Why do successful companies fail?

Why do successful companies fail?

Question-to-innovate Series: This the thirtieth of a series of weekly posts where I will answer a few common questions about innovation. Please feel free to add your own response. Also, if you have any questions you think we should discuss, let me know.

Success hides problems.  – Ed Catmull, President of Pixar

This is a question that really interests me, and spend quite some time thinking and contemplating this question. And it doesn’t necessarily have to be an organization, but a person. It is the reason why I worship companies like Disney and Pixar, and people like Michael Jordan and Madonna, they’ve overcome the trap of complacency.

And that, is what I believe it all comes down to: complacency.

This question, doesn’t just interest me, it is a question that puzzles many, but not most. Ed Catmull is one that was puzzled, and figured it out, by why so many successful companies ultimately failed. “I’m thinking, ‘If we’re ever successful, how do I keep from falling into the traps these companies are falling into?” he recalled in a recent lecture at Stanford Business School.

Constantly identify and solve new problems

Only the paranoid survive, and to consistently break new ground, Pixar puts itself in uncomfortable situations deliberately to keep innovating themselves. For example, when Stanford professors Robert Sutton and Hayagreeva “Huggy” Rao interviewed Pixar director Brad Bird with Allen Webb, Bird recounted being recruited to Pixar:

“Steve Jobs, Ed Catmull, and John Lasseter said, in effect, ‘The only thing we’re afraid of is complacency, feeling like we have it all figured out. We want you to come shake things up. We will give you a good argument if we think what you’re doing doesn’t make sense, but if you can convince us, we’ll do things a different way.’ For a company that has had nothing but success to invite a guy who had just come off a failure and say, ‘Go ahead, mess with our heads, shake it up.’ When do you run into that?”


Not many people are ready to try. I’ve had the experience that when I’ve asked my colleagues to make smart mistakes, smart failing, at something; most can’t do it. It is human nature, plus most people are not used to the world working that way.

But, that is exactly what we have to do to overcome the fear of failure, put ourselves in uncomfortable situations.

Additionally, instead of asking yourself at the beginning of a new venture: how might we succeed. Also ask yourself: if we’re ever successful, how do we avoid falling into the complacency trap?

In other words: build to last.

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