A conversation with Larry Mandelberg reveals why businesses don't fail - they commit suicide
When Larry Mandelberg was 13 years old, working in his family's auto parts store, his father posed a question that would shape the next 50 years of his life: "How did we go from zero automobile manufacturers to 300 to just three in only 20 years?"
That question launched Mandelberg on a 23-year research journey to uncover why businesses fail. His conclusion is as controversial as it is compelling: No business ever fails due to external forces. They only fail because of internal decisions.
In our latest episode of The Recognition Factor, I sat down with Larry to explore this provocative thesis and uncover the three organizational imperatives that can make any business "indestructible."
The Myth of External Business Failure
"People say things like, 'Well, what about natural disasters?'" Larry explains. "And I say, if I'm the CEO of a company and my job is to protect that company, isn't it my job to be prepared for anything that will disrupt that?"
He points to Disney as the perfect example. When COVID hit, Disney's entire business model - bringing large groups together in theaters and theme parks - was shut down overnight. Their stock collapsed. By any measure, they should have been finished.
Yet by the end of 2021, Disney was leading their industry in the stock market, stronger than before. Meanwhile, some restaurants closed while others thrived by simply moving their tables into parking lots.
The difference? Internal decisions, not external circumstances.
The Three Organizational Imperatives
Through his research of over 100 organizations and 250 executives, Mandelberg identified three things every organization must do to survive - and they must do them in a specific sequence:
1. Clarity of Purpose
"If you took 10 people arbitrarily and said, 'What is our purpose?' how many different answers do you think you'd get?" Larry asks. Most organizations would get 10 different answers.
This isn't about knowing you're a law firm or a construction company. It's about every single person in your organization being focused on exactly the same purpose. Without this alignment, you're wasting time, money, and human resources.
One mortgage company Larry worked with spent seven years clarifying their purpose. When they finally shifted from focusing on revenue to focusing on the customer experience, they went from $1 billion a year to $1 billion a month.
2. Consistency of Performance
"If you can't make commitments and perform to those commitments consistently every time, you can't grow, because people won't depend on you."
Larry uses McDonald's as an example - not of quality, but of consistency. Order a Big Mac anywhere in the world, and you know exactly what you're getting. That predictability builds trust and enables growth.
3. Engagement of People
"You have to make people feel like they're an integral part of the organization's success. If you can't do that, you can't survive."
This aligns perfectly with what we see at Scratchie - when people feel valued and recognized for their contributions, they become invested in the organization's success.
Why Planning Beats Strategy Every Time
One of Larry's most practical insights is the "big business secret that small business seems to want to avoid": planning.
"Yes, it's time consuming. Yes, it adds overhead. Yes, it adds costs," he admits. "But think about the money you save by not making stupid mistakes."
This isn't just about having an annual business plan. It includes:
- Documenting roles and responsibilities
- Creating separate marketing plans based on product cycles
- Maintaining simple tools like document inventories for projects
- Building mitigation strategies for key assumptions
As Larry puts it: "Money is a lagging indicator of prior bad decisions that shows up too late to fix."
The Truth About Change
Perhaps the most striking insight from our conversation was about change. When Larry speaks publicly, he always asks his audience: "How many of you believe people like change?" Almost no hands go up.
"You're completely wrong," he tells them. "Every single human being loves change. It's not change they don't like - it's change done unto them by others. They all love the change they do unto others."
This connects directly to self-determination theory and the importance of autonomy in the workplace. When people have agency in change, they embrace it. When change is imposed on them, they resist.
A Warning About the Future
Our conversation took an unexpected turn at the end when I asked Larry about AI and the future of work. His response was sobering:
"The human race is either going to learn how to get control of AI, or it's going to cease to exist."
With 52 years in technology, including running three tech companies, Larry sees parallels between AI and social media - tools that provided immense value until "the volume of harm being done with it outweighs the volume of good."
His solution? Education. But he worries that with educational systems in decline and people electing leaders based on personality rather than competence, we may not be equipped to handle what's coming.
The Bottom Line: Purpose, Performance, People
Larry's research confirms what we've discovered at Scratchie: sustainable success isn't about external factors or financial engineering. It's about creating clarity of purpose, delivering consistent performance, and genuinely engaging your people.
As Larry says, "Profits without purpose is pointless. If you do something you love, you will make money. Money is never the issue."
Whether you're running a construction site, a restaurant, or a tech startup, the message is clear: businesses don't fail because of external forces. They fail because of internal decisions.
The good news? Those decisions are entirely within your control.
Listen to the full conversation with Larry Mandelberg on The Recognition Factor podcast. His book, "Businesses Don't Fail, They Commit Suicide: How to Survive Success and Thrive in Good Times and Bad," is available on Amazon.
What internal decisions could be holding your business back? Share your thoughts in the comments below.
