Business Failure Diagnosis: Internal Bleeding

Business failures are common to the tune of about 50% of companies won’t exist five years after starting. The numbers get more dismal the further out you look. These failures can be the result of a bad product/market mix, fumbling a launch, investing in the wrong things … or a number of other factors.

Often, an unarticulated reason for business failure could be given the name “internal bleeding”. Internal bleeding is characterized by a company that has deeply negative issues around their people or processes that are largely invisible to both those inside and outside of the company. They come in the form of disengaged employees that show up but do little to drive the business forward. Or a passive-aggressive culture that emphasizes “nice-ness” over respect and effectiveness.

As an example, recently a smaller division of a large company with multiple worksites engaged a firm to help them with some cultural issues. After working with the firm on increasing engagement, collaboration, and respect within this team of about 100 people … real success was being made. Upper levels of management and other departments didn’t understand the ways in which this group was attempting to be more helpful and surprisingly saw it as a threat. Instead of trying to understand the potential benefits, they punished this group for spending the time they had on seeking to better understand their stakeholders. After having “seen the light” of a better way to work, the improving team was devastated by the reaction. At last point of contact, about 50 of the original 100 team members had left the company in search of a culture they now desired but couldn’t see they lacked under their former organization’s culture and system.

These issues will often be written off as “normal workplace friction” or rationalized as not being any worse than what you find at other firms. That may be true, but a general lack of visibility into how we really do benchmark allows us to rationalize what might be a toxic virus in an ever-declining system.

We must, therefore, be diligent in finding the truth and understanding anything that might indicate cracks in the foundation of our continuing success. Regular, open conversations with our people is the single best way to get a clear view of those realities and should be happening anyway.

At times, a more indirect method can be highly useful as well. The survey will give you a view not only into your team performance and sentiment, but will also do it by area (For instance, is it a teaming issue? Or an interpersonal issue?) and let you know how you rank (by percentile) against other organizations. The survey itself takes about 5 minutes to complete and can help you and your team immensely.

Last updated: August 05, 2017