(Psst… There are a couple of secrets that employers and large company boards don’t want you to know…)
But, first, let’s talk about stars.
For those of us who grew up watching Carl Sagan or worthy successors such as Neil Degrasse Tyson, we learned what happens to stars over the course of their lifetime. These mighty constructs spinning around the universe, full of fusion and fission and burning for millennia, eventually reach the end of their fuel supply. That is, the matter at the heart of the star begins to be used up by the nuclear fire that has raged for millions of years and the energy which pushes the star outward can no longer withstand the incredible forces of gravity which want the star to contract. Once this process begins, after a brief death pang during which the star expands into a red giant, the stars collapse ensues and, depending on the size of the original body, it becomes a white dwarf, neutron star or black hole.
Carl, wherever you are, forgive me for truncating the process so much less poetically than you would have. I’d love to talk astronomy all day, but…
The lesson learned on an interstellar scale is, even stars don’t last or grow forever. Eventually, physics wins and something that once was, isn’t. The lifecycle of the celestial body reaches its end and the star collapses into a densely-packed fraction of what it once was.
So, what is the first secret that the leaders of your company don’t want you to know? Here it is -
Your company isn’t going to last forever.
Now, that fact may seem obvious, but stop and really ponder it for a second. Ask yourself how many meetings, strategic roadmaps and operating plan sessions you have been a part of which were aimed at sustaining an organization and keeping it evergreen. My bet is, a lot! A generation ago, before notions of employment began to change, companies actually spent a great deal of energy trying to be the stalwart, rock-solid epitomes of eternal greatness. Particularly in the U.S., the ideal of an Uncle Sam who was strong, moored by companies that would also last forever, is woven into our American dream. This dynamic has reverberations today. When it comes to large and old organizations, they are more than companies. They are organisms. And, like all organisms, the company fights to sustain itself. The organization or organism becomes superior to the people within it. Go back and review your Wilford Brimley, “You wouldn't hurt the firm, would you, Mitch?”
Now, let’s be real, most of us are in roles which exist for the purpose of directly or indirectly contributing to the growth and achievement of our companies. Companies make money and that’s fine. Commerce is good. Buying and selling, trade, our own individual ability to offer our time and skills in exchange for compensation and reward - these are all good things. But they don’t last forever. I’d like to examine two ways in which the finite condition of a firm’s lifespan can be felt by us. First, by examining how growth (and contraction) occurs in cycles.
Companies, Like All Systems, Have Cycles
Seasons, weather patterns, biology - there are systems and processes all around us. These systems have ebbs and flows that give and take and we are often flowing within them. Organizations and market sectors are no different. On an even larger scale, economies experience these peaks and valleys and we’ve attached entire industries to predicting these bulls and bears, expansions and contractions, recessions and economic booms. Turn on Bloomberg and the basis of most of the dialogue there or within any other business blog, radio station or television program is trying to understand these cycles. There is no debate that these flows exist. None. Some will claim to be better than others at explaining causality or recognizing, naming and predicting these movements, but no one argues that these patterns exist.
So why do so many companies (and stock market investors) expect their organizations to grow forever?
Let me go back to our Sagan… STARS collapse and die eventually. But we operate on the regularly accepted fallacy that a company and its financials can continue on a favorable trend line year after year and nothing can stop it. If stars don’t grow forever how can a company be any different!?
Okay, let me pause here and state for the record - yes, I know our world economy and our nation’s GFP are larger than they were a generation ago and Warren Buffet and Jim Cramer will tell all of us about the wisdom of investing, saving, compounding and so on. Yes, I get it. I’m not here to debate that we have grown wealth as a society and made more ‘stuff’ in the last two hundred years. I’m not an economist and I still believe in a free and healthy economy. What is more applicable to me are the micro-cycles with the cycles. I want to zoom in a bit to the life of a leader who must grow year over year or achieve targets over a period of a decade. Let’s face it, Wall Street is looking quarter to quarter. Most of us are not measured on a lifetime of work, we are only as good as our last P&L. So, we should try to understand how to avoid becoming a collapsed star. Well, in order to prevent our own collapse, we need to understand the cycle which firms remain engaged in today that continues to prop up the myth of perpetual growth, much to the detriment of all involved. And, that, takes us to the second secret we aren’t supposed to talk about…
The Three Year Corporate Shuffle
I’m about to cut a bit close to the bone, so if you don’t like it real, best to go watch some YouTube cat vids now….
Companies of all kinds, especially in publicly-traded firms, participate and are complicit in a shell game that I refer to as the Three Year Corporate Shuffle. By shuffle, I mean dance, not mixing up a deck of cards, although that may be an applicable analogy too.
Here’s what I mean:
Year 1: Wine and roses, baby! We are doing great! We’re hitting targets, our operation is humming along, we’re crushing our goals and everyone is enjoying bonuses, healthy stock options and the promotions are being handed out like tic-tacs at a kissing contest. ‘Year 1’ can be several consecutive years of this sort of growth and favorable business performance. It can last for 10 years. What’s important is the ‘Year 1’ we are examining is year ‘Mark 1’. The year before the star starts to… contract.
Year 2: We miss our goals. Depending on what sort of company you’re in, the first time this happens, everyone just sort of looks around like we’ve just been in a car accident. We didn’t think it could happen to us. ‘We’ve grown by double digits since 1990!’, ‘But, we’re the ‘it’ brand!’. A company with the Midas touch has a really rough time the first year it misses. Even for companies without such enviable track records, if results have been good, often a bad year results in the same sorts of internal discussions and reactions.
