Are you succeeding, or just looking like you’re succeeding in business?

For you to be successful in business, don’t make business a rat race. Only rats win those races; and rats never build anything. FILE PHOTO

What you need to know:

  • Companies soar when led by effective managers, but there is a lot of luck and a lot of cyclicality in business numbers.
  • To imagine that you are invulnerable to corrections and disruptions is to be high on your own supply.
  • Your business should be led by realists. It should tackle tough issues head on. It should encourage honest conversations.

When Jeffrey Immelt, long-time boss of giant conglomerate General Electric (GE), held his annual address to investors last May, his corporation’s stock was trading at close to $30.

He painted a rosy picture of his long tenure, and retired as chief executive officer soon afterwards. Today the stock price is around $15 (Sh1,500).

His successor decided to bare all and embark on a brutal restructuring involving thousands of layoffs and mass disposal of assets.

The firm is under scrutiny from regulators for how it accounted for certain transactions. A break-up may be looming.

POSITIVISM

The Wall Street Journal recently called Mr Immelt’s reluctance to announce bad news and tendency to gloss over real problems “success theatre”.

This refers to the habit of some business leaders to project optimism and an upbeat tempo at all times, and to meet ambitious numbers at any cost.

According to insiders, Mr Immelt ran a culture where you never say: “I can’t”.

Does it work? Well, GE’s revenue today is actually lower than it was in 2000. And its market capitalisation is a fraction of what it was then.

I can’t comment on GE, but I have observed this tendency many times in my decades as a business adviser.

There are leaders who thump their chests and tell their teams: don’t come to me with problems; come with solutions. Don’t say it can’t be done; get it done.

PRODUCTIVITY

Don’t be mired in today’s reality; imagine and shape tomorrow’s reality.

Decide whether you’re a winner who’ll hit great numbers, or a loser who isn’t up to the job.

This gung-ho mentality is meant to be an aphrodisiac, a catalyst that promotes great performance.

Very often, though, it leads to the exact opposite: huge stress in the company; masking of real challenges; massaging of numbers; and the kicking of some nasty cans down the road for someone else to deal with in future.

It creates a situation where what is shown to the world is mere theatre: a stage that is carefully managed with scripts and props and special effects, with the real mess hidden behind the curtain.

INVESTORS

There are real consequences to this, because managers engage in all manner of shenanigans to impress the bosses and the market: they overbook revenues and postpone accounting for costs; they underinvest in much-needed equipment or upgrades; they shed staff brutally to shave costs.

A culture of fear and hypocrisy is often the result, and eventually the rot in the numbers is exposed.

It’s not just the investor meetings that are mere stagecraft. When illusion is the main play, even internal board meetings and senior management gatherings are full of insincere conversations and play-acting.

A pile of dirt grows unchecked under the carpet, until it eventually upends the table.

Chief executive officers, boards and investors need to understand: The force of gravity does indeed apply to corporations.

GOOD MANAGEMENT

Companies soar when led by effective managers, but there is a lot of luck and a lot of cyclicality in business numbers.

Every business suffers downturns; every hit product runs out of steam; every business model has its time and its place and must be reinvented after every few years.

To imagine that you are invulnerable to corrections and disruptions is to be high on your own supply.

To target ever-rising growth, quarter after quarter, is to engage in an elaborate charade.

To focus on seducing investors is to take your eye away from real issues in business: the levels of engagement of your employees; the uniqueness of your products; the strength of your bonds with customers; the movements in customer trends. The hard stuff is hard.

It requires undivided attention and great reserves of grit. It is not something best done by illusionists and charmers.

SAVVY
Your business should be led by realists. It should tackle tough issues head on. It should encourage honest conversations.

It should demand greatness, but with the humility of knowing greatness is a long-term play achieved over decades, not just in a set of sizzling quarterly numbers.

The best long-term culture to have is one that gives safety to its members to tell the truth, and to work together to meet challenges.

That cannot be achieved if only the so-called stars get the real rewards, and only the rank-and-file suffer the consequences of failure.

I have said it before: Don’t make business a rat race. Only rats win those races; and rats never build anything.

www.sunwords.com