Early Signs and Symptoms of Small Business Failure

When any of these symptoms begin to be a normal part of your company’s meetings you need to be diligent and accept that you may need to pivot,...

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Author Jim Collins describes this process — the stages of falling. These five stages should be recognized before your company falls to its death:

  • Stage 1: Hubris Born of Success: The team believes they are going to win because their strategy has and will always work.
  • Stage 2: Undisciplined Pursuit of More: The team pursues more than they can take on.
  • Stage 3: Denial of Risk and Peril: The team fails to realize they are in trouble and worse, ignore it.
  • Stage 4: Grasping for Salvation: The team begins to look for anything that can save them, changing leadership, players, and flailing activities.
  • Stage 5: Capitulation to Irrelevance or Death: The team primary process finally surfaces through the results.


The Business Impact of Changing Worldviews

Many great companies that have fallen share a common characteristic: they did not see their irrelevance coming. They did not look up and revise their view of the world. Their world became stale and the reality around them was rapidly changing.

While most companies believe they are doing fine according to P&L sheets, metrics we commonly use as a life source of our companies, in different conditions and in the middle of a market transformation these metrics are unreliable.

This is where exploratory methods are drastically needed in business: when quarterbacks need to focus on making sense of their world. Large companies like P&G, Fannie Mae, GE, Windows, Wells Fargo, Petco, Ford, HP, Virgin, Redbox, NorthFace, Intel, Clark Realty Capital, Nemours Children’s Hospital, Walgreens, Converse, and others use exploratory partners and processes to understand the world. Their partners focus on the social sciences and how they apply to business.

We must understand that the other team or the field of play is not the problem, it is the processes, values, and our business perspectives that create the problems. As theoretical physicist Albert Einstein says, “No problem can be solved from the same level of consciousness that created it.” This means you must use a very different set of tools to understand what’s next for your company.

Exploring the world. Immersing in the wide lens. Disrupting your assumptions. Utilizing a beginner’s mind. Abductive and inductive reasoning. This goes against what is taught in most business schools, but it’s also what has saved massive companies like P&G and many others.

[pullquote align=”right”]“… It would be a sad situation if the wrapper were better than the meat wrapped inside it.”[/pullquote]In today’s business world, we must focus on solving human needs. Instead of focusing all of our efforts on persuasion, like discounts and advertising, we need to explore the world and rethink our assumptions, constantly readjusting them to keep our minds fresh.

The transforming market, the increasing complexity in human needs, the increase in customer touch points, and the vast globalization of the market is causing all types of ruptures and the changes aren’t stopping. When any of these symptoms begin to be a normal part of your company’s meetings you need to be diligent and accept that you may need to pivot, even your core business model.


Christian Ramsey is an ethnographer and strategist at ESP Collective which specializes in applied social science and design thinking to help businesses and organizations grow through innovation in today’s ever-changing landscape. Connect with ESP Collective on Twitter.

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