Four lessons that are at the core of why so many successful businesses eventually fail.
Steve Yegge strapped on his parachute and jumped out of a perfectly good airplane, in fact, by any measure, it was not only safe but one of the world’s most successful and invincible planes.
OK, he didn’t really go skydiving. I’m using a metaphor to illustrate just how crazy what he did may appear to many people. After 13 years at Google Steve Yegge bailed. He still believes that “Google is one of the very best places to work on Earth.” And yet, he left to go work for a startup. That may not sound like a big deal; happens all the time in Silicon Valley, right? Smart people leave great companies to go out on their own.
“I see more great companies fail because of their success the anything else.”
However, what’s interesting is that what drove Yegge out may point to one of the most consistent and insidious factors in the downfall of many large successful companies. His take, (recounted in a recent Medium article) on how Google lost the hunger and the edge that it once had, provides crucial lessons on, and an insider’s view of, why one of the best companies on earth may succumb to its own success.
While Google may seem light years removed from your small business, these are lessons that every company would be wise to pay attention to–most of all companies that are growing rapidly and experiencing high levels of success.
Decades ago, a mentor told me, “I see more great companies fail because of their success the anything else.” At the time I was at the helm of my own very successful company and didn’t really get what he meant. Thirty years later it’s crystal clear to me how success can seduce us into complacency, arrogance, and ultimately stagnation.
Here are the four lessons that Yegge recounts which you would do well to pay attention to as your own business grows.
1. “The main reason I left Google is that they can no longer innovate. They’ve pretty much lost that ability.”
It’s hard to imagine that a company like Google could be accused of lacking in its ability to innovate. But that’s where the disconnect in most very successful companies enters the equation. The more successful your current business model, products, and services the more internal mechanisms that end up being put in place to protect them.
“Gatekeeping and risk aversion at Google are the norm rather the exception.”
This isn’t a well-planned strategy, by the way. Instead it slowly creeps into everything from how you incentivize employees to how you budget. I recall one Fortune 500 company I worked with that allocated budget for innovation based on a hardwired formula, built into it’s budgeting software, which allocated innovation dollars based on the profitability of the product being innovated. Want to guess how well that worked for new products that weren’t profitable because they didn’t yet exist? Right! Unless you were senior enough to override corporate policy your new idea didn’t stand a chance of making it off of the white board.
As Yegge put it, “Gatekeeping and risk aversion at Google are the norm rather the exception.”
2. “…they are mired in politics…”
Of course, any organization of two or more people will have some sort of political agenda to contend with. However, in the same way that the power of a network grows exponentially as you add each new node, so does the inherent friction caused by politics as you add more people. Driving down this friction will not happen on its own. Much like entropy, the only way to mitigate it is with the application of energy to keep the machine operating smoothly.
However, putting in place people and policy to specifically avoid the friction of people and policy seems incredibly wasteful to most companies. After all, they are successful, so why bother? Because nothing is more amazing than the phenomenon of bringing together dozens, hundreds, or thousands of brilliant humble people to end up with a very arrogant company that lacks common sense.
“Poor policy is most often the output of a disjointed political system that is serving the disparate agendas of too man masters.”
Think about it. How often have you come across a large global brand with a policy that makes absolutely no sense other than to create unnecessary friction and frustration with its employees or customers? Poor policy is most often the output of a disjointed political system that is serving the disparate agendas of too man masters. Sadly, it’s the rule, not the exception.
As Yegge put it, “When a company is as dramatically successful as Google has been, the organization can become afflicted with a sense of invincibility and almost manifest destiny, which leads to tragic outcomes: complacency, not-invented-here syndrome, loss of touch with customers, poor strategic decision-making.”
3. “Google has become 100% competitor-focused rather than customer focused…their incentive structure isn’t aligned for focusing on their customers.”
This has to be one of the most pervasive and yet easily overcome obstacles of growth. Losing the perspective of the customer (and potential customers) and instead chasing the competition, is epidemic among successful companies.
“Put your people in the role of the customer regularly.”
According to Yegge, “You can look at Google’s entire portfolio of launches over the past decade, and trace nearly all of them to copying a competitor: Google+ (Facebook), Google Cloud (AWS), Google Home (Amazon Echo), Allo (WhatsApp), Android Instant Apps (Facebook, WeChat), Google Assistant (Apple/Siri), and on and on and on. They are stuck in me-too mode and have been for years. They simply don’t have innovation in their DNA any more. And it’s because their eyes are fixed on their competitors, not their customers.”
How do you fix that? It’s utterly simple. Put your people in the role of the customer regularly.
Yegge recounts how “Jeff Bezos mandates that every leader in the company spend a day a year in the customer call centers, because info relayed back from Customer Service reps doesn’t paint the full picture. You have to experience it.”
If you’re scoffing at that then answer honestly, how often do you do it?
4. “Google just isn’t a very inspiring place to work anymore.”
Ok, so we’re not all working on solving world peace, curing a deadly disease, or ending poverty, but inspiration isn’t just about being part of a grandiose mission that makes the daily headlines. In my experience as a CEO and in working with countless startups, I’ve found that it’s mostly about being part of a company that sees itself as having purpose.
“Profit is what gives us license to exist but it is purpose that gives us the reason.”
As companies experience success it’s easy to lose sight of that and instead just follow the money. Profit is what gives us license to exist but it is purpose that gives us the reason. If you’re not reminding your people every day of “why” they are doing what they are doing, in terms that go beyond the financial, they will end up making decisions that fear risk, innovation, and growth.
I often use the anthology of flying a plane. You need to make sure your fuel gauge (profit) is full enough, but without a compass setting (purpose) to follow you will run out of fuel before you find a destination. Or, in Yege’s case, grab the parachute and jump before the tank is drained.
Yegge, ultimately left Google to go to a startup, Grab. It’s much smaller than what he’s been used to flying in. It can’t fly as high or nearly as fast, yet. And there are definitely no guarantees of success. Clearly, it’s not for everyone.
Yegge isn’t deterred, because not only is the thrill infinitely greater but so is the degree of personal investment.
According to Yegge, “I am giving everything I’ve got to help Grab win. I am all in. You’d be amazed at what you can accomplish when you’re all in.”
That’s what success should feel like.
This article was originally published on Inc.
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Tom Koulopoulos is the author of 10 books and founder of the Delphi Group, a 25-year-old Boston-based think tank and a past Inc. 500 company that focuses on innovation and the future of business. He tweets from @tkspeaks.