The Decline

All organizations go through phases of decline. For many it is the final countdown, but some turn out stronger afterwards, mainly owing their survival and turnaround to outstanding leaders. Look what Louis V. Gerstner did for IBM, or Steve Jobs for Apple.

Why do so many leaders struggle to recognize the signs of a decline on the horizon, even when it is obvious to outsiders and we can read dozens of books on the topic?

The key reason for this ignorance is that the regression actually starts long before you can see the impact in any financial numbers. The CFO reports sunshine while the thunderstorm is already behind the next hill.

There are reliable–yet unusual–early warning indicators that leaders should watch for carefully:

1. Staff walking around with negative facial expressions. If you see five people out of ten with grim faces, then the situation is already alarming. If you see eight out of ten, then it is too late.
2. Arguing about change. Managers of all levels spend more time explaining why things will not work in their opinion than in doing what is required to make things happen.
3. Lost customer contact. People spend more time in internal meetings than with customers. Ask your managers when was the last time they faced a real external customer. If the time span for most is more than a month, then the need for change is immediate.  

Instead of looking into reports and discussing slide decks, look into the eyes of the people in your organization and listen to their–and the customers’–comments.

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This post is from our Friday noon memo #93. Interested in regular updates? Sign up here.
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