When Pioneering Companies Fail

Joost Minnaar
Written by Joost Minnaar July 31, 2019

Finding progressive organizations with truly radical management practices is hard. There seem to be so few of them around. To make matters worse, some with radically new approaches only survive briefly. Why do some poster boys of the future revert to traditional models?

439 1140x0

We think it’s important to share the less-than-successful stories as well—because we can learn from troubles in paradise, just as we can from paradise itself.

Finding progressive organizations with truly radical management practices is hard. To make matters worse, some with radically new approaches only survive briefly. Why do some poster boys of the future revert to traditional..
Click to tweet

Once upon a time

Over the past few years we learned heaps by visiting progressive firms all around the world. Most of our visits were (and still are) extremely inspiring.

But every now and then we visit firms that, while being portrayed as progressive by the media, are not, in reality, anymore.

Why did once-radical firms revert to traditional modes? That’s what we asked ourselves. We found three reasons.

  • A change in leadership.
  • The threat of imminent crisis.
  • A combination of both these factors.

Here are five examples that make our point:

1. Oticon

Oticon 1

This Danish hearing aid manufacture was praised in popular and academic management literature for adopting it’s ‘spaghetti organization’.

The spaghetti model was notable because there were no job titles, assigned bosses, offices, desks or work! Employees were free to select a project to work on from a list on the bulletin board.

However, after the iconic CEO, Lars Kolind, left the organization—around 1990—a new leadership team arrived. Most of the spaghetti model was quietly abandoned over the next few years.

2. FAVI

FAVI


FAVI is the French manufacturing company famous for an organization built as a collection of ‘mini-factories’—as pioneered by former CEO Jean-Francois Zobrist.

It was a poster-boy example in the book Freedom Inc. (by Isaac Getz). Then it earned fame as a case study in Frederic Laloux’s bestseller, Reinventing Organizations.

But by the time Laloux’s landmark book was published, Zobrist had left, and the organization returned to traditional modes of management.

3. BSO

BSO


BSO (also cited by Laloux) was a Dutch software services firm famous for a radically decentralized organizational model based on the “cell division” concept. Eckart Wintzen founded the company in 1973 and managed to build a global staff of thousands in two decades.

In 1995, Wintzen merged his brainchild with a division of Philips, the Dutch electronics giant. Soon after, Wintzen left, and the “cell division” model was quietly abandoned.

4. AES

AES

AES is an American-based company that became the world’s largest independent power producer. Its ‘honeycomb’ model, advocated by CEO Dennis Bakke, rejected many traditional practices.

Instead, AES (another Laloux case study) embraced progressive features like radical decentralization, self-management and a commitment to ethics and fun.

However, after the Enron drama, and the imminent regulatory crisis of 2003, AES reverted to a more traditional model at breakneck speed.

5. Semco

Semco 1

Semco is a Brazilian manufacturing company founded by Antonio Curt Semler in 1953. For 20+ years the company focused on manufactured pumps and axles for the shipping industry.

In 1980, Antonio’s son, Ricardo Semler, took over the reins at age 21. That kicked off one of the most unusual transformation stories ever. It was brilliantly described in Ricardo’s bestseller, Maverick.

At Semco’s peak it had ~5,000 employees. But, around 2000, South America faced an economic crisis and Semler started selling his shares. Last year - when we visited Semco and Semler - the company had around 50 employees.

Once Upon A Time Some Firms Were Progressive: And Some Still Are
Click to tweet

The lasting ones

Luckily, some progressive firms survive these kinds of challenges. Moreover, they will probably survive. Two stand out.

The first is W.L. Gore & Associates, the American company famous for Gore-Tex, and their radical organization model. Among many radical practices, Gore works without any kind of manager. They do this with ~10,000 people around the globe. Gore has worked with this model since 1958—when it was founded by Bill and Vieve Gore. It’s notable Gore has had only 5 CEOs in 60 years, and not much has changed in this time. There are still no managers to be found.

The second is Swedish bank Handelsbanken. They operate a radically decentralized organization model introduced in 1978 by former CEO Jan Wallander. They have used this now for >30 years, and with ~14.000 staff in northern Europe. Since Wallander turned the bank upside down, their decentralized model has survived many CEOs. And despite crises in banking, they still use their progressive model today.

So, some fold, some last.

Beware leadership change, crises, and especially the combination.

Written by Joost Minnaar
Joost Minnaar
Co-founder Corporate Rebels. My daily focus is on research, writing, and anything else related to making work more fun.
Read more
Jan 21, 2023
Decentralization in the Workplace: How Distributed Management is Changing the Game
Yuji Yamada Written by Yuji Yamada
In October 2018, the Japanese IT company Yumemi launched a so-called “Agile Organization Declaration.” Over the years, this inspired them…
Read more
Jan 07, 2023
A New Year: New Opportunities And Fresh Starts
Joost Minnaar Written by Joost Minnaar
The first week of January is traditionally a time to make New Year resolutions - the time of the year when we look forward to the new year…
Read more
Dec 17, 2022
Let’s Fire All The Micromanagers
Joost Minnaar Written by Joost Minnaar
Micromanagers are by far the least popular managers. Nobody wants to report to one. Nobody wants to be one. The funny thing about…
Read more
Dec 14, 2022
Announcing Our New On-Demand Course: "How NER Works"
Emma de Blok Written by Emma de Blok
Today, we’re launching a new Corporate Rebels Academy Course: “How NER Works..” This radical (and proven) approach to self-management truly…
Read more
Dec 07, 2022
Change the Mindset of Employees with These Three Simple Steps
Joost Minnaar Written by Joost Minnaar
The leader of a large manufacturing company recently complained to me, "I want our people to change their mindset, but they do not change."…
Read more
Nov 16, 2022
An Introduction Into SINIC: A Future Prediction Theory
Yuji Yamada Written by Yuji Yamada
Fifty years ago, Kazuma Tateishi, the founder of Japanese company Omron, debuted a future predicting theory called SINIC Theory. The theory…
Read more
Read all articles