Because, here’s the deal - the senior team has to do something.
We can’t just miss our growth targets and do nothing to address it. Because people in C-suites are paid to make decisions and do things, lots of discussion will take place about what went wrong. Often, this is good, because let’s face it, companies like other organisms, can improve and learn. They can adapt. But things start to go off the rails in some situations when companies - remember the firm is its own organism by now - begin to think with a hive mind. The company starts to see elements and people within it as viruses that must be addressed and removed. ‘Our goals couldn't have been too aggressive, we missed because of that SVP of sales and his faulty growth plan.’ ‘The company couldn't have grown lazy after years of sky-high stock growth, we failed because of the HR team and their leader, she should have seen this coming.’
But the worst examples of the year 2 blame game are when fingers get pointed downward. Units or field personnel get smeared, blamed and generally lambasted for lackluster growth or a missed comp percentage. Now, when correction is deserved - say, the field teams lose their customer focus or the unit leaders began to trail their competitors in their delivery of value to their customer - hey, they should be held responsible for improvement and coached or managed to a higher level of performance. But, often at enterprise level, on the interstellar scale when the star itself is shrinking and threatening to go into black hole or neutron start mode, it’s simply not right to say line level employees or middle managers are to blame. Yet, it happens. And then…
Year 3: The correction year. A C-level leader or mid-senior level leader promises action will be taken. This is what the board wants. It’s what Wall Street wants. The ship must be righted. We missed our comp store growth by 3 points last year and our shareholders demand return. So, reorganizations happen. Leaders lose their jobs. Geographic territories are rewritten. A whole slew of command and control measures are rolled out. Year 3 is no fun. Sometimes ‘year 3’ actually lasts 2 years, or more. The entire culture of the company can change. It’s incredible how the DNA of the organism mutates when that first miss happens. And, sometimes not for the better.
And the year after Year 3 is over? Often, comp growth is positive. Or, we are opening new locations again. Or, our market share has risen after the previous year’s decline. Action has been taken, confidence is restored. And the stock price? It rises.
But what was accomplished? Think about what the comparable growth numbers in the most recent year were measured against. The trough. The down year. So, did we really ‘fix’ anything? By reporting to the street a favorable comp percentage which was compared to a down year, we’ve just executed slight of hand. How often do you hear a same store sales figure on the business broadcast which is followed up by the revenue numbers that come along with it? Percentages lie. A clever business leader can make percentages tell any story they choose. In turnaround situations, sometimes real improvement was required and is acted upon. But, often, the reality is we just did the dance. And a lot of pain and suffering happened as a result.
So, what is to be learned and what can we do to protect against the perpetual growth myth ruining our organizations or our livelihoods?
If You Work For A Company, Know Your Worth
If the trends mentioned above are to continue, the worker of tomorrow is likely to move around a lot over the course of their career. For all sorts of reasons: balance of work and home; career growth aspirations; financial needs or the desire to experience personal growth and development. Tomorrow’s professional will be hard to keep. Period.
DO: Value your own contribution to the companies by which you are employed, and, it’s imperative that you tell that story (at the right place and time) because no one else will. You have to be your own marketeer and agent and prepare yourself for a life reinvention and exploration. This may sound like fun but it is a different mind set than graduating from a good school and going to work for the same company for 35 years.
The future for the worker also includes a commitment to educating yourself and mastering awareness which is outward as well as inward. Your external view should remain focused on industries and macro trends in our world which may represent sectors in which you can contribute. In today’s faster-than-Moore’s-law growth rate, entire industries will exist each decade that were not around during the last ten years. Remain agile in your mindset in terms of what you are and who are you are. Your degree is in mechanical engineering? Great. Fifteen years from now you may be the owner of that pastry business you’ve always dreamed of, and that’s as it should be.
DON’T: Remain attached to the mental and emotional models you had ten, five or even one year ago. Your inward view is all about knowing yourself. The right companies will be seeking more self-aware professionals in our future and emotional intelligence matters. You need to be in touch with your strengths, opportunities, needs and tendencies so that you can manage your own evolution and growth.
If You Lead A Company, Try To Remember That Business Is A Not Zero Sum Game
If you’re a CEO, a CFO or board member, you have an incredibly important role to play for the success of your company. Yes, it is vital that your company returns value to its investors. Yes, the ability of your firm to grow creates benefit for those employed by the company and the customers you serve. There are so many ways that a free market society generates positive ripples in the ocean in which we all swim. But, stories of company cultures that permitted or even encouraged a ‘growth at all costs’ mindset abound. Situations like the one which preempted the recent sub-prime mortgage debacle come from that toxic mindset that allows workers to be regarded as less important than the overall organization.
C-suite executives, ask yourself how you can achieve growth and do the right thing even when it’s hard. This may seem like a pollyanna notion, but as more trillion-dollar companies seek to remember the ideals they had when they were billion, million and thousand-dollar companies, we are seeing business lead in ways government often fails. This is the power to do good by doing well and we have to try to make this the norm. The Orwellian doublespeak in which companies have engaged in the past, should be called out for what it is - the attempts of a shrinking star to ignore its impending collapse. If leaders evolve and help those companies evolve along with them, maybe we will have more bright, healthy stars in our future night skies.
— Kimball Carr is a writer, owner and multi-unit leader with more than two decades of business experience across a wide array of sectors. He has produced work for print, film and the software world and has contributed his leadership to 3 of Fortunes best 100 companies to work for. As a consultant, he works with business and individuals and is currently the co-founder of Grom Coast Surf & Skate, an apparel brand and retail store built specifically for kids. —