Preventing the Coming Corporate Mass Extinction Event

Rob Enderle

I was recently struck by a rather salty post. The author pointed out some rather painful statistics we don’t report often that showcase how absolutely dysfunctional most companies are. For instance, according to surveys, 95 percent of employees have no idea what their corporate strategy is, and 95 percent of companies report that they constantly make bad hires and that 82 percent of managers are bad fits. It really makes you wonder, not why companies fail, but how the heck they were successful in the first place.

What we aren’t talking about is that when you automate something that is broken, you don’t automatically fix it, you just make it faster, often much faster. So, for instance, if you are building defective parts by hand and you pull out the people and increase production by 10 times, you end up with 10 times the defective products. That kind of change could put you under faster.

Let’s talk about that before the long weekend.

Speed vs. Direction

I used to belong to SCIP, which used to be the Society of Competitive Intelligence Professions and magically became Strategic and Competitive Intelligence Professionals at some point. One of the sessions I attended years ago really hit home. The speaker drew an X/Y chart. On the horizontal axis, he put speed, and on the vertical axis, he put direction. Speed was faster to the right and direction was more accurate toward the top.

He argued that while a company should fix its direction before speeding up, most firms focus on speed first. The end result is that companies make their problems far worse before making a direction change.

Since then, I’ve realized the gradual degradation of financial performance over time doesn’t highlight the direction problem until you hit the accelerator and make it obvious to everyone. And executives don’t like to admit they were wrong. This last point means you need a pretty big stick to hit them with to drive a necessary change which, sadly, often means a major termination event (like it just did for Ford’s CEO).

The Next Industrial Revolution

The thing is, as we approach the concepts of truly intelligent systems, we aren’t talking two times or three times improvements in speed or improvement. We are likely talking 100 times, and this is one of the reasons why there is so much concern regarding this new age of intelligent machines. Using a car analogy, if you are in a car heading for a wall that looks like the horizon and you speed up two times, you’ll see the wall faster but still be able to react. If you jump to 100 times, you’re pretty much dead.


We aren’t talking about tweaking the carburetor or getting a better gas mixture, we are talking rocket engines and near warp speed. If the statistics are right, we have a massive amount of mismanagement going on as a practice and if we now automate those practices without fixing them first (recall that deep learning machines learn from us), we are quite literally screwed.

Corporate Mass Extinction Event

What really bothers me is, given that my graduate and undergraduate work was in manpower management (among other things), I got to see a lot of similar surveys back then and things have actually gotten worse with regard to hiring practices.

We are getting away with it due to a combination of checks and balances (which are likely holding on for dear life right now) and efficiency improvements, which are covering up the massive problems that exist in most companies. Let’s take the practice that largely forced Michael Dell to take his company and then EMC private: the excessive focus on quarterly results (which has been broadly panned because it is a company killer). Dell not only isn’t the rule, these practices that are slowly killing firms like Apple are still by far the most common. We aren’t learning and if we suddenly put rocket-powered roller skates under them, we could be looking at a mass extinction event. Rather than a meteor taking out the dinosaurs, it’ll be us running en masse, with scissors.

Wrapping Up: Fix First, Automate Later

This takes me back to the common problem of focusing on blame rather than first understanding the causality of a problem and then working to assure it doesn’t recur. We can see this in spades with the current presidential administration, which seems to have made many unforced errors, and finding people to blame is a near national pastime, showcasing a set of common practices in firms that are far too common.

So, the point I’d like to leave you with is that if we don’t start aggressively fixing what appear to be endemic judgment problems in critical processes and in how we deal with problems before we automate them, this next industrial revolution could become a corporate mass extinction event.

 

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+

 


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