What role does luck play in business? Greg Nathan, founder of Franchise Relationships Institute, shares his thoughts on luck, hubris and franchising…
I just watched an interview with one of the world’s greatest violinists, Joshua Bell. He was asked by a rather serious ABC journalist, “What is the most important factor that has contributed to your success?” His response caused me to burst out laughing with delight because I had literally just completed a blog quoting the world’s most popular business author on this topic. Joshua Bell simply said “Luck”.
The author I was quoting was Jim Collins, who wrote Good to Great, one of the best-selling business books this century. Many people don’t know that Collins went on to write another book about corporate failure. If you think your business is really, really successful, and it’s because of how fantastic you are, this is probably a more useful book to read. It’s called How the Mighty Fall.
Collins wrote the book after facilitating a leaders forum for a select group of USA army generals and CEOs.
During a break the CEO of a highly successful company pulled him aside and asked how he would know if, despite his company’s power and success, it was actually heading for decline. Collins thought that was a great question and spent the next four years researching why great companies often lose their way and crumble into decline.
Don’t underestimate the role of luck
Collin’s central message is, there is no law that says because you are successful you’ll stay there.
He warns the decline of mighty companies starts with hubris — a sense of pride and entitlement. They think they deserve to be at the top purely because of how smart they are, and fail to acknowledge the role that luck — being in the right place at the right time — has played in their success. (This is why I laughed at Joshua Bell’s insightful explanation for his success.)
Another symptom of impending decline, according to Collins, is when the leaders in a business lose their passion for their core values and purpose. They start to chase growth for the sake of it, ruthlessly clamouring to hit their numbers at all costs.
Finally, Collins observed declining companies assume the strategies that made them successful will continue to work, even when the market around them is changing, rather than understanding why these strategies worked and the conditions under which they may not work.
The mantra, “Just follow the system” is a popular one in franchising.
But franchisors also need to listen carefully to their franchisees, who can be in closer contact with the market and how it is changing.
Collins says one of the most powerful antidotes to hubris and decline is a keen openness for continual learning and renewal — a realisation that in business and in life, you never arrive. “Truly great leaders, no matter how successful they become, maintain a learning curve as steep as when they first began” he says.
Lessons from 500+ franchise networks
At FRI we have had the privilege of working with more than 500 franchise networks over a 28 year period. We have seen many franchise networks grow and bask in their success, only to face decline because of hubris.
Perhaps the franchisor team stopped listening and learning because they thought they’d arrived. Perhaps they started to believe their own PR and failed to acknowledge the role of luck in their success.
Perhaps they started to chase growth for growth’s sake, and lost sight of the values and purpose on which their business was founded.
On May 18 a passionate group of franchisor operations executives will come together in Sydney with leading experts for the National Franchise Operations Conference to discuss how the franchising sector can continue to develop and prosper. They will share their strategies and experience on what is currently working to keep them growing and improving, and the lessons they have learned for protecting franchisee profitability.
It will be a day of interactive learning, reaffirming, and renewal. If you think your company doesn’t need to attend events like this because of how awesome you are, I can recommend a great book.