Friday, August 29, 2008


Two years back, when I heard this name being whispered in management circles, it sounded more like that of a garment trader’s [think about it, Jagdish Sheth & Sons...] than like that of the leading management thinker of modern times. At that time, Fortune had mentioned this media-avoiding former MIT & Columbia professor’s name in a futuristic article, with reference to his unique Rule of Three [a rule that competitive industries, in general, will finally only be left with three significant players]. An year later, this 67 year old imp of a powerhouse called Sheth combined his years of exhaustive global research on the world’s leading corporations and wrote the rule book on why CEOs of the world’s leading and most successful corporations will destroy themselves and their companies [The Self-Destructive Habits of Good Companies] because of a simple reason, “Complacency!” (The book was picked up by the famed Wharton Publishing).

“I used to think that competition destroys good companies. Strangely, I found that’s not true: companies destroy themselves… Success breeds complacency. The average life span of corporations is declining, even as that of humans is rising.” Out of the seven self-destructive habits of corporations, Sheth lists “The No-One-Can-Beat Me Syndrome: Arrogance & Complacency” as number one! From Prof. Carl Robinson of University of Maryland, [Why Great Companies Fail] to the famed Courtman & Wild of Turnaround Management Association [Avoiding Common Traps That Lead to Distress], leading management scientists now accept that complacency of CEOs is the Number 1 reason why companies get destroyed! In fact, now the most famous Prof. Clayton M. Christensen of HBS notes, “Leading companies decline and sometimes die not because of competitor’s advances, but because of new players with lower-quality solutions!” However out of this world this might, this is exactly what Sheth warns about. The first one to forecast that GE is self destructing itself in turf wars, all Sheth got from the world were chuckles. Today, Immelt has proved to be the worst performing CEO of all times for GE. During Immelt’s 7 year reign, GE stocks have plummeted by 30.2% [Jack Welch’s first 7 years had seen a 140.2% rise: Bloomberg].

CEOs have completely forgotten the concept of visioning. Forget visioning, unbelievably so, CEOs have even stopped “thinking.” Ask a CEO a modern management paradigm, and all you’ll see is a blank face. Ask yourself, when was the last time you sat down to ‘think’. Sheth is the first to statistically prove that where earlier “a [Fortune] company would be in existence for 50 to 60 years, now its life cycle is down to just 10.5 years!” Shocked? Sheth’s corporate clients roster now includes Cox Communications, Delta, Ernst and Young, Ford, Lucent Technologies, Motorola, Nortel, Sprint, 3M, Whirlpool, and even General Electric itself, the same company he doesn’t lose an opportunity to criticise. BusinessWeek now notes, “Dr. Sheth is one of the most globally acclaimed academicians, authors, and Board Advisors,” connected to 186 board members across the world [he’s now even a Director at Wipro]! Cut to June 2008, Sheth wins the Guizeta Global Innovation Award; it is presented to him by John Quelch, Senior Associate Dean at HBS in a small ceremony... It’s seriously a strange existence for this man I know of as Jagdish Sheth. And imagine, you hadn’t even heard of him! That’s complacency! This is a special double issue of 4ps B&M and as we have burnt a lot of midnight oil, I guess it is time for us to take time off and be a little complacent. we will be back after a break issue. Cheers!!!


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