are governed by both upper management and a board of directors, it is ultimately the responsibility of the board to ensure the success of the company. It is incumbent upon the board to not only choose and support upper management such as the CEO or president, but also to understand current trends and benchmarks, and use that knowledge to make high-level, future-oriented decisions.

Upper management, on the other hand, is responsible for implementing the resulting plans, while making operational decisions and policies, and keeping the board educated and informed with well-documented recommendations. Creating a strong balance between a board and management is key to the success of every organization.

Currently, I am involved with three large businesses representing over 400 combined years of operation. Each of these time-honored establishments is facing incredible challenges. I would bet that at least one will not recover.

So, how do these businesses go from being the poster child of organizational greatness to becoming the next Woolworth, Blockbuster, Kodak or Toys R Us? It all boils down to leadership. An imbalance in power between board and management can lead to incredible instability which renders a business ineffective in battling its threats.

These organizations with which I am involved once had a strong history of great leadership. They had systems in place to ensure success beyond their current president/CEO or board of directors. Board members understood their organization’s purpose for being in existence, and worked tirelessly to stay true to that mission and vision. They took ownership of their responsibility to leave things better than they found them. They came prepared to understand and fight both internal and external threats and attacks. They took the time to discern the company culture and create a pathway to a positive sustainable cultural change when needed.

So, what did these three organizations do in the past that they are not doing now? Ultimately an imbalance of power between the board and upper management occurred. The boards began to abdicate some of their responsibilities to the CEO or president. Even if only a couple of board members are too trusting, too hands off or too distracted to see that things are moving in the wrong direction, the problem can quickly get out of hand.

Upper management chose to make generalities about the state of operations and present the board with a less than transparent picture of company health. This spin often times will placate an absent or trusting board until the problems become so critical that they can no longer be hidden.

Once an organization starts to decline the leaders most needed on the board, the ones trying to stop the slide, often will sense a withdrawal of support which can leave them frustrated, disillusioned and less than able to create positive change.

Margaret Meed once said, “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”

In this article, we discussed the problems facing a few once mighty companies. Next month, we will talk about possible solutions, and how a strong board could set the company back on a path to greatness, if they can intercede before it’s too late.
In the meantime, shall we visit the ruins of Rome?

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