Bankruptcy Case Studies | Part 4: Why Do Companies Go Bankrupt? ~The 3 Common Structures of Corporate Collapse~ (Summary)

The cause of collapse is not on the outside, but
within the decision-making process.

This episode is the final installment and summary of the "Bankruptcy Case Studies" series.
Why do companies perish?

The conclusion is simple.
However,
for most people, it is too late by the time they realize it.

The 3 patterns we have examined so far

Part 1: Dependency

→ Renown
→ Suruga Bank

Operating under the "assumption that it exists"
and the "assumption that it will continue"

Part 2: Distortion of Perception

→ Toshiba
→ Olympus

Interpreting reality in a convenient way

Part 3: Unstoppable Collapse

→ Skymark
→ Yamaichi Securities

Unable to stop even after realizing the mistake

What is important here is
that these are not stories about "special companies."
For example,

Dependency

・Over half of sales from a single major client
・Attracting customers through only one specific advertising medium
・Securing profits from only one product

If your company falls into any of these categories,
the moment that stops, it will be the end.

Distortion of Perception

・"This industry will still grow"
・"We are fine"
・"This is a temporary problem"

If you are saying these things based on feeling without evidence,
that is called "wishful thinking."

Unstoppable Collapse

・Unable to stop loss-making businesses
・Investments that cannot be cut
・The front line knows, but management won't stop it

This is organizational dysfunction.

I would like to ask the readers a question here.

Question 1

Which one does your company fall under?

A. Dependency
B. Distorting reality
C. There is an unstoppable structure
D. None of the above

Please choose by intuition.

If you chose D,
it is quite dangerous.

Because
there is no such thing as a "company with no problems."

Companies
do not collapse because they have problems.
They do not collapse because they have problems, but rather,

when they

・Do not see
・Do not acknowledge
・Do not stop

these three things, they collapse.

Let me speak realistically here.
Many managers

"know"

・They are too dependent on this customer
・This business is tough
・This decision is dangerous

Yet,

・It's still okay for now
・Let's wait and see a little longer
・I can't stop now that I've invested this much

In this way,
they end up ignoring "small feelings of unease."

And then one day,

・Funds run out
・Credit collapses
・It all surfaces at once

Only then do they ask,

"Why didn't I act sooner?"

A quote from Sun Tzu

　Victorious warriors win first and then go to war
　Fight only after creating a state where you can win.

Translating this into management, it becomes these three things:

・Build a structure that is not dependent
・See reality without distorting it
・Have the decision-making power to withdraw

In other words,
fighting without these three things in place

is synonymous with

"going to lose."

I will ask one more question.

Question 2

Are you currently in a state where:

A. You can change direction immediately?
B. You are in a state where you can no longer easily turn back?

If you feel you are closer to B,
now is the final turning point.

Finally

Companies
do not collapse due to the external environment.
They collapse due to internal decision-making.

And that collapse
proceeds quietly,
and one day, it suddenly appears on the surface.

Many companies
only realize it at "that moment."

But in reality,
the signs have been there for a long time.

・Are you dependent?
・Are you distorting reality?
・Are you in a state where you can turn back?

It is important to
constantly ask these three questions.

If you stop facing these questions,
the collapse begins.

The answer is not outside.
It is inside.

Whether you notice it or not.
And whether you can change when you notice it.

Only companies that can do that will survive.

Next Episode Preview

In this series, we have looked at cases of
"how companies go bankrupt."
So, how can they survive?
One of the answers is the next work, "The Thirty-Six Stratagems."

Starting tomorrow, I will post "The Thirty-Six Stratagems" as Part 5.

The Thirty-Six Stratagems | Episode 1 Crossing the Sea in Plain Sight ~People are Deceived by the Mundane~

[Series Developed So Far]

Part 1 | Distortion of Judgment Series (35 episodes in total)
→ Systematically summarizes the reasons why "distortion of judgment" occurs and management tips.

Part 2 | Sun Tzu's Art of War Series (42 episodes in total)
→ Summarizes the 13 chapters of the Art of War in a format of meaning, Warring States examples, and modern applications.

Part 3 | Tokugawa Shogunate Series (4 episodes in total)
→ Summarizes the reasons why the Tokugawa Shogunate lasted 260 years and why it formed the social foundation of modern Japan.

Part 4 | Corporate Bankruptcy Series (4 episodes in total)
→ Systematically summarizes the reasons why companies go bankrupt and whether bankruptcy could have been avoided.

Reference Materials | Various Reference Materials (10 works)
→ I am posting additional reference materials as supplementary data for each series.

*Please refer to past posts below ↓↓↓
Post Index ★You can search for articles of interest here★Sun Tzu's Art of War Series Table of Contents *You can check all 42 episodes