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It’s Virtuous/Vicious Out There!

Startups are all about virtuous circles and spirals. They see the beauty in a spiral for a sea shell and want to scale up. The first sale gets everyone excited and optimistic about the next sale. So they spend a little more time and effort. Then the second sale comes in. Then the third. The fourth is even bigger than the third. A local chain of stores takes on their product. Then they are in a nationwide chain in one region. Then they are nationally recognized. Internet sales are taking off. All is wonderful. Blue skies are in their future as they spiral upwards to success. It’s not so much a ladder, straight-line climb to success, as a spiral staircase reaching skyward.

Maybe it’s true, “What goes up must come down!” While the startups are looking up, the larger, more mature companies are looking over the railing and seeing how far they can fall. They are more concerned with the vicious spiral downwards. Uber is a company that spiraled upward to unbelievable heights of valuation. They’ve reached global proportions. They are more valuable than most companies, such as Ford Motor Company. Ford looked over the railing and could see that they are spiraling out of control, just whirling about and not going up or down in valuation. They could see they have the likelihood of spiraling down. So, they changed their CEO a couple of weeks ago. GE has languished for over a decade with hardly a change in valuation. This week they announced a change in CEO.

But, even Uber has looked over the railing and seen the precipice below. Their CEO is being sideline for a while and several high level people are getting off the staircase. Uber is under attack by governments and private lawsuits. That spiral staircase goes in both directions. It reminds me of the beanstalk in Jack and the Beanstalk children stories. Riches galore are in the clouds. All we have to do is climb the spiral up, grab the reward, and return. Alas, the return to the ground is not so much fun and the stalk may need to be cut down.

How do you avoid a virtuous spiral upwards from turning into a vicious spiral downwards? I’d suggest a firm foundation in values which are nurtured as the stalk grows. Inculcate the culture of the company with those values every step along the way. Evaluate strategic and tactical decisions using those values as a guide. Soon I will start a video series on how values inform and nurture culture. I’ll look at how culture is part of the fabric of a company. It’s beautiful when the threads of value can be seen in the finished garment.

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