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Can a company’s DNA kill it?

August 19, 2013

Will DNA that doesn’t adapt kill a company? The chemistry of corporations and their leaders is endlessly fascinating to us ‘industry watchers.’ To what extent are companies reflections of their leaders or, conversely, do some companies suck the personality out of managers, demanding everything is done the ‘XYZ’ way? Can you take the DNA of one company, carried in its executives, and transfer it to another?

There are examples a proponent of any of the above can chose for their case. Certainly some corporates always try and impose their personality on a new purchase; Cisco does this, it probably feels it has to because that’s the only way to extract value quickly from its many, many acquisitions. It often hurts the new member of the family, but at least ensures they’re all singing off the same hymn sheet. The company also thinks the Cisco way is the right way, and, so far, who can doubt it? But when Nortel went on a buying spree on the Cisco model, it was lights out.

Now another Canadian company seems on the brink, or rim, of disaster. Blackberry has put itself up for sale (kind-of; and there you begin to see the problem). This was a phenomenally successful company that so cornered the business phone market it easily defeated attempts by Nokia, Motorola and Microsoft to break in. Its founders and managers, not surprisingly, developed a sense of invulnerability. The co-CEOs (there’s another problem) got distracted by philanthropy, and one was reputed to say when the iPhone came out that neither he, nor anyone he knew at RIM, had used one. Those founder CEOs have now gone but the person appointed was an insider. RIM didn’t see smart phones coming, then they decried them, and then when they finally made their own they were no good. Classic cycle.

In technology it is easier to get left behind than in most sectors. And sometimes you are just invented out of existence; look at Polaroid and Kodak. They tried all sorts but in the end someone always did what they tried better or earlier. Their core skill wasn’t needed anymore.

IBM almost went the same way. It was a disaster in the PC world and trying to keep a grip on mainframe and midrange computing wasn’t working, so it changed everything, all at once, and it survived and prospered. It had, and has, a strong personality – black shoes, no beards etc – but it was a corporate personality long decoupled from any person or persons. It thought clearly and made tough decisions but only just in time. It is always five to midnight before the unthinkable is thought. RIM’s time is likely already passed. Hewlett-Packard is on the clock and so is Alcatel-Lucent. Sony must be keeping an eye on the time. Even Microsoft should be glancing that way; it has a first generation insider at the helm who cannot believe there could be another way, but what is working well for them just now? Apple is almost a victim of its own success, with an insider trying to carry on the over burnished mantle of a personality leader who successfully elevated the practice to a cult.

What about the goliaths who are not just first generation but barely out of school? These – and I mean Google, Facebook, maybe Amazon, even Twitter, are a new phenomenon. Even in the days of Howard Hughes (not a great example of personality leadership), or Mellon or Carnegie, businesses didn’t ascend to world domination as quickly and completely as this. And yet every bit as much as those historic businesses they are driven by individuals whose DNA run through their companies. And it would be remarkable if their stunning success hadn’t lead to more than a hint of hubris. So far, no one has flinched too much at their daunting rise to power, partly because they seem such nice people; kids who had brilliant ideas and adopt mottos like ‘do no evil.’ It will be interesting to see how sentiment shifts as their all pervasiveness ploughs on. And, while it is very hard to imagine now, how will these companies react if the world moves on and the model starts to fail? Every company has its midnight hour eventually.

Categories: Blogs, Business, M&A, Nick Snow