When former Central Bank of Nigeria (CBN) governor, Chukwuma Soludo, directed banks to shore up their capital base to N25 billion in 2006, Intercontinental Bank was one of those that had no problem complying. The bank had built such a solid reputation for itself that when it issued its initial public offer, it enjoyed good subscription. However, to position it as a financial institution that was ready to leverage size and huge capital to deliver higher value, the management of the bank decided to merge with Equity Bank of Nigeria, Gateway Bank and Global Bank, where it had held equity positions ahead of the Soludo’s consolidation directive.
With that, Intercontinental Bank became one of the biggest and strongest financial institutions in the country in terms of branch network, assets and balance sheet. The bank extended its services to other countries in the West African sub-region by opening offices there. It also had a branch in London and had many subsidiaries in other industries. The bank was riding high; its narrative had become one of success. Its management and board got accolades. It appeared a great future had been carved out for the bank.
Then came the big bang.
In 2009, the CBN instituted a special audit of commercial banks operating in the country. The audit report had it that nine of the banks were under-capitalized and had been subjected to mismanagement. The apex bank sacked the management and board of each of the nine banks and injected fresh capital to save them from going under with depositors’ funds. So, the once buoyant and adequately capitalized Intercontinental Bank
was bailed out of bankruptcy by the Federal Government. It was later acquired by Access Bank, which could only have accounted for a fraction of its size in 2006.
How did Intercontinental Bank slide from so glorious a height to such an ignominious nadir? How did a bank that had its fingers in almost every pie get to the point that it had to depend on a government bailout? How did a well-capitalized banking institution that was growing to become a colossus experience such a descent that it had to be acquired by a bank that once held it in high esteem?
Many organizations often experience such slide and that is principally because they are unable to sustain the level of success that they once had. In business, nothing stands still; organizations either move up or buck down; they either increase their profitability or slide into insolvency.
Boom to bust
Writing on why some companies are unable to sustain the success they had once attained, Professor Vijay Govindarajan, who co-authored The Other Side of Innovation, identifies three traps which companies often fall into that give their much touted success stories the look of a page from pre-historic literature.
The first is the physical trap. He says by investing in old systems or equipment, such companies are unable to make adequate investment in the areas of the business that really need it. Resources are always inadequate. So, if deployed towards the wrong purpose by using them for the acquisition of outmoded equipment, there will not be enough for the pursuit of the much needed ones.
The second is the psychological trap, which makes the company so focused on what worked in the past to the extent that it is unwilling to adopt new ones. No one ever makes a giant leap forward by looking consistently at the back.
There is also the marketing trap. He explains this as the preoccupation of an organisation with the marketplace of today to the neglect of the demands of the future. The same rule applies to both organisations and individuals. The future is more important than the present. To remain relevant in the future, plans must be made today for the future. Those that focus only on the present will be left behind by the future.
In addition to those identified by Govindarajan, there are other factors that constitute an albatross to a company’s aspiration to sustain or surpass its success.
Failure to understand what made success possible
The slide into failure begins with the inability to manage success. The first step to managing success is to have a firm understanding of what made it possible. It is natural to ask ‘why’ after a failure but success is often followed by celebration that does not leave room for reflection. But the fact is that success does not just happen because every effect has a cause. When the factors responsible for success are not known, making wrong assumptions that could result in wrong decisions that would vitiate the success becomes a possibility.
When your organisation records a feat, it is good to find out why, don’t assume. If there is a surge in your sales, find out why. If there is an increased interest in your product, find out why. Knowing this will enable you to consolidate on the success. When you know what works you will be able to do more of that and have repeated successes. But when you do not ask the tough questions that would reveal the secrets behind the success, you downgrade the success to the realm of an accident.
To have repeated success, you have to understand why you succeeded. Most companies that moved from success to failure never understood why they succeeded in the first place, therefore their slide became a matter of course. Success leaves a pattern, it is only those who understand the pattern that are better positioned to repeat it. Understanding why your organization succeeded would position you to know what works and do more of that and jettison what does not work.
New level requires new strategy
Many of the companies that fail to sustain their success are led by people who are enslaved to the past. They are those who believe that the strategy that once worked for them can never fail them. Nothing can be farther from the truth. Every new phase in an organisation’s life requires a new strategy. So, relying on the old strategy is akin to grasping at straws. The actualization of a goal is not the end of the journey. So, rather than resting on its oars, with every success, a company must set new goals and deploy new strategy to achieve them. If a business chooses to take it easy after a major accomplishment, it would find out to its chagrin that other businesses have not only caught up with it but have left it behind.
Business leaders should take to heart the counsel of business coach, Marshall Goldsmith, in his book, What Got You Here Won’t Get You There. Moving your organization beyond its current level requires a change of strategy. Getting new results requires doing new things.
Strategy is never static; it is dynamic. It must keep pace with organizational goals and vision because it is the bridge between a company’s present and its future. So, every height aimed requires different strategy. Relying solely on a strategy that once worked to glide to the next level is a recipe for failure.
Get new people
The present is already known but the future is still in the air. However, what smart leaders do is to snatch the future from the air and mold it to suit their purpose. According to Abraham Lincoln, the best way to predict the future is to create it. So, creating a future that is different from the present will necessitate bringing on board some new people.
Some leaders are reluctant to do this because they think it would be unfair to members of the team that laboured so much to get the organization to its present level. While the sentiment may have some basis, it won’t get the organization to its desired future. Breaking new grounds consistently requires the injection of new blood.
When football clubs get promoted to the premier league they go for new players with proven accomplishment in soccer. Why? If they don’t, the probability of returning to the lower division the following season would be high. Should a football coach refuse to hire new talents that could guarantee his club’s continued participation in the premiership or even a chance to play on the continental stage because he does not want to hurt the feelings of those who got the team its much cherished promotion? That would never occur to a forward-looking and serious-minded coach. While he would not throw all his old players overboard, he would bring in new people and allow every player to contest for a shirt in the team.
Old thinking cannot produce fresh actions. Moving beyond the current level requires new brains that will generate fresh ideas, new eyes that will see things differently and new hands that will find better, easier and more productive ways of working. Relying on the same set of people who made the current success possible is limiting the possibilities of the future.
Be ready to learn
Success sometimes can be its own destruction. Successful people are often set in their ways. They are of the view that having taken the route before and recorded success, there is nothing left for them to know. They maintain that you can’t argue with success. But that mindset makes further success difficult and a slide inevitable. Hence, the saying by management expert, Jim Collins, that the good is the enemy of the great. Small successes may make great ones impossible unless the person deliberately detaches himself from the little successes. Reveling in little successes leaves the individual with the impression that the highest height has been conquered.
Moving from the present level to the next one will require doing new things. To do new things requires knowing new things. Knowing new things must be preceded by learning new things. Thus, to ensure that their organisations keep growing, leaders have to make learning an ongoing endeavour. If you keep doing a good thing the same way over a long period, you are doing it the wrong way. A company that will not regress is one whose leaders will not shut their minds to learning nor close their eyes to opportunities. The largest room in the universe is that for improvement.
The antidote to sliding is continuous growth. Those who don’t keep growing end up groaning.