Thursday, May 28, 2009

When Businesses Fail, It's not Bad News: It's a Sign


Packard Motor Car Company, Westinghouse Electric, Wang, and Arthur Andersen. What do these businesses have in common with big businesses currently on the brink?
Packard was an American luxury automobile built by the Packard Motor Car Company. The first Packard automobiles were produced in 1899 and the last in 1958.
Founded in 1886, Westinghouse Electric Company was later renamed Westinghouse Electric Corporation by George Westinghouse and met its end when what was left was purchased by Viacom in 1999.

Wang Laboratories was a computer company founded in 1951 by Dr. An Wang. At its peak in the 1980's, Wang Laboratories had annual revenues of $3 billion and employed over 40,000 people. In 1999, Wang Global was acquired by Getronics of The Netherlands.

Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms. In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after being found guilty of criminal charges relating to the firm's handling of the auditing of Enron, the energy corporation.

All four of these companies were strong well-respected businesses at some point in their arch of existence. Most business models talk about the lifecycle of a business that goes under once what they produce is no longer needed. My professor used the example of buggy whips. It could've been VCR or video tape manufacturers, camera film makers, etc. But not all business fail because their products are no longer needed.

These are four examples of businesses that failed to survive because they were poorly managed, failed to have clear vision, and did not make proper decisions, not unlike the large businesses that are facing a potential end of the road for the same types of reasons today –- failure to navigate changes in the marketplace or make the right decisions.

Businesses fail; in fact, businesses that are unable to be productive, or are poorly led, need to fail. A stronger competitor comes along, the industry has a massive shift, and new techniques arise to replace the old systems that no longer work.
Propping up bad business models doesn’t improve the economy; it weakens it and delays the inevitable.

If your business is struggling this year, don't wait for bailouts, magic phone calls or a return to the economy of the 1990's. Don't expect if you keep on doing what you've been doing, everything will be fine –- it won't.

Do what these dying businesses are failed to do. Take action, take risks, and explore new methods and directions. Bottom line -- if you are struggling, your bad habits got you here. Find the different habits that will rebuild your business even if it will look different than it once did. The world has changed, and your leadership must as well.