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Success Leading to Complacency

“One of the best generic warning signs is . . . success,” Finkelstein writes. He lists a host of reasons why successful companies can quickly fail, including these:

  • When things are going well, companies often don’t stop to understand the true reasons for their success, so they don’t see that things need adjustment until it’s too late.

  • Companies that are “successful in their marketplace act as an advertisement for others to enter the arena.” A publicly recognized success can breed more intense competition.

  • It’s easy “to let your guard down when you are awash in success. It’s only natural.” Finkelstein quotes Machiavelli, who aptly said, “There is a common failing of mankind never to anticipate a storm when the sea is calm.”

In his influential book, Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every Company, Andy Grove, the former Chairman of Intel, issues a similar warning. “Complacency often afflicts precisely those who have been the most successful. It is often found in companies that have honed the sort of skills that are perfect for their environment. But when the environment changes, these companies may be the slowest to respond properly.”

For go-it-alone entrepreneurs, these injuctions reinforce two central operating principles discussed repeatedly in this book: the need to constantly reinvent the business and the need to understand the real reasons that the business creates value. Finkelstein’s findings do, however, add an extra urgency to these principles:

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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.