Keeping ships afloat
Afailing company is sometimes referred to as a sinking ship. The image connotes a large structure slowly but steadily descending into a watery grave. It may be kept afloat with temporary measures. This metaphor of a foundering vessel can invite mention of rats deserting it. And here the implication is one of premature abandonment by those not loyal enough to try to stay longer and work on a salvaging operation. The early deserters may be off in their lifeboats spiriting away the ship’s treasures. So, opportunism is attached to the rodent’s instinct for survival honed through millennia of plagues, sometimes caused by themselves, fires, wars, earthquakes, and various apocalyptic situations.
There is some irony too when a company is referred to as a sinking ship. After all, the cause of a company’s downward spiral is the lack of liquidity. And yet, the real sinking ship derives its situation from too much water seeping in, not too little. Thus the literal counterpart is doomed rather than saved by pouring in water. Liquidity for an organizational sinker may be provided for months and even years, always in exchange for a business plan that promises a break-even point in the future, say on the third year... and then it’s supposed to be smooth sailing after that. Banking on such a distant promise is a distress signal not to be ignored.
Acquiring the label of sinking ship has consequences. There is usually a period of denial, too long held, that the doomed vessel can still be kept afloat, thus squandering resources and time in the effort to postpone the inevitable. Changing captains which is the knee-jerk reaction to failure can also be a problem as the candidates for the position at the helm are either unavailable or unqualified. Too, the crew is in a state of panic that translates into an attitude of every-man-for-himself. This selfish streak is just a survival instinct, no different from that of the small creature with the long tail. It throws overboard all the elements of teamwork, going the extra mile, and feelings of concern for the organization. It even becomes a problem to get a quorum for a meeting on the extent of the damage — is the water already in the mess-room?
The sinking ship paradigm has it’s equivalent in medicine in the incurable disease. The patient is hardly mobile or even communicative but is kept alive through artificial life support which only paying relatives have the authority to unplug. Doctors sometimes characterize this phase not as recovery but “pain management.”
Thus a rich parent, as in the case of organizations, is able to keep the ship from going down too fast. Part of the motivation involves ego — no ship has sunk on my watch. This is a state of irrational behavior which abandons the brutal and cold-blooded economic rules of supply and demand and the required profitability of companies. There is a Darwinian dynamic at work in business where only the fittest survive, pay dividends, and enjoy a stable stock price. For analysts and researchers, the appellation of sinking ship translates into a sell recommendation that leads to profit-taking or loss management.
Rats, especially after they abandon the listing vessel, tend to become prophets of doom themselves. Even when they have availed themselves of generous exit packages when the company was still able to afford these, the only restriction imposed on them may be the clause that prevents them from working for a competitor. This may be an unnecessary obligation to impose on a fugitive as a competitor is unlikely to offer a berth in their own sailing ship to a still wet rat. Still, the rodents tend to protect their personal brand by explaining their departure as a choice they made rather than one made for them. But in justifying their abandonment, these rodents also spread nasty rumors and add details to the woes of the sinking ship.
Still, in the matter of corporate declines, the sinking ship, like the dreaded lingering illness, actually affords more time for an orderly dissolution. This is not afforded to other organizations like closed banks and pyramid sellers which crash and burn abruptly, leaning more towards the metaphor of a plane crash, with no survivors.
Not all hands on deck perish when a ship sinks. Some are able to find a lifeboat or get rescued by passing ships. In fact captains may manage not only to save their lives but get transferred to another ship in the same group, perhaps a new one to sink. As to those trying to keep a damaged structure afloat, maybe they can consider another economic concept of stopping the flow of liquidity. It’s a matter of moving on and writing off losses... as sunk costs.
Still, in the matter of corporate declines, the sinking ship, like the dreaded lingering illness, actually affords more time for an orderly dissolution. This is not afforded to other organizations like closed banks and pyramid sellers which crash and burn abruptly, leaning more towards the metaphor of a plane crash, with no survivors.