By 1933, the precursor to the United Nations, the League of Nations, was considered largely defunct. In 1937, it moved into a lavish new headquarters called the Palace of Nations.
Since the end of the Cold War, NATO (the North Atlantic Treaty Organization) has struggled with an identity crisis. In 2018, it moved operations into a massive new headquarters in Belgium.
In 2016, Lego celebrated its largest sales year in its history by announcing a new, state-of-the-art headquarters. The next year, sales dropped 8% and Lego announced 1,400 layoffs.
What is going on? Why do organizations often build incredible structures as they decline? This strange phenomenon was actually first noted by British naval historian Cyril Northcote Parkinson. He called the phenomenon “Parkinson’s Law of Buildings.”
Parkinson’s Law states that “…a perfection of planned layout is achieved only by institutions on the point of collapse… Perfection of planning is a symptom of decay. During a period of exciting discovery or progress there is not time to plan the perfect headquarters. The time for that comes later, when all the important work has been done.”
If Parkinson is correct, leaders don’t have the time to build perfect headquarters until they believe they have already solved all of their difficult problems. This suggests an uncomfortable reality: The moment a company begins building a monument to itself might be the moment it is nearing irrelevance.
All companies navigate a sequence of industry phases my firm calls the Disruption Cycle®, moving from Acceleration and Maturation at the beginning of the cycle to Saturation and Commoditization at the end. According to our extensive research, companies tend to build monuments to themselves during the Saturation phase.
This phase is marked by slowing growth and a dramatic shift in the company’s focus from customers’ wants to internal needs. It also correlates with a decrease in alignment among leadership and a loss of focus in the marketplace.
The monuments companies build during this phase take many forms, from seeking accolades and awards to lobbying for industry regulations and planning the perfect headquarters. These monuments to self often mean one thing: Decline is near.
Juxtapose monuments with milestones. The term “milestone” originated from the Roman custom of marking every mile on a road with a stone. Whereas a monument looks to the past, a milestone marks the present. As monuments look inward, milestones evidence progress toward the future. And where monuments are a sign of death, milestones assume life.
What monuments have you built in your business? Could one be the building you’re sitting in, an award sitting behind your desk or a new industry regulation you asked your lobbyist to pursue? Consider what your monuments mean and whether they are a healthy reminder of the past or a sign of decay. And if you realize you built a monument to yourself, consider tearing it down before it tears you down.
Instead, focus on milestones that demonstrate that while the job is never done, your team is making progress every day. Fight the urge to turn inward that tempts every company in the Saturation and Commoditization phases. And always act as if today were the first day you opened your doors — when you had everything to prove and nothing to show for it.
It’s interesting that just as Apple celebrated the largest market valuation in human history in 2017, it was entering a beautiful and perfectly planned new headquarters. Perhaps it should come as no surprise that, at the time, Apple began facing shrinking demand for its core product line and began chasing new revenue streams.
Parkinson’s law, anyone?