How to Kill an 800 Pound Gorilla

Americans love winning success stories. But let's face it - we love train wrecks almost as much. In terms of newsworthiness, the only thing that comes close to rocket-ship rides like Apple, Google, or Microsoft is the demise of an Apple, Google, or Microsoft.

That's why headlines like these never surprise me:

• "Apple Is Creating Its Consumer Tablet Cloud to Kill Microsoft"
• "Microsoft News Corp. Deal Is a Google Killer"

Still, a headline does not a plausible proposition make. Not to suggest that the media tends toward hyperbole, but the truth is that stuff like this rarely, if ever, happens. In reality, 800 pound corporate gorillas are far more likely to die from disruptive technology or by their own hand than at the hands of a competitor.

In my experience, these are the five most common failure modes for corporate giants, plus one that's perhaps not-so-common but intriguing, nevertheless:

1. Death by corporate Fraud. Top executives of Enron, WorldCom, and Adelphia Communications all committed major accounting fraud. Megamergers and overleverage also contributed in WorldCom's case, but the entire "house of cards" was courtesy of dysfunctional CEO Bernie Ebbers.
2. Death by disruptive technology. The personal computer essentially killed off a whole boatload of computer giants like Digital Equipment, Wang Laboratories, Data General, Commodore, and Silicon Graphics. And Sun is well on its way. In all cases, the companies failed to adapt their business models to a changing market - sort of a dinosaur effect.
3. Death by attrition. You can say that Dell killed Gateway, AST, and Packard Bell, but I'm more inclined to see it as a fast-growing, 800 pound gorilla killing off smaller competitors that failed to adapt to Dell's low-cost supply chain management and Internet commerce business model. The same thing essentially happened to Egghead Software and even Kmart.
4. Death by over-leverage. Lehman Brothers, Bear Stearns, and Merrill Lynch. I think we've analyzed this one to death.
5. Death by mega-merger. Emery Worldwide, once the nation's largest freight and air carrier, ultimately failed due to a botched merger with Purolator Courier. WorldCom, Pan Am, and many others are also partial examples.
6. Death by regulation. For more than 50 years, Pan Am - which once boasted annual profits of $4 billion - was America's flagship international airline. But deregulation allowed American and United to acquire international routes while preventing Pan Am from acquiring domestic routes. When the National Airlines merger was finally approved, it was too little, too late -- and Pan Am botched the merger.

That said, these 800 pound gorillas - and the likes of Apple, Google, and Microsoft - are not as easy to kill off as some headlines may suggest. And they're certainly not likely to occur at the hands of a competitor.

Related to the topic, check out: The Problem With Know-It-All Managers