Why great organizations fail

And a few ways to prevent it

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Now, onto Issue 18.

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Today’s Issue

Why is it so difficult to sustain success?

I’ve long been fascinated with this question.

We see great teams and organizations rise and fall continuously in sports, business and other domains.

Very few sustain success for long periods of time.

Today, we’re going to scratch the surface on this question and explore a few insights of why this is.

Let’s dive in.

Why great organizations fail

Last Monday, the University of Georgia football team won its second consecutive national championship.

The morning after, head coach Kirby Smart was already thinking about next season.

"Starting to think about the next one, I do think it's going to be much tougher,” Smart said. "And I do think we're going to have to reinvent ourselves next year because you can't just stay the same.”

Smart is a psychological master.

He knows how to pull the mental strings of his players in just the right way to keep them hungry and motivated.

"The disease that creeps into your program is called entitlement,” Smart said.

You can already hear his messaging for next year.

Entitlement will destroy us.

Complacency is the enemy.

Nobody believes you can do it again.

Smart’s challenge will be getting his players to sustain championship-level success.

It got me thinking about the business world, and I came across this stat:

88% of Fortune 500 companies in 1955 are no longer around.

They’re either out of business or have been acquired.


In recent history, we’ve seen numerous examples of great companies go bankrupt.

  • Blockbuster

  • Polaroid

  • Borders

  • Kodak

And many others.

All of them reached “championship-level” success, but then eventually failed.

This presents a perplexing question:

Why is it so difficult to sustain success?

I asked my friend Alex Auerbach — a performance psychologist with the NBA’s Toronto Raptors — about the science and psychology behind this question.

Alex sent a few resources, and I want to synthesize a few of my takeaways:

1. The Overjustification Effect

The Overjustification Effect states that being rewarded for an action diminishes intrinsic motivation to perform that action in the future.

Hit a revenue target.

Win a championship.

Write a best-selling book.

When these outcomes are achieved, a shift tends to happen.

The external reward becomes the focus, not the activity itself.

Instead of playing football because you love it, you play to win a trophy.

Instead of obsessing about serving your customers, you obsess about profits.

Instead of writing because you enjoy the creative process, you write to sell books.

When this happens, science shows internal motivation decreases.

Rather than operating by your Inner Scorecard, you become consumed by the Outer Scorecard.

This is the beginning of the fall.

2. Self-determination Theory

According to the self-determination theory, human beings are motivated in four primary ways:

  • Extrinsic (rewards or punishment)

  • External (guilt)

  • Internal (aligned with values)

  • Intrinsic (you love doing it)

Think of this as a spectrum.

Extrinsic motivation (reward-based) is on the “non-self determined” end of the spectrum, while intrinsic motivation (self-motivated) is on the opposite end.

In this context, rewards are demotivating over time.

3. Intrinsic vs. Extrinsic Motivation

Extrinsic motivation can work well in the short-term, but research shows it’s not effective in the long-term.

This is one major reason we see examples of short-term success across sports, business and other domains, but sustaining it is exponentially harder.

The world is outcome-obsessed, but that mindset decreases your odds of long-term success.

So, what can we do about this?

I’m not sure if there’s a concrete formula on how to sustain success — and we’re only scratching the surface of this topic in this issue — but I think organizations that are successful over long periods of time share three common traits:

1. They’re intrinsically motivated

There must be a purpose driving the organization that’s bigger than an outcome.

Smart said he doesn’t want his program’s “self-worth” to be defined by championships, but rather by “being your best every day.”

That sounds cliche, but it’s backed by science.

If your sole drive is the reward, motivation won’t last.

The pursuit of becoming your/the team’s best is a much deeper fuel tank.

2. Their culture resists complacency

There must be a hunger to continually strive.

This doesn’t require a cut-throat culture, but it does require a complete intolerance of average.

Complacency starts small:

  • Lack of attention to details

  • Cutting inconsequential corners

  • Relaxing the standards just a bit

It’s almost unnoticeable at first, but over time it builds and then festers.

The collective culture must snuff this out early.

3. They continuously evolve

There’s a great book by legendary executive coach Marshall Goldsmith called, “What Got You Here Won’t Get You There.”

The premise is simple: You must continue to evolve to reach new heights.

You cannot stay exactly the same and expect success to continue.

The organizations that sustain success are relentless about learning, growth and evolution.

Author Stephen King has a saying I love: “Kill your darlings.”

If something he wrote no longer serves the overall story, he cuts it.

If what served the organization previously is no longer working, it must go.


Becoming successful is hard.

But sustaining success is exponentially harder.

A few reasons for this:

  • Rewards become demotivating over time

  • Rewards shift focus away from the process

  • Most organizations become outcome-obsessed

3 traits the best organizations share:

  • They’re intrinsically motivated

  • Their culture resists complacency

  • They continuously evolve

Obviously, there’s much more to it than this, but this is a great place to start.

Assess yourself and your organization against the above traits and see where you need to improve.

One more thing about Kirby Smart:

He has a saying he uses inside the Georgia football program.

When his team has success, he reminds them: “We eat off the floor.”

The message is simple and powerful.

We stay hungry.

We stay humble.

We can always improve.

We’re never above the work.

We’re never entitled to success.

Human nature is to relax after a moment of success. It assumes success will just continue.

But that’s not the case. Everything must be earned.

No matter how good you become, always be willing to eat off the floor.

Teddy’s Recommendations

Speaking of my buddy Alex who I mentioned in this issue: He recently launched a newsletter called “Perform.”

He writes about human performance in a way that’s accessible, and he has as much credibility on the topic as anyone.

If you’re into science-backed perspectives on how to perform better, subscribe to his newsletter below. I think you’ll enjoy it.

PerformJoin 6000+ subscribers learning how to unlock their full potential.

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