How to avoid the success trap?

Published in LaZOOZ - Strategy, Marketing and Innovation Newsletter, Issue 51, By Ari Manor, CEO, ZOOZ

Some companies have success written all over them. They are in a thriving industry, their revenues and profits are continuously on the rise and their growth rate has been in the double digits for years. Such companies unfortunately often fall into the "success trap".

Here are several symptoms that companies suffering from the "success trap" exhibit: 

• Arrogance, pretentiousness
• Exaggerated and unjustified expenses
• Mediocre service and occasionally even disregard for customers
• Short term planning and a lack of a focused strategy
• Incongruence between the various departments
• Multiple politics and internal intrigues.

So how do you defend yourself from the success trap? Here are a few recommendations:

• Use the entire industry as a reference point: When the industry grows by 15% annually, there is no reason to be proud of 12% growth. You have done a good job only if your annual growth rate exceeds the industry average.
• Stay humble: This starts with upper management, from what messages it sends to the other employees. If the CEO and upper management manage to keep things in proportion even in light of the success, treat customers, suppliers and employees respectfully, do not waste money on unnecessary expenses and posturing (including expensive furniture and vehicles, a separate dining room for executives, etc.), and do not rest on their laurels, even the lowest ranking employee will get the message. In fact, if you manage to continue being humble in light of your success, you will gain a lot more respect from everyone you work with.
• Recruit a compatible staff and change the current mix if required: Humility is a matter of character, and therefore you have to recruit managers with a compatible personality. If someone does not suit your organization culture then they must go, because one bad apple can ruin the bunch.
• Carefully prepare and implement an ambitious and focused strategic plan: Set challenging growth goals that far exceed the industry standards (as stated above). Consistently and constantly monitor progress, check that the departments understand the plan and are acting according to it in complete concordance with each other. Challenging goals and constant monitoring will force everyone to closely cooperate, and will minimize the internal politics.
• Prepare logistically: Accelerated growth requires close long term planning. Plan the inventory, employee recruitment, adding areas and production lines, etc. for the next five years. Concurrently, verify that your main suppliers are also prepared for growth. Do not let demands surprise you.
• Invest in innovation: If you want to grow faster than your industry, you need to constantly provide your customers with reasons to choose you each time anew. The products and services that worked so well for you today are not an assurance for tomorrow. Even very large companies are forced to reinvent themselves every few years, otherwise they become obsolete and disappear from the market.

An example of a company that managed to escape from the success trap is the dental implant company, MIS, which operates in a global market that grows 20% annually. In 2003, MIS's management was smart enough to understand that the accelerated growth that the company had experienced was not necessarily auspicious, and together with ZOOZ, it underwent a strategic process to prepare for the future. MIS, which was then a fairly small company, one of the top thirty dental implant manufacturers in the world, set ambitious goals for itself: to grow by 30% or more annually, meaning much faster than the global growth rate, and to become one of the top ten in its field in 2008 (within 5 years). In order to meet these goals, it was decided to focus on countries in which the dental implant market grows relatively faster, invest in R&D and innovation, and develop a well-invested brand. It was also decided to expand the management ranks in order to support the plan and the anticipated growth.

Between 2003 and 2008, MIS worked according to the plan, and met its ambitious goals. It has grown by more than 30% in each of the years since then, launched several innovative brands, and is currently among the top ten largest companies in the world in its field. Their new and state of the art factory is currently being inaugurated. We are still assisting MIS with their innovation processes, marketing and sales, and are happy to see that even today, success has not gone to their head. They are still humble, still energetic, and are currently exploring how they can become one of the top three companies in their field worldwide. We have no doubt that they will succeed!