Even great companies can make failure into a tradition. That seems to have happened at UBS, Yahoo and Hewlett-Packard. The prognosis for all three is not good.
The two tech firms have an obvious similarity. In recent weeks they both chucked out relatively new chief executives without much in the way of notice or obvious rationale. They are also alike in having fallen from being clear sector leaders – HP in hardware and Yahoo in the Internet world – to strategic drifters.
The Swiss universal bank may seem different. It has not yet kicked out its boss despite somehow losing track of a $2 billion bet on a supposedly low-risk trading desk. But UBS, like HP and Yahoo, is a once-confident institution that’s now in search of a coherent strategy.
At each of these companies, the earlier greatness was also a tradition. HP was famous for “the HP Way”, a Californian mix of technical excellence, trust and responsibility to the community. Yahoo, whose founder has said he bleeds the purple corporate colour, embodied the open spirit of the early Internet age. And UBS considered itself different from other big banks: more cautious but no less clever. Even if outsiders did not always find these self-images accurate, they helped keep employees loyal and motivated. The corporate myths became almost true because people believed in them.
But the HP Way drifted as the founding ideal waned in force and technology became a mass consumer market. Purple went out of fashion and the disruptive Yahoo was in turn disrupted. UBS lurched late and disastrously into the finance boom. All three tried the usual remedies: new bosses, strategic reviews, restructurings. They are still trying.
The efforts could yet be rewarded. IBM, for instance, managed to move from fading hardware monopolist to successful contender in IT services. But the required corporate humility is in short supply. Whether because of board dysfunction, chief executive arrogance, or complacency lower down the organisations – or a combination – a near total loss of direction is hard to recover from. Just ask the risk control staff at UBS.