Self-Defeat!

Two of the biggest macro-stories last week were the ongoing Russian invasion of Ukraine and expanded lockdown across more than 30 cities in China due to Covid-19.

Two of the bigger micro-stories last week were the shutting down of CNN+ just 32 days after launch and the 40 percent plunge in Netflix stock.

Though each was different they shared a common trait which is a surprising reversal of fortune!

Defeat seemed to be snatched from the jaws of victory!

Self-Defeat.

A case can be made that most successful individuals, institutions and nations are rarely defeated by others but find ways to defeat or weaken themselves to enable their own withering and dissolving.

In almost every case the same four indicators have been flashing for a while, but no one was paying attention.

The four symptoms of SDD (Self-Defeating Disease) are:

Incestuous thinking: A smaller and smaller group of decision makers with similar backgrounds and long tenure in the same place.

Cult replacing Culture: A cult either around a leader, a “way”, a fashionable financial market meme (“everything as a service”, “data driven everything”, “streaming is the only way”, or some other weird dogmas parroted and echoed by a fawning press chasing page views, trending stories and personalities).

Fear: Fear of speaking up, fear of change, fear of opposing the leader or “the way”!

Overreach: Letting recent success and fawning make one lose perspective that much success is driven by luck and trends that can turn and therefore overreaching too far or moving too soon.

The symptoms at play.

Russia: The long table that Putin sits at the very end of reveals his self-isolation, fear and cult mongering which has led to one of the greatest (and tragically bloodiest) strategic miscalculations in decades. Regardless of whether Russia ‘wins” the citizens of a civilization that gave the world Tolstoy and Tchaikovsky has been led backward rather than forward. Truth has a habit of breaking in and facts are stubborn things. Sooner or later gravity has its way with initial upward floating balloons of baloney. And Russia and Russians will find in time their own leader defeated them and pushed them back a generation. If time is all we, have he robbed a nation’s proud citizens of years of their lives.

China: A little over one year ago China appeared to be unstoppable. Their economy was soaring. They had Covid under control. Their next generation technology companies from Alibaba to Tencent were growing and innovating.

Then overreach.

The leadership determined that it was time to not let any opposing forces rise thus they set about attacking their technology firms destroying nearly a trillion in value and stalling innovation. Soon this began to slow the economy and, in a world, where software, talent and change will determine the future they froze people with fear.

They thought that they could control Nature, but Covid morphed and their internal belief in second-rate home-grown vaccines now have country at great risk. Now the “way” of zero covid tolerance has tied their hands to playing a potentially losing game stirring resistance greater than ever before.

Finally, since overreach loves company, they decided to forge a great fusion with Mr. Putin badly hurting their reputation and “soft-power”.

China is a great country and the Chinese a great civilization that will recover but their recent setbacks are all self-inflicted due to a cult like leader, incestuous thinking, fear, and overreach.

Netflix: In hindsight it is so clear that Netflix no longer has a significant edge in technology or data or programming (the edge they still have for the moment is international sourcing of programming). They had started as David taking on Goliath but now are increasingly feared and are regarded as bullies. Their “keeper” philosophy of upgrading talent had dissolved from a great idea to pure drivel and so much of their data and talent propaganda is Kool-Aid that even their talent only tolerated due to a soaring stock price. Now the entire company is perceived differently internally and externally and in a world of omni-channel, omni-presence and omni-everything being streaming only is not that omni-potent. Their leadership is brilliant and have created an amazing company but somewhere they tripped into the light fantastic.

CNN+: Very few people watch CNN most days. In February average prime time audience among people 25 to 54 was less than 150,000 people! And CNN is not specifically paid for (it is bundled as part of a cable package) and covers actual news. CNN viewership rarely ever reaches a million and that is when there is massive breaking news. So now create a non-news streaming channel that costs $5.99 per month, and you must be high or believe a Mckinsey analysis that you paid for to anticipate 2 million sign ups the first year. (After a month of heavy promotion and cut- rate pricing of $2.99 a month for life just over 100,000 people signed up and daily viewership was about 10,000 people which is less than half the number of people who read this post today!).

CNN+ was not about the future of CNN. It was about hurt feelings, about the future of its personalities, about leaders making a mark and earning a stripe for launching things or being aligned with the coolness of streaming. Mostly it was a massive self-induced hypnotic trance among some of the smartest and most accomplished people in the business who spent too much time watching CNN.

Three hundred million dollars later the field of dream has led to a war of recrimination, a sullied brand, a set-back to a merger and tragically lots of junior people without jobs and world class talent with egg on their face.

How to avoid self-defeat.

Russia will evolve. China will thrive. Netflix will try expanding to gaming and remain one among a handful of leaders and CNN will be one additional reason the new “HBODiscoveryMaximus” service will be worth paying for. None of these players are going away but they need not have suffered these completely avoidable setbacks.

These were not the setbacks that come with trends turning, the uncertainties of innovation or the win and lose of daily business or strategic competition.

These were the setbacks of self-defeat.

Since the best of talent and the best of companies can defeat themselves, we need to be wary when we spot the four symptoms of Incestuous thinking, cults, fear, and overreach.

And we must ensure that organizations and individuals can access remedies for curing SDD (Self-Defeating Disease):

Diversity: Diversity of backgrounds and thinking particularly in leadership teams are critical. If everybody thinks the same way, it can be dangerous. Disagreement and challenging points of view is what boards, external perspectives and independently successful people bring to a company or to a person.
Building a case for the opposite: Whenever a key decision needs to be made a team or individual should be charged with building a case for the exact opposite of what you as an individual, a leader or board are considering. This provides two benefits. First it allows one to make sure that group think does not disconnect us from reality since there is a reminder that we may be wrong. Second it helps us correct gaps in the thinking of our original recommendation. It is like stress testing our proposition.
A blank piece of paper approach: Many times, individuals and companies find themselves in self-defeating positions because of a way of doing, a historic momentum, legacy costs, or structures and fixating on current category dynamics. What if one was to launch a company or initiative with a blank sheet of paper with only three constraints. A legal one (whatever one does has to be legal), technological (it must be possible today) and economic (some breakeven or other financial constraint) what would one do to anticipate or meet a customer need?
The future comes from the slime and not the heavens: There are many benefits of being a leader, working at a very successful company and being on the top of the world. Everybody wants to meet with you or think you are cool because of the fame and reputation of your company. The press fawns and friends’ gush. It gives us all a great rush. Important that we do not get too high on our fumes and begin to believe our flatulence smells like Chanel 5. T

The future usually does not emerge from the gatherings at Davos, The Allen Conference or at TED but where no one is looking or visiting. The Auto companies were looking at each other and they missed Tesla and Uber. Procter and Gamble missed Dollar Shave Club. IBM missed Microsoft. And today Tik Tok has more engagement than every Facebook property combined (Facebook, Instagram, and WhatsApp). So, let’s meet the crazy folks who have an idea, go off the beaten path and not take ourselves too seriously.

Or let us remember just one characteristic to minimize self-defeat.

Humility.

Time Passages

Management Next!