Corporate Failure by Design: Why Organizations Are Built to Fail

Corporate Failure by Design: Why Organizations Are Built to Fail

Corporate Failure by Design: Why Organizations Are Built to Fail

Corporate Failure by Design: Why Organizations Are Built to Fail


Based on data regarding corporate mortality, organizations are built to fail: a conclusion critical to managers, employees, stockholders, consultants, customers, vendors, competitors, and therefore all of us who transact with and depend on organizations. Yet, literature about organizational management tends to focus on education and inspiration, and to bristle with optimism about the potential success of applying its wares. Ignored, in virtually all of this literature is the reality that personnel may or may not be "inherently" self-interested, but certainly join business organizations in order to serve individual rather than organizational interests. At all levels, therefore, the organization's long-term interest is undermined by the goals of the very members of whom it is comprised--it is built to fail. And through control of its various internal processes and elimination of opposition, the organization pursues self-destructive goals without knowing it.


Truth is stranger than fiction, but not so popular.


An information technologist at a law firm develops a software program for quickly, thoroughly, and accurately completing routine forms. His supervisor orders him to destroy the program because she had not authorized it. Instead, the technologist sells the program to a rival company, resigns shortly thereafter, and starts a lucrative consulting practice.

Officers of a manufacturer of computer hardware, desperately needing an operating system, schedule a meeting with the ceo of a small software company in order to discuss an arrangement through which the latter might develop one. They arrive at the CEO's home for the meeting, only to be kept waiting all day while he and his wife dither over the correct procedure for such an arrangement. Eventually, they leave without ever having had the meeting in the first place. the hardware manufacturer then approaches another software company that quickly agrees to develop the operating system, and enjoys tremendous success in doing so.

The vice president of Human Resources for a huge telecommunications corporation pleads guilty to charges of insider trading, for which he is fined almost a million dollars. He had previously pleaded guilty to a scheme in which he received kickbacks from profits earned by sixteen of his friends, from insider information he had provided. This is the individual responsible for developing and administering companywide ethical development pro-

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