Success Brings Unintended Consequences

Starbucks' battle back from mediocrity is well documented in CEO Howard Schultz's new book "Onward." Pairing it with Jim Collins' 2009 book "How the Mighty Fall" gives ChurchWorld a sobering lesson in how to handle success.

Collins' 5 Stages of Decline begin with "Hubris Born of Success." He describes it in a short paragraph:

Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward, for a while, even if its leaders make poor decisions or lose discipline. Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and the lose sight of the true underlying factors that created success in the first place. When the rhetoric of success ("We're successful because we do the specific things") replaces penetrating understanding and insight ("We're successful because we understand why we do the specific things and under what condition they would no longer work"), decline will likely follow.

Here's what Starbucks' Schultz had to say in looking back to early 2008:

If not checked, success has a way of covering up small failures, and when many of us at Starbucks became swept up in the company's success, it had unintended effects. We ignored, or maybe we just failed to notice, shortcomings.

We were so intent upon building more stores fast to meet each quarter's projected sales growth that, too often, we picked bad locations or didn't adequately train newly hired baristas. Sometimes we transferred a good store manager to oversee a new store, but filled the old post by promoting a barista before he or she was properly trained.

As the years passed, enthusiasm morphed into a sense of entitlement, at least from my perspective. Confidence became arrogance and, as some point, confusion as some of our people stepped back and began to scratch their heads, wondering what Starbucks stood for.

In the early years at Starbucks, I liked to say that a partner's job at Starbucks was to "deliver on the unexpected" for customers. Now, many partners' energies seemed to be focused on trying to deliver the expected - mostly for Wall Street.

Great companies foster a productive tension between continuity and change. On the one hand, they adhere to the principles that produces success int the first place, yet on the other hand, they continually evolve, modifying their approach with creative improvements and intelligent adaptation.

When organizations fail to distinguish between current practices and the enduring principles of their success, and mistakenly fossilize around their practices, they've set themselves up for decline.

By confusing what and why, Starbucks found itself at a dangerous crossroads. Which direction would they go?

Questions for ChurchWorld

• Is your organization locked in on your core values, purpose, and culture?
• Or do you move in first this direction, then that, just to have "success"?

Beware the unintended consequences of success

How the Mighty Fall

Stage 5: Capitulation to Irrelevance or Death

You pay your bills with cash. You can be profitable and bankrupt. Bill Lazier, Stanford Graduate School of Business

There are two basic versions of Stage 5 for organizations: 1) Those in leadership believe that capitulation offers a better overall outcome than continuing to fight; and 2) those in leadership continue to struggle, but they run out of options and the organization either dies outright or shrinks into utter irrelevance.

By the time an organization has moved has moved through Stages 1, 2, 3, and 4, those in leadership can become exhausted and dispirited, and eventually abandon hope. And when you abandon hope, you should begin preparing for the end.

Not all organizations deserve to last. Institutional self-perpetuation holds no legitimate place in the world of scarce resources; institutional mediocrity should be terminated, or transformed into excellence.

If you cannot marshal a compelling answer to the question, “What would be lost, and how would our community be worse off, if we ceased to exist?” then perhaps capitulation is the wise path. But if you have a clear and inspired purpose built upon solid core values, then the noble course may be to fight on, to reverse decline, and to try to rekindle greatness.

The point of the struggle is not just to survive, but to build an organization that makes such a distinctive impact on the world it touches, and does so with such superior performance, that it would leave a gaping hole – a hole that could not be easily filled by any other institution – if it ceased to exist.

Questions for ChurchWorld
John Moore, at Brand Autopsy, has a long-running series of posts about various companies we encounter every day. He posed a simple thought: Would we miss this company if it were gone? Here are his questions - answer them for your church:

• Does my church provide such a unique ministry and experience that our community would be saddened if it didn’t exist?


• Does my church treat its staff (paid and unpaid) so astonishingly well that those workers would not be able to find another place of ministry service to treat them as well?


• Does my church forge such unfailing emotional connections with its members and attenders that they would fail to find another church that could forge just as strong an emotional bond?

I hope you have been challenged by this week's look at "How the Mighty Fall". Jim Collins continues his great work with this book; as with "Built to Last" and "Good to Great" there are tremendous lessons for the church in his research and conclusions. I encourage you to get a copy today and begin asking the tough questions raised in it.

