In the previous article in this series, “Proper Organization Is the Fountain of Youth in Company Longevity,”we described how faulty organization contributed to the ultimate demise of Pan Am, the once monolithic giant of the skies. The airline’s reign lasted throughout most of the twentieth century; but after the retirement of its president Juan Trippe in 1968, internal mismanagement led to the company downsizing itself into bankruptcy in 1991.
To illustrate the opposite end of the corporate longevity spectrum, we also discussed the Japanese construction firm Kongō Gumi, which holds the unique distinction of being the world’s oldest continuously operating independent company. By means of delivery of a superlative product—backed up by a sound organizational structure—Kongō Gumi was able to last over 1,400 years.
Now, both companies had an organizational pattern. But the basic laws that govern what patterns of organization work and will guarantee expansion or, if ignored, spell disaster are laid out in L. Ron Hubbard’s article of 9 November 1968 where he highlights what “The Best Organization” is composed of. This is where he states:
“The best organization is one which has someone over it, methods of working out its problems, basic actions and a good desirable product.”
Any group, including yours, should have skilled executives. Even a young, bold entrepreneur should be learning from mistakes and enhancing his or her skill set and acumen. Problem solving usually goes from the top down, but any leader should watch for those on the team that solve problems without being told what to do. These are the people to mark for promotion.
So, what are the first steps a new business must take when it is struggling? And what must an established business do when it is faltering? From the same article, Mr. Hubbard sums up the answer:
“Thus when you see an organization begin to contract, if it is to be salvaged, it must be stripped back to basics quickly, its form simplified, its purpose clarified and the important services it can render greatly intensified and the cost of rendering them greatly reduced. This formula intelligently applied even to a dead government could revive it.”
Let’s look at Pan Am again, when it was beginning to contract. President Juan Trippe bought too many Boeing 747 planes before his retirement in 1968, and Pan Am started on its downward spiral in the early 1970s when the global oil crisis hit—affecting the bottom line of the entire airline industry. He was not around to navigate the company, and his successor did not strip back to basics, innovate and work out how to reduce costs while streamlining what his company could deliver.
The details are vital, but are meaningless without the big picture. A declining or struggling company must strengthen and streamline its most fundamental actions, and must focus on its deliverables and getting these to its customers, whether those customers are the broad public or other businesses.
The next point covered by Mr. Hubbard:
“It adapts itself to its environment or surroundings or conditions of operation so as to expand to greater or lesser degree.”
Now more than ever, we live in a constantly changing marketplace. With the Internet and digital media, communication travels instantly around the globe. Lies and propaganda travel just as fast as truth and usable data. For your business to survive, it must be able to adapt within a constantly shifting climate while remaining true to its ideals.
Some goods or services become obsolete or are threatened by innovation. Uber is now valued at $60 billion. (1) That’s billion with a B, and depending on whom you ask, they’re more valuable than GM, Ford and Honda. (2) They don’t even make or own their cars, and they pose a serious threat to the taxicab and shuttle industry all over the world. Innovation, while it drives us forward, is brutal and unforgiving to time-honored tradition, which brings us to the next point:
“Such an organization must have a clear-cut purpose and fill a definite need in order to survive.”
Make it clear in your company, from the boardroom to the mailroom, your mission statement and purpose. Why do you exist? Strong businesses always have an inclusive and positive company culture—one that never lets anyone forget or dismiss why the company exists and its role in society.
The next line is crucial to your plan:
“Its services must be more valuable than what it costs to produce or furnish those services.”
This does not mean you cut corners or resort to unethical practices, contrary to the beliefs of some of the “too big to fail” outfits out there. If you’re made in the USA and cost more, promote that; make that part of your identity. You have to be shrewd on this point and build relationships with suppliers and your customers.
The next component to consider:
“It must, to remain healthy, obtain more potential than it spends. For ‘potential’ can be ready money or power or even strength.”
Strength is not just monetary. Team building is essential in any business. A team is only as valuable as its individual members, and your strength comes largely from those you bring on board and how you work together to push forward your strategy. You’ll discover that there are those who work exceptionally hard and generate income through their actions; make an extra effort to retain these people.
“Where an organization violates these very fundamental things, it sickens and will eventually perish.”
Just as you can learn from success, you will learn from failure. Any business person worth his or her salt would do well to study the rise and fall of other companies and even governments and civilizations. But remember that you are unique—and your uniqueness will play a significant role in your success.
Use these points to build your strategy, and refer to them often and make adjustments as needed.
Good luck, and may you prosper well into the future!
- Rosoff, Matt. “Uber Has Become the Symbol of Everything Right and Wrong with Silicon Valley Today.” Business Insider (April 24, 2016). http://www.businessinsider.com/its-all-about-uber-2016-4. Accessed June 16, 2016.
- Divine, John. “The $68B Uber IPO Is DEFINITELY Not Worth the Wait.” InvestorPlace (April 19, 2016). http://investorplace.com/ipo-playbook/uber-ipo-valuation/#.WBuOJ8nBAXg. Accessed June 16, 2016.
- Branson, Richard. “Juan Trippe: Pilot of the Jet Age.” Time.com (December 7, 1998). http://content.time.com/time/magazine/article/0,9171,989780,00.html. Accessed June 16, 2016.
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