If at First You Do Succeed—Watch Out

The New York Times wished IBM a happy 100th birthday in an article last weekend as it explored the secrets of the company’s longevity. “Evolving beyond past success is a daunting task for companies in all industries,” the Times noted. “But that problem is magnified in the technology arena.” The piece went on to discuss the challenges facing present-day titans such as Google, Apple and, especially, Microsoft.

The Times also pointed out that IBM very nearly ran out of steam about 20 years ago. In 1990, IBM’s executives were speaking of “the need to wean I.B.M. from its dependence on mainframes and to shift toward software and services,” but they “didn’t pursue that strategy until after the company was in peril.” The article concluded with an observation from David Yoffie, a professor at Harvard Business School, who said, “It’s really hard to move a company when it’s doing well and not facing a crisis.”

This problem of success was one that greatly interested Peter Drucker. “Problems of success are always the hardest—if only because the human mind tends to believe that everything is easy once success has been attained,” Drucker wrote in The Practice of Management, his 1954 classic. “It is also for this reason that so few managers realize that growth requires a change in their attitudes. They tend to argue that the attitudes and behavior that have led to original success will also lead to further success.”

[EXPAND More]While IBM had troubles in the early 1990s, this period was an exception. The company until then had a history of rarely taking success for granted, thanks in large part to its founder, Thomas Watson. “Watson invented what the Japanese now call continuous learning,” Drucker recounted in Frontiers of Management. “He began in the early 1920s with his salespeople, who were called into headquarters again and again for training sessions to enable them to ‘do better what they are already doing well.’ Later Watson extended continuous learning to the blue-collar employees in the plant. . . . These practices very largely explain IBM’s success. They exorcized the great bugaboo of American business, the employees’ alleged resistance to change.”

How about you? Have you ever worked in an organization that was a victim of its own success? What happened?[/EXPAND]