How the Mighty Fall

Stage 4: Grasping for Salvation

I don’t have a sense of crisis. I have a sense of urgency that never changes. Louis Gerstner, IBM

Stage 4 begins when an organization reacts to a downturn by lurching for a silver bullet. They go for a quick, big solution or bold stroke to jump-start a recovery, rather than embark on the more pedestrian, arduous process of rebuilding long-term momentum.

Stage 4 grasping can produce a brief improvement, but the results do not last. Dashed hope follows dashed hope follows dashed hope yet again. Organizations stuck in Stage 4 try all sorts of new programs, new fads, new strategies, new visions, new cultures, new values, new breakthroughs, new acquisitions, and new saviors. And when one silver bullet fails, they search for another.

The signature of mediocrity is not an unwillingness to change. The signature of mediocrity is chronic inconsistency.

Rebuilding greatness requires a series of intelligent, well-executed actions that add up one on top of another. Most “overnight success" stories are about twenty years in the making.

When we find ourselves in trouble, when we find ourselves on the cusp of falling, our survival instinct – and our fear – can evoke lurching, reactive behavior absolutely contrary to survival. By grasping about in fearful, frantic reaction, late Stage 4 organizations accelerate their own demise.

Markers for Stage 4

• A series of silver bullets
• Grasping for leader-as-savior
• Panic and haste
• Radical change and “revolution” with fanfare
• Hype precedes results
• Initial upswing followed by disappointments
• Confusion and cynicism
• Chronic restructuring and erosion of financial strength

The very moment when we need to take calm deliberate action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear.

Questions for ChurchWorld

• Have you stopped momentum in your church with chronic restructuring and/or as series of inconsistent big decisions?
• Do you sell people on the promises of a brighter future to compensate for poor results today?
• Have you made panicky, desperate moves in reaction to threats that imperil your organization even more, further eroding your resources?
• Have you embarked on a program of radical change, a revolution, to transform nearly every aspect of your organization, jeopardizing or abandoning core strengths?

How the Mighty Fall

Stage 3: Denial of Risk and Peril

We just didn’t have enough conclusive data to convince anyone.
NASA O-Ring Task Force following the Challenger disaster

As organizations begin to move into Stage 3, we begin to see the cumulative effects of the previous stages. Stage 1 hubris leads to Stage 2 overreaching, which sets the organization up for Stage 3, Denial of Risk and Peril.

The greatest danger comes not in ignoring clear and unassailable facts, but in misinterpreting ambiguous data in situations when you face severe or catastrophic consequences if the ambiguity resolves itself in a way that’s not in your favor.

When facing irreversible decisions that have significant, negative consequences if they go awry – what you might call “launch decisions” – the case for launch should require a preponderance of empirical evidence that it’s safe to do so.

One common behavior of late Stage 3 is when those in power blame other people or external factors – or otherwise explain away the data – rather than confront the frightening reality that the enterprise may be in serious trouble.

A final manifestation of denial deserves special attention: obsessive reorganization. Reorganizations and restructurings can create a false sense that you’re actually doing something productive. Organizations are in the process of reorganizing themselves all the time: that’s the nature of growth. But when you begin to respond to data and warning signs with reorganization as a primary strategy, you may well be in denial.

Markers for Stage 3

• Amplify the positive, discount the negative
• Big bets and bold goals without empirical validation
• Incurring huge downside risk abased on ambiguous data
• Erosion of healthy team dynamics
• Externalizing blame
• Obsessive reorganizations
• Imperious detachment

Audacious goals stimulate progress, but big bets without empirical validation, or that fly in the face of mounting evidence, can bring organizations down, unless they are blessed with unusual luck. And luck is not a reliable strategy.

Questions for ChurchWorld

• What’s the upside, if events turn out well?
• What’s the downside, if events go very badly?
• Can you live with the downside? Truly?

How the Mighty Fall: Stage 2

Stage 2: Undisciplined Pursuit of More

An organization is more likely to die of indigestion from too much opportunity than starvation from too little - David Packard, Hewlett Packard

Overreaching, not complacency, much better explains how the once-invincible self-destruct.
Frenetic innovation – growth that erodes consistent tactical excellence – can just as easily send a company cascading through the stages of decline.

Hubris (Stage 1) can lead to making brash commitments for more and more and more.

