In the past few months we have seen the meteoric rise and ignominious downfall of WeWork. Not long ago, the company was poised for a successful IPO. Right now, however, its disgraced CEO has stepped down. The company, while burning through enormous amounts of cash, even has its core business model being challenged. Yet its main investor did not pull the plug: It doubled down with an additional, huge influx of money. This may turn out to be an example of excessive Ahabism.
The downfall of Captain Ahab, the protagonist of Moby Dick, was his obsession with catching the white whale. There is a fine line between admirable persistence and block-headed tenacity.
These are typical signs that an organization may be chasing a white whale:
- The company is so focused on market share that margins rapidly erode and financial results deteriorate. The old joke is that a company may have negative margins, but they make it up with additional volume.
- Assumptions for key strategic projects are no longer reviewed on a regular basis. Even new people are quickly drawn into action and are no longer curious as to why certain things are done.
- The organization becomes blind to alternatives. More resources are poured into failing projects, while these resources may have been better used elsewhere. This is called the sunk cost fallacy and is one of the main reasons it’s so difficult to abandon failing projects.
One of the most important traits of a successful leader is therefore to know when to quit….
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