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| “Empire…” What does the word mean to you? For me it conjures up images of might, autocracy, scale and longevity. But it also comes with connotations of history and decline: empires don’t just fade away, they ‘fall’. As Enoch Powell famously wrote of political careers, so it may also be said that all empires ultimately end in failure. Late November brought the grim news of the impending collapse of Arcadia Group, Philip Green’s “retail empire”, with the potential loss of over 13,000 jobs. So what lessons may we learn from this? I think four common factors lie behind the collapse of Arcadia, and possibly empires in general: leadership, philosophy, scale and structure. Leadership – A single individual, family or inward-looking cadre of individuals sit at the top of the organization and concentrate power and control towards themselves. These are not the sort of people who welcome bad news, and they become deeply invested in their own past success. Philosophy – Empires develop a “way of doing things” over time. Often this approach is at the centre of their success as the formula is rolled out across the organisation over time, bringing with it the ability to capitalize on the prior success of that modus operandi. Scale – Almost by definition empires are big, and they constantly seek to get bigger. This size brings with it further success as competitors are either absorbed, outcompeted or conquered. Structure – In order to impose the will of the leadership, to disseminate the imperial philosophy and simply to manage the scale of the empire, a highly organized framework evolves to support the empire as it expands. |
| But these four characteristics together can also be the seeds of the future destruction of the empire. As the world changes around the organization it is unwilling or unable to adapt. Leadership may fail to recognize or accept the need for change, preferring to adhere doggedly to the old philosophy and approach that brought success in the past. At the same time the sheer size of the empire, and the calcified structures built to support it, become obstacles to the very change that’s needed. Coming back to Arcadia, it is telling that the company’s own website even today makes the following claim: “our brands are beloved in the British high street and beyond”. The British high street and beyond: no wonder Arcadia got minced! I think the fall of the Arcadia Empire was as foreseeable as it is depressing for all those affected, and it has nothing to do with the short-term impact of Covid-19. Investors should beware of companies that look like empires, and business owners of all shapes and sizes should take heed of the lessons of imperial decline. |