The Curse of the New HQ (Apple)

by Colin Berkshire

I have a personal theory about “Corporate Palaces”. When a company decides that it is time to build a Corporate Palace for themselves, they have peaked and a crash will be within five years, usually sooner.

I have 40 years of experience in business and I have seen this trend over and over again. It’s like magic. A company builds a new Corporate Palace and then it is suddenly in decline. It’s like a curse.

I’ve pondered the Corporate Palace curse for a decade and I think I understand it.

When a company is growing and struggling it is resourceful. It needs every available dollar, and it has no time to spend on anything other than achieving its very focused goal. That goal is customer and product focused, end every effort throughout the company is clearly and sharply focused on reaching that goal. The goal may be simply to stay in business, or it may be a new generation of product, or to deliver a breakthrough product, or to conquer a rival. But it is laser-focused on only one thing.

But at some point this edge is lost, and the goals become mushy, and life becomes comfortable. The company starts hiring people based upon their “compatibility” and their political skills, and those with raw talent are sidelined (“not team players.”)

A more important thing happens: The company stops being product and customer centric and starts being internally focused. Politics takes over, and the fight for the corner office begins. Eventually, in an effort to feel successful the company decides that it needs a Corporate Palace. (The justifications range from “It will help us recruit people” to “we are giving back to our community” to “it is such a small portion of our earnings”.)

Corporate Palaces are a sign of mis-placed priorities, and that leads to a decline in the business.

The move-in date for the Corporate Palace usually marks the peak in a corporation’s life. Look at JC Penny or AT&T or Disney.

Apple is now moving into their Corporate Palace. I predict doom.