Dead organizations and their organizational characteristics

Dead Organizations

The Value of Autopsies That Analyze Dead Organizations

The rapid demise of enterprises that reached such great heights of success very quickly in their lifecycles only to come plummeting to the ground provide fertile examples of how not to run a business. These cautionary tales can form a framework for evaluating how a given business is defined, managed and invested in for growth or not. In Arthur Anderson, Enron, Tyco, MCI and many others, there is a fundamental foundation of business ethics that needs to be evaluated in the context of how these enterprises were run. It is the intent of this analysis to argue for more rigorous post-mortems to be done, autopsies at the process and systemic level, audits not just of operational issues but the ethical factors as well.

Postmortems on the Fallen: Why Corporations Die

It is invaluable to understand and appreciate why one business started within a year can have specular success while another dies quickly and with great public disgrace. it's invaluable to see at the most structural levels and at the core of assumptions, why a given business fails and other succeeds. The more one studies Arthur Anderson, Enron, Tyco and others, the most fundamental truth emerges. Corporations who fail are built on a foundation of ethical assumptions and hypotheses that by their very nature invite destruction. In analyzing these firms which have failed so quickly, it is apparent that the assumptions that anchored their business models were ethically challenged. Enron selling futures contracts not only on energy but on the price of energy, from electricity and natural gas to oil, all wrapped up in a highly secretive private trading exchange that sought to optimize price per option and projected futures demand level set a precedent of a lack of accountability and transparency with investors that was easily defensible over time (Sherman, Chambers, 2009).

In reality, entire segments of the value chains of these companies, and a core part of how they promised to deliver value, was erroneous or only partially true. After the passage of the Sarbanes-Oxley (SOX) Act and full auditing of the Enron finances it became clear that there were multiple sets of financial records, each designed for a specific audience (Petrick, Scherer, 2003). What had happened is that the undefined, ambiguous and difficult-to-audit areas of the value chain, left unchecked, began to gravitate into unethical practices and reporting to further support the unrealistic projections of profit (Petrick, Scherer, 2003). The same dynamic occurred at Tyco, MCI and others. Arthur Anderson was responsible for the auditing of the Enron financials and was guilty by association, perpetuating the fraud involved in the massive operations underway (Petrick, Scherer, 2003).

Conclusion