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Columns

Uncommon Sense: Why Businesses Fail

June 1, 2002

Lack of working capital, government regulation, loss of market share, foreign competition and stagnant product development have all been blamed for business failures. However, these are only symptoms. In 1957, C. Northcote Parkinson coined the term "injelititis" to describe an infectious disease that often causes business failure. In its primary stage, injelititis infects individuals who combine severe incompetence and jealousy.

When infected individuals gain control of an organization, the disease advances to the secondary stage. At this stage, Parkinson says, "Higher officials are plodding and dull, those less senior are active only in intrigue against each other, and the junior men are frustrated or frivolous. Little is being attempted. Nothing is being achieved."

In the tertiary stage of the disease, a mean-spirited, self-centered, ignorant and insecure top management team has gained control. Parkinson describes its behavior thus: "We rather distrust brilliance here. These clever people can be a dreadful nuisance, upsetting established routine and proposing all sorts of schemes that we have never seen tried." At this stage, smugness and apathy are the only remaining cultural anchors and the organization is essentially terminal.

The Enron-Arthur Andersen debacle is just one example of injelititis extremis, in this case exacerbated by uncontrollable corporate greed.

Business leaders don¿t recognize—or they ignore—the symptoms of injelititis. They would much rather rely on the next magic-bullet solution than address the core organizational challenge—effectively getting work done through others. And in their quest for this magic bullet, business leaders are supported by their public accountants and by the graduate business schools.

Public accountants focus on technology because it is in their financial interest to do so. Professional fees for a modest software development and implementation program can run into the hundreds of thousands of dollars. Such projects are typically touted as the solution to all organizational ills. However, they often fail miserably, typically for one or both of two reasons. First, the software was installed by the public accounting staff who did not, or were not allowed to, take the time to understand the business processes to which the software was to be applied. Second, the organizational dynamics and design were not even remotely considered.

Business schools stress technology because it is easier to teach a math formula than to impart the wisdom required to cure injelititis. Furthermore, applying that wisdom requires courage, security in one¿s self and the ability to effectively listen instead of talk—qualities few of us possess intuitively and which cannot be taught. The business schools need to stress that technology cannot be successfully implemented without considering the complex human side of the enterprise.

In most cases, there is no cure for injelititis once the disease has reached its tertiary stage. However, a few rare individuals are immune to the infection. Parkinson says these individuals "conceal their abilities under a mask of imbecile good humor, babble about golf and giggle feebly until the outer defense has been penetrated and they achieve high rank." At that point, the uninfected individuals throw off their masks, and the infected staff, with shrill screams of dismay, finds ability right there in its midst. They begin to retreat and full recovery is possible.

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