The Illusion of Invincibility. Paul Williams

and famine were raging in Europe. We discovered how, before integrating a tribe or nation into their empire, they would first make an offer of a “friendly takeover” and only use their considerable military force if the offer was rejected. And we learned how they consistently endeavored to integrate the conquered people into their empire and maintain peace thereafter by resettling people and developing the local infrastructure.

      Originally, the trip was intended to give us a few days to relax from our day-to-day work as managers, supervisory board members, investors, and coaches. Yet we suddenly found ourselves talking about management—Inca management. How could it be that the Incas, who had neither the wheel nor a system of writing, let alone modern communication technology, had built and dominated a vast empire, while many present-day mergers fail under far more favorable conditions? How did the Incas manage to establish an accepted governing elite that lasted for many decades, while modern senior executives often have to defend themselves against allegations of egomania and arrogance? Why did so many groups and communities choose to follow the “children of the sun,” while the attempts of today’s business leaders to steer company conglomerates on a common course often end in failure?

      Of course, the methods of a rigidly hierarchical society of the early modern period cannot simply be transferred directly to the present day. But our heated debates made one thing clear: the Incas offer us a mirror and a chance to reflect on the behaviors and methods business executives use today. What at first glance appears so distant and alien can actually hit home. The Inca elite faced challenges similar to those of today’s managers: formulating clear goals, persuading others to embrace change and innovation in a tough environment, unifying different groups, and implementing plans according to rigorous standards. When we look beyond many of the current management trends and buzzwords, be it “digitization,” “diversity,” or “disruption,” one question remains unchanged: What is essential for leaders at all levels seeking to ensure their companies or organizations can achieve sustainable success? Successful management and leadership really depend on the answers to this question—and this book provides such answers. Having served as the initial spark of inspiration, the Incas provide a backdrop throughout the book as we draw on our own business experiences and on what our interviewees—senior managers from international companies, successful family businesses, start-ups, consulting companies, public sector organizations, and NGOs—shared with us along the way (see “Our Interview Partners”). We would like to thank all of them for their trust and openness, and we have chosen to anonymize some of the more personal or controversial stories.

      This book is in no way intended to be a starry-eyed romanticizing of the Incas’ story. Alongside impressive expansion, their reign was also characterized by deportations, often of entire peoples and villages, child sacrifices, and the rigid regimentation of individuals, who were not free to choose their place of residence or their occupation. Furthermore, after almost a century of uninterrupted success, the Incas suffered an equally monumental downfall: in 1532, the Spanish conqueror Francisco Pizarro defeated the Incas’ twelve-thousand-strong army with fewer than two hundred soldiers and captured their ruler (the “Inca”) Atahualpa. Within a few years, the Inca Empire had disintegrated, although the last Inca king, by that time a puppet of the Spanish conquistadors, was not executed until 1572. For all the resourcefulness, efficiency, and consistency the Incas had shown in the domination of their empire, they seemed helpless in the face of their new adversary, which leads us to ask whether all such outstanding successes are intrinsically doomed to fail at some point—whether every great triumph carries within it the first small steps toward failure.

      Here, too, the parallel with the present is immediately apparent. Every manager and executive knows the names of the “global players,” the seemingly unassailable companies, that have experienced dramatic decline or, in some cases, been obliterated completely: Kodak, Nokia, AOL, Pan Am, Arthur Andersen, and many more. If we take the annual Forbes list of the world’s five hundred most profitable companies as our benchmark, it quickly becomes clear that scarcely a single organization has been able to maintain its place in the gilded ranks of the world’s ten most financially successful companies over a longer period of time. Perhaps it is precisely the illusion of invincibility that predestines their often rapid fall from grace. For executives and managers, this means remaining constantly vigilant, particularly in times of “guaranteed” success, searching for weaknesses and constantly working to challenge and develop both themselves and the company. Otherwise, the danger is that they may suffer the same fate as a certain German executive whose pompous attempts to create a “Global, Inc.” out of the Daimler Group marked the beginning of the end of his career and cost the company and its shareholders billions of dollars.

      One more thing: While we have carefully researched the information about the Incas in this book and have talked with a number of experts in Peru, the United States, and Germany, we neither intend nor are able to provide more than just an overview of this fascinating culture. There are many other books that do this job much better than we can, and we have listed some of these in the bibliography. Our view of the Incas is a selective view through the eyes of managers working within large organizations. The Incas added an unexpected layer of meaning and insight to our view of the business world, and the lessons we learned surpassed in many ways the dozens of leadership seminars and workshops—with their assorted PowerPoint presentations—that we had both witnessed over the years. Our hope is that this book succeeds in conveying at least part of the fascination of this change of perspective and that our insights, analyses, and recommendations provide sufficient information and entertainment to encourage you to read the book from start to finish. After all, there are more than enough boring management books out there!

      Andreas Krebs and Paul Williams,

      Langenfeld, Germany

      www.inca-inc.com

      “Many years of success can produce an unjustified degree of self-confidence and lead to the misguided belief: ‘We can do it all.’”

      Dr. Iris Löw-Friedrich, Executive Vice President and Chief Medical Officer, UCB

What Goes Up Must Come Down? A Look at the Fortune 500

      Every year, Fortune magazine publishes the list of the top 500 companies. On this list appear the “big players,” those companies with the highest revenue in the world. And yet, hardly any of these organizations manage, consistently, to maintain their ranking among the titans. Could it be that the moment of greatest triumph is also the moment of greatest vulnerability? Does every extraordinary success carry with it the seeds of its own destruction? Must everything that goes up eventually come down? If global empires can collapse and advanced civilizations like the Incas’ can melt away into irrelevance in a matter of a few years, how on earth can our current business leaders and managers have any confidence that today’s success can be sustained into the future? More importantly, are there any warning signs of impending doom? Of course, these are not just questions for big businesses. After all, we all know of start-ups that demonstrate meteoric growth before failing equally spectacularly, as well as more traditional family businesses that flounder, seemingly without warning, after many decades of success.

Remember Nokia?

      Ask a modern-day cellphone-savvy teenager what he thinks about Nokia and he will most probably give you a blank stare. Er…who? Nokia? Just a few years ago, this Finnish company ranked among the giants of the business world and dominated the global market for mobile telephones from 1998 to 2011. In 2004, Nokia made it into the top third of the Fortune 500, coming in at number 122. A small country with around five million inhabitants was the home of an undisputed leader in a key and growing global sector.

      The story of Nokia reads like a Hollywood script. It is 1865, we are in the south of Finland, and an engineer called Fredrik Idestam builds a paper pulp factory on the banks of the Nokianvirta; he calls it Nokia. About thirty years later in 1898, Eduard Polón sets up the Finnish Rubber Works to manufacture rubber boots and tires. Another fifteen years go by, and Arvid Wickström establishes the Finnish Cable Works. From 1963 onward, the Cable