Is Your Big Franchise Brand Doomed?

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My education and experience in crisis avoidance and - if that fails - crisis management began rather early in my now more than 50 year professional practice.

The purpose of this article is to illustrate how the seeds of disaster are planted and grow, slowly at first in many instances and then explosively, and how best to avoid or manage those life threatening events.

The context is a story of three companies' experiences. One probably could not be avoided, as it was the product of the human tendencies that operate as it approaches critical mass and then explodes.

The other two were instances of avoidable mismanagement coupled with refusal to deal with anything that was not openly supportive of the agenda of a limited leader/owner - bullying as we conveniently call it today.

1. Let's deal with the giant company syndrome first.

It was the company's heyday. It led its field in almost everything it attempted. It had more money that just about any enterprise on earth. Its sales were more than the gross national product of several countries combined and its profits were mind boggling.

Department heads worried more that if they failed to go over their budgets the budgets would be reduced the following year. While enjoying an as yet unearned designation as an antitrust specialist, I was the lowest of the low in an enormous group of highly educated experienced people. What I really got to do was observe and learn.

No confidential information will be revealed in this article. Everything here is of public record and very old. Most of the people involved are long since gone to heaven.

In retrospect I think it is probably impossible for normal human beings to remain modest, humble and maintain their essential humanity in the face of so much wealth and power. I am not against wealth and power, but in this instance we are speaking of national level wealth and power - supernormal even for large companies.

Oddly enough, while antitrust enforcers sought and failed to bring it down, it ultimately brought itself down with inbred delusionality.

2. What I quickly learned was that most crises come from management blindness and resulting gross miscalculation.

The notion that one may be possessed of so much power, authority and wealth as to be immune from disastrous consequences is practically always the seed from which the tree of emergencies grows. This company was an extreme example of that, far more so than any other place I have ever been.

What I observed that opened my eyes to the notion that no one is sufficiently powerful to be immune to disaster was a trio of catastrophic instances of management arrogance and of management being oblivious to the opportunities for change in the marketplace.

  • The management arrogance incident involved attempting to destroy a critic who had put his finger on a fundamental product weakness.

  • No one was to be permitted publicly to suggest that this company was imperfect.

  • The corporate braggadocios included such things as boasting that it was four deep in every position - the definition of wastefulness - and that its law department was The Praetorian Guard of the World's Largest Industrial Organization.

You just can't make this kind of stuff up.

The consequence of the incompetent attempt to destroy the critic was the establishment of organized insistence upon better automotive safety and the enactment of laws addressed to that and several other issues on which prior to that moment in history the company had had its own way. The genesis of the plot was laid to the law department.

Oddly enough, at the same time, its most effective potential competitor came out with a revolutionary design named The Ford Mustang that swept the market with excitement. Lee Iacocca really was the smartest man in the room.

Within a very short few years the Japanese, led by Honda, took up where Ford had begun and the era of the giant, powerful, fast, quick, gas guzzling behemoth of an automobile began to fade.

Ultimately, the product of such ingrained arrogance was the failure of the entire company and a federal bailout to try to save the jobs it potentially represented. In such a rarified atmosphere it is probably unrealistic to expect what would seem rational to normal people.

Anyone suggesting that management look into a mirror, on any level, would be summarily cashiered. After all, "What's good for General Motors is good for the USA", according to its chairman Alfred Sloan.

We begin with this vignette only to demonstrate that there is no one so mighty that he cannot be the author of his own comeuppance, even if it takes a while. The world does change. Circumstances do catch up to everyone.

As always, you can call me, Richard Solomon, at 281-584-0519.

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1 Comment

The mightiest of businesses they do fall.

While at the same time they have immense resources available to them they can't seem to get out their own way.

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About this Entry

This page contains a single entry by Richard Solomon published on December 11, 2014 2:19 PM.

The 6 Benefits of a Bespoke Franchise Resolution Mechanism was the previous entry in this blog.

NLRB Finally"Explains" Anti-Franchise Animus is the next entry in this blog.

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