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By René Carayol, 10 May 2001 06:00

COMMENT We really enjoyed our meeting with you last week and our conversations with you about Fast businesses that are applying what we call the Voodoo spell. We thought it only fair that we follow up with some examples of companies who are failing to make the magic work. There are many examples of mature traditional businesses which have become 'veritable institutions'. They tend to be household names and no one would ever imagine a world where these stalwarts are not around. The key facet of the New Age Economy may be speed - and Voodoo - but many of our grandest institutions not only have never seen the need for speed to beat off the competition - they have for far too long been sheltered from fierce, fast moving competitors in their markets. This has all changed. The change has not happened overnight, yet many large, complacent behemoths have not seen it coming. The late 1990s and certainly the new millennium have seen them put under pressure from all angles. At The Voodoo Group, we've had the opportunity to either work closely with or study these old giants. There are quite striking similarities amongst them. One of the most concerning features of the majority of these organisations is that they were the market leader in their served markets, and in some cases massively ahead of the competition. This dominance has bred an arrogance and complacency, which has now borne the fruits of serious and potentially life-threatening failure. It is essential that these organisations understand and accept the reasons for their current hardship, and look to lessons of the New Age Economy for salvation. It is no surprise that their inherent culture has not enabled them to accept their deficiencies and more tellingly, the incumbent management are not able to turn these massive ocean-going liners around. It is instructive to look at the attributes that have led to their current malaise. The uniformity of their problems is quite striking. Voodoo is not: closed-cultured The first issue for these companies is their impenetrable closed cultures. Companies of this kind - have strong cultures which demand conformance, and do not tolerate mavericks or those who would 'rock the boat'. Consequently, they - have low staff turnover rates. This has been seen as a great strength, especially amongst long-serving senior management. They have grown up within these institutions, and fundamentally believe that they have the only successful and sustainable method of winning in their marketplace. Until recently, history would have supported this view. However, in recent years the chickens have come home to roost. - are beginning to recognise the need for change. Shareholders are increasingly concerned at their inability to respond to the new demands of the marketplace. - have elder statesmen in the organisation who find it impossible to dance to a different tune. And tellingly, the next layer of senior management has also been gathering its corporate air miles for far too many years. - need new ideas, new impetus - and new people. The old Voodoo spell of 'we grow and nurture our own gene pool and the best talent is home grown', is now proving to be the recipe for impending doom. A corollary to this is that the maverick talent they need will not want to join what they see as a constraining, conformist culture. Organisations of this kind have a method of working which is epitomised by incremental improvement: doing the same things, but trying to improve and refine them over time. But when in need of a sea change, incremental improvement is just not radical enough. Voodoo knows a bit of Latin (Radix [radical] -- Root) A key example of what a closed culture might do to you can be seen with Marks and Spencer (M&S). They were regularly voted Britain's most admired organisation. They were the UK's leading retailer for many years, and achieved this position through a variety of different economic measures: turnover, market capitalisation, sales per square foot, profitability - you name it, they were number one in their sector. There was no perceived way that they would ever be toppled - but it's happening. The great green and gold giant is now struggling, and is increasingly looking like a target for acquisition. Having posted record profit results of over £1bn only a few years ago, it is in ruinous shape. The then Chairman and Chief Executive, Sir Richard Greenbury - the deliverer of those sparkling results - was forced to leave the business not long afterwards. This led to an unseemly scrap for the CEO's role. Keith Oates threw his hat into the ring, but was defeated by colleagues who preferred the homegrown stewardship of Peter Salisbury - another M&S lifer. (Perhaps he was still seen as an outsider by his board colleagues, despite over 15 years with the organisation?) Voodoo hates jobs for the boys Salisbury's mantra of radical reform and culture change fell on deaf management ears. They only knew one way to operate: the old way. His was not an organisation that appeared to encourage challenge or new ideas. It could be argued that it had far too many layers of audit-based management that spent its time checking on the layer below, NOT attempting to add value, vision or inspiration. This is an excellent structure for stability but a poor one for change. Mr Salisbury could certainly motivate his people to run faster, but he could never get them to run in a different race, even at snail speed. The major issue was that M&S, badly hurt by falling revenues, seemed to the market to have little idea or experience of what race to enter them in. Eventually Salisbury summoned up the courage to bring in some talent from outside at senior levels. However, these new incumbents appeared soon to be indoctrinated into the M&S way of doing things. Perhaps those who tried to challenge the status quo were treated with suspicion and not allowed into the inner sanctum. The final extract will be published tomorrow, or go to our special microsite to learn more about Corporate Voodoo and Rene Carayol and buy the book, at a 20 per cent discount. http://www.silicon.com/goto-CV-ex