Monday, August 31, 2009

Which Side Are You On, Part 2

"How did you go bankrupt?"
"Two ways, gradually and then suddenly."
The quote is from The Sun Also Rises, and it's worth remembering that before he was a novelist, Hemingway was a very careful reporter. He took notes and he remembered everything and everybody he met. His dialog on bankruptcy isn't something he made up; it's something he heard--it has the unmistakable ring of authenticity.
If you ask the people at GM how they went bankrupt, my guess is they'd say much the same thing. Or ask the higher-ups at Lehman Brothers what it felt like to vanish. Gradually, they'd say, and then suddenly.
What's true for companies is true for ideas as well.
How do ideas go bankrupt? Gradually and then suddenly.
These days when you hear the old refrain that "greed is good," you have to shake your head. Did we ever actually fall for that? When you hear someone describe the promises Madoff gave to his investors, the notion that year after year he'd deliver double-digit returns without a single year of failure or falter--did people actually fall for that?
What's next?
In a few years, will we look back at the notion that the job of a corporate manager is to create value for the shareholders and ask, did we ever really believe that?
Will we look at CEO compensation and shake our heads, as if it were just another version of a Ponzi scheme?
How do ideas go bankrupt?
Gradually and then suddenly.
But by the time they go bankrupt, it's too late.
The time to start writing your own new rules is before the old ones are officially bankrupt. Don't wait until the bankruptcy proceedings have gone from gradual to sudden.
Do it now.

All Rights Reserved 2009 (c) Alan Webber, Rules Of Thumb