ACTIVE INERTIA - WHY GOOD COMPANIES GO BAD

 

According to the Harvard Business Review, when good businesses start to falter and fail, it is often assumed it is due to business paralysis, or their lack to act (Harvard Business Review, 2014). However, it actually has more to do with active inertia, or the businesses tendency to follow established patterns of behavior. Active inertia has plagued numerous companies and has led to their demise, not because of their failure to act, but because they failed to act appropriately (Harvard Business Review, 2014).

This was true in the case of women’s clothing apparel maker Laura Ashley. In 1953, Laura and her husband Bernard started this clothing line to simulate the mood of the British lifestyle, and provide a romantic version of clothing that may have been worn by English ladies tending their gardens, in their country manors. The business grew immensely, from one silk screen to a network of 500 stores and worldwide brand. Laura Ashley successfully survived the 1960’s and 70’s by keeping design, manufacturing, and distribution in-house, developing great relationships with their suppliers, and by providing generous wages and benefits to their employees (Harvard Business Review, 2014).

However, after Laura’s death in 1985, her husband Bernard failed to adapt to the times. With more and more women joining the workforce, they chose more professional, practical attire, over Laura Ashley’s romantic, unpractical clothing. The companies’ delay in keeping up with the times and trends, led to seven new CEO’s in ten years. All of them came in with plans on how to rejuvenate the company but none of them were successful. Laura Ashley fell victim to active inertia due to social and cultural factors and simply failed to adapt and act early enough. The dynamic of failure is outlined below and shows blinders, routines, shackles, and dogmas as the four pillars of business failures (Harvard Business Review, 2014).

References

Why good companies go bad. Harvard Business Review. (2014, August 1). Retrieved November 8, 2021, from https://hbr.org/1999/07/why-good-companies-go-bad.