Tuesday, February 21, 2012

Corporate Arrogance - Hara Kiri, the Price to Pay

While we pay our respects to a blue blooded brand "Kodak", I can't help but think what led to its dismal performance and downfall. People may blame it on disruption, creative destruction and ofcourse the irony of the digital age, but to me it reeks of something deeper and more innate - leadership arrogance.

In his book 'The Sacred Art of Soul Making', Joseph Naft had said 'Arrogance - Those to whom much has been given sometimes suffer from arrogance; or rather the people around them suffer. Arrogance is doubly a pity, because the talents of the arrogant serve primarily themselves. The arrogant assumes his views and opinions are The Truth. In arrogance, natural confidence goes sadly awry. Rather than the self-assurance born of knowing his own strengths and limitations, arrogance admits no limits. The arrogant brooks no weakness in himself and may even secretly rejoice to find flaws in others. But imperfections are inherent in being human, so the arrogant, like everyone else, always has feet of clay, however well hidden they may be. Fearing exposure, haughtiness forms a hard shell masking inner emptiness." 

While Naft had written this in the context of human leadership it can well be extended to corporates as a whole.  The arrogant corporate behaves as a power on its own. The self-grandiose opinion is that they rule the market and believing in one’s so called strengths and oblivious to the weaknesses. There are imperfections and it are these imperfections which competition will latch on to.

In the 70’s, Kodak had nearly 90 percent of the film and camera market. With a near monopoly and unassailable position, there was a certain haughtiness which crept into Kodak. Arrogance and complacency are often the by-products and Kodak has been no exception.

Success cannot be forever and an organisation has to keep working to be ahead of the pack. Organizations like Kodak came to believe their success is due to an inherent superiority they have and even worse that this superiority will go on forever. So typical of the superiority complex syndrome!

‘Hubris’ - the word was used to refer to the emotions in Greek tragic heroes that led them to ignore warnings from the gods and thus invite catastrophe. It is considered a tragic flaw that stems from overbearing pride and lack of piety. The word is taken directly from the Greek hubris, meaning ‘insolence or pride’. Companies loose contact with reality and have an overestimation of one's own competence or capabilities. This leads to complacency which is when the rot begins to set in. This insular behaviour prevents organisations from reacting to changes in technology. They tend to live in the past and believe that what was successful in the past will be successful in the future.

Leadership can be a curse.  In 1976, Foster coined the phrase ‘incumbent’s curse” Companies become so captive to their core business that it can scarcely imagine another way of doing things.  Kodak infact invented the digital camera in the 1970’s but since it had become successful in the film related market, it developed a logic called dominant logic which overpowered any other logic which was contrary to it. When the photography world went digital, Kodak's strengths became weaknesses. It could not overcome its dominant logic and look at an alternative one logic.

The incumbent's curse has been evident in many other companies today, such as Blackberry-maker Research in Motion, Hewlett-Packard, Digital, Best Buy, Intel and many others.

It does not mean that an epitaph has to be put out for Kodak. Kodak has much strength to leverage. Many other companies have got out of the rut and looked at things anew. IBM, GM and to a certain extent even Apple have done so. It calls for a complete change in mindsets and to take a route which different from the past.

June Tangney on one of her papers had identified a number of key features of humility which can be adapted to a corporate:

·        An accurate (not underestimated) sense of one’s abilities and achievements – stay humble
·        The ability to acknowledge one’s mistakes, imperfections, gaps in knowledge, and limitations. – reflect honestly
·        Openness to new ideas, contradictory information and advice – grasp the current condition
·        Keeping one’s abilities and accomplishments in perspective.
·        Relatively low focus on self and the ability to “forget the self” – stay humble

Has the Kodak Moment passed?

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