The greatest leaders do seek growth – growth in performance, growth in distinctive impact, growth in creativity, growth in people – but they do not succumb to growth that undermines long-term value. And they certainly do not confuse growth with excellence. Big does not equal great, and great does not equal big.

Undisciplined Behaviors

Discontinuous leaps into arenas for which you have no burning passion

• Taking action inconsistent with your core values
• Investing heavily in new arenas where you cannot attain distinctive capability
• Launching headlong into activities that do not fit your resource engine
• Addiction to scale
• Neglecting your core business while you leap after exciting new adventures
• Using the organization primarily as a vehicle to increase your own personal success
• Compromising your values or losing sight of your core purpose in pursuit of growth

Any exceptional enterprise depends first and foremost upon having self-managed and self-motivated people – the #1 ingredient for a culture of discipline.

When bureaucratic rules erode an ethic of freedom and responsibility within a framework of core values and demanding standards, you’ve become infected with the disease of mediocrity.
Whether a company sustains exceptional performance depends first and foremost on whether it continues to have the right people in leadership, which introduces the last point in this stage.
Leaders who fail the process of succession set their enterprises on a path to decline. One of the most significant indicators of decline is the reallocation of power into the hands of leaders who fail to comprehend and/or lack the will to do what must be done – and equally, what must not be done – to sustain greatness.

Stage 2 overreaching tends to increase after a legendary leader steps away.

While no leader can single-handedly build an enduring great company, the wrong leader vested with power can almost single-handedly bring a company down.

Stage 2 Markers

• Unsustainable quest for growth, confusing big with great
• Undisciplined discontinuous leaps
• Declining proportion of right people in key seats
• Bureaucracy subverts discipline
• Problematic succession of power
• Personal interests placed above organizational interests

Questions for ChurchWorld:
John Maxwell says everything rises and falls on leadership. The number one warning sign for your organization is a declining proportion of key seats filled with the right people. Here are your 24/7 questions:

• What are the key seats in your organization?
• What percentage of those seats can you say with confidence are filled with the right people?
• What are your plans for increasing that percentage?
• What are your backup plans in the event that a right person leaves a key seat?

Choose your leaders well.

How the Mighty Fall: Stage 1

Today begins a series of posts diving into Jim Collins' latest book "How the Mighty Fall." Continuing in his groundbreaking work in "Built to Last" and "Good to Great", Collins uses meticulous research to document 5 stages of decline. Sprinkled throughout his new work are references to his prior work; if you need a quick Collins primer, see here for introductions to terms like Flywheel, Hedgehog, and First Who, Then What.

Stage 1: Hubris Born of Success

It’s far better to create your own future, repeatedly, than to wait for external forces to dictate your choices - Robert Galvin, Motorola

Hubris can be defined as the excessive pride that brings down a hero or outrageous arrogance that inflicts suffering upon the innocent

Multiple forms of hubris

1. Undisciplined leaps into areas where a company cannot become the best
2. Pursuit of growth beyond what it can deliver with excellence
3. Bold, risky decisions that fly in the face of conflicting or negative evidence
4. Denying even the possibility that the enterprise could be at risk from external threats or internal erosion
5. Arrogant neglect

Great organizations foster a productive tension between continuity and change. On the one hand, they adhere to the principles that produced success in the first place, yet on the other hand, they continually evolve, modifying their approach with creative improvements and intelligent adaptation.

When institutions fail to distinguish between current practices and the enduring principles of their success, and mistakenly fossilize around their practices, they’ve set themselves up for decline.

There’s nothing inherently wrong with adhering to specific practices and strategies but only if you comprehend the underlying why behind those practices, and thereby see when to keep them and when to change them.

The best organizational leaders remain students of their work, relentlessly asking questions –why, why, why – and have an incurable compulsion to vacuum the brains of the people they meet.

Stage 1 Markers1. Success entitlement, arrogance
2. Neglect of a primary flywheel
3. “What” replaces “Why”
4. Decline in learning orientation
5. Discounting the role of luck
Questions for ChurchWorld

1. Does your primary flywheel (mission identity) face inevitable demise within the next three to five years due to forces outside your control?
2. Have you lost passion for your primary flywheel?

If you answer no to both questions, continue to push your primary flywheel with as much imagination and fanatical intensity as you did when you first began. Continually experiment with new ideas, both as a mechanism to stimulate progress and as a hedge against an uncertain future. That does not mean static, unimaginative replication; it means never-ending creative renewal.