Federal Express

The gulf between expectations and realities has been the subject of fascinating discussion in the modern corporate sector. Danny Miller's The Icarus Paradox, describes how business executives fly too high, fail to heed warnings to restrain their ambitions, and come crashing down. One example he gives is the decline, in the 1970s, of Control Data Corporation. This company succeeded in building faster computers than their larger competitors such as IBM, but overspecialization in computing speed led to weak overall performance. In situations such as these, senior executives frequently ignore advice to exercise caution. Miller recounts similar problems at Wang, Polaroid, ITT and others. Some, like Federal Express, staved off disaster by means of flexibility.

Other companies such as Disney, Texas Instruments and Caterpillar also repaired the damage done by overspecialization. To quote Miller: "Their new (or reawakened) leaders reduced the dominance of the production and engineering types and promoted looser, more responsive structures and cultures." He lists the issues:

Problems:
Intolerant leadership and monolithic cultures
Centralized, overbureacratic structures
Blindness to markets
Narrow focus: destructive parsimony or irrelevant quality
Outmoded product lines
Lackluster marketing

Solutions:
Open up cultures to new blood and different values
Loosen structural strictures
Scan markets and competition to increase scope
Diversify out of stale areas
Boost innovation
Market more aggressively

Reference:
Miller, Danny The Icarus Paradox: how exceptional companies bring about their own downfall, Harper Business, New York, 1990.