Why Companies Degrade and Implode

A long time ago Carl and I took a trip to…somewhere.  I think it may have been Baltimore.  Anyway, we departed from Chicago’s Midway Airport via Southwest airlines.

Carl made a comment about the boarding process of Southwest vs. another (dying, bankrupt) airline.  It went something like this:

Interesting how the successful airline can implement changes to its culture and product, while the dying airline, just ONE GATE AWAY wonders why they can barely tread water.

For some reason that little nugget has stuck with me.  All company “U”, we will call it, would need to do is implement a few simple things and they would be WAY more successful than they are – and Southwest gives the information away for free – all you have to do is LOOK. 

I use this bit of wisdom when talking about the BCS, or Bowl Championship System that the NCAA uses to choose its national football “champion”.  That system is the most corrupt, fixed, ridiculous thing ever created (see this year while Boise repeatedly gets jumped over by other teams) – while just down the hall, the NCAA every year plans one of the most successful sporting events ever created – March Madness.  Whole workplaces shut down so people can watch their pool teams play online.  Vegas is crushed with people making their wagers and having fun.  Venues across the US are packed with fans.  NCAA football fans get more shaft than the Chilean miners.

All of this brings me to an interesting article by Barry Ritholz at the Big Picture today about why companies implode.  Some of the things he says reminded me of what Carl said and my feelings about the NCAA.  The comments are great as well (as always).  Give it a read if you have a few moments.

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One thought on “Why Companies Degrade and Implode”

  1. Dan – thanks for coming over to the new trust funds for kids. We left the old URL and now share one with you know who.

    That is a good article but he kind of misses the best thing Yahoo did… which was buy a chunk of a Chinese search engine company which is worth probably more than the rest of Yahoo. They did that right but did squander a lot of the rest.

    I think Yahoo was on the cutting edge of a lot of stuff and then spread themselves too thin.

    The comments are interesting, I learn a lot reading them, but not always what the poster intended. They bash Dell but fail to understand what made Dell great in the first place -their ability to receive cash from customers prior to paying suppliers; as long as everything grew they had cash to spare. And for MSFT – they were the first to master how to extract cash for software, a skill that Oracle has now learned in spades, too. A lot of the tech guys think that you should win or lose based on tech merits, but this is just part of the business for most companies, not the whole enchilada.

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