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When Giants Fall

  • By Jeff Tetz & Tim O'Connor
  • July, 4 2022
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In the late-1990s Nortel was the 9th most valuable company on the planet worth $250 Billion. It employed 94,000 staff globally and made up one-third of the Toronto Stock Exchange. Nine years later it was bankrupt. 

What did Nortel do to collapse and what can you do to avoid a similar fate?

Diagnosing the Fall 

After Nortel declared bankruptcy, former CEO Jean Monty (who preceded Roth) and a team from the University of Ottawa conducted a three-year study to find out what happened. They released their findings in 2014. 

Several external factors played a role in the fall of the company. These included the factors you would expect; increased competition, the global economy and quickly shifting technology trends.  

But here is what’s shocking: the study also cited seven internal factors: 

  1. Poor corporate culture including low collaboration, politics, and turf-wars.
  2. Inadequate business processes
  3. Lack of communication and care for customers
  4. Erroneous reading of trends
  5. Lax financial discipline
  6. Inadequate integration of acquisitions
  7. Arrogance 

Every one of these factors could have been avoided if leaders had recognized them and done something about it.  

Business Fall

Avoid Your Fall 

The story of Nortel is a cautionary tale for you and your business, and there’s four simple actions you can take to avoid predictable surprises. 

  1. Listen to Your Customers 

    Deep listening is about asking the tough questions and hearing the uncomfortable truths. Even if your company is growing rapidly, there can be seeds of dissatisfaction in your customer base and if you don’t take the time to surface them you could be unequipped when a savvy competitor comes along and replaces you. As John Spence regularly reminds us, “whoever owns the voice of the customer owns the marketplace.” 

  2. Remain Humble 

    Humility is the opposite of arrogance. Success is often fleeting, so never forget where you came from. Humility is directly linked to a leadership style known as servant leadership. Emerging research confirms that not only are newer generations of employees attracted to this style, but they perform better in environments where servant leadership is the norm.  

    Servant leaders understand their own limitations, consider others’ opinions, recognize their own mistakes, and are continually trying to improve, making humility a key factor in coachability. 

    Adam Grant notes that the best leaders are givers first. They always start by putting the interests and priorities of others ahead of their own. Leading in this way is a hallmark of servant leadership. 

  3. Avoid Complacency

    The journey is never over for organizations, and that’s why Jim Collins and others espouse setting longer-term vision. Like a compass, we always need a true north to guide us and push us forward.  

    One of the characteristics of exemplary leaders is to always be challenging the process, continuously improving key processes and people in the organization. 
     

  4. Internal Focus 

    For the past several decades leaders have been externally focused. Corporate success has been tied to choosing the right markets, adopting the right technologies, making the right acquisitions or strategic partnerships, and introducing the right products at the right time.

    Increasingly, the competitive playing field is shifting to people and talent. Winning firms are those who attract, employ, and engage the best talent more than those who land be best contracts. Therefore, leaders need to shift focus to culture, coaching, development and engagement of their teams. 

Unleashing the Potential of Your Organization 

If you’d like to learn more about how to predict, mitigate and adapt to your business challenges, or other ways you can take the simpler path to creating a great business, connect with us or consider attending one of our upcoming leadership events. 

 

Tim O’Connor & Jeff Tetz

 

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