The recent scandal at Wells Fargo finally led to a result that many considered inevitable: the resignation of CEO John Stumpf.
The Wells situation is certainly complex. On the surface, it's just the latest in what's become commonplace today: evidence of systemic dishonesty and corruption in the finance industry (and arguably, big business as a whole). What made this case especially intriguing, though, was just how widespread openly deceitful practices had become, with thousands of employees committing open fraud.
But there's another issue at stake here, one that countless companies fall victim to every day.
Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, summed it up well in a recent interview with The New York Times.
"Wells Fargo emerged unsullied by the financial crisis and with a reputation for integrity," Mr. Elson said. "That reputation was so hard to gain, so easy to lose."
Or, as you've probably heard before: Trust takes years to build, seconds to break, and forever to repair.
We've seen some very successful companies experience this recently.
For example, Samsung has been fiercely battling to keep the catastrophe surrounding one of its flagship smartphones, the Galaxy Note 7. After a number of phones spontaneously exploded in August, the Korean technology company scrambled to determine the cause.
But after replacement devices the company shipped started blowing up too, Samsung decided to pull a drastic (and unexpected) move: It killed the Galaxy Note 7 entirely.
Then there's Chipotle. The fast-food chain seemed to shoot up out of nowhere, quickly becoming America's new darling.
Then, much more suddenly, a series of outbreaks of food-borne illness stopped the company dead in its tracks. Hysteria ensued, customers fled, and stock prices dropped. Now, several months after the last serious outbreak, the company is still struggling to win back consumers.
The Root Cause
On the surface, each of these companies are suffering different problems. But we can identify a single root cause they all share:
Leadership ignored clear evidence of systemic problems for an extended period of time.
In Wells Fargo's case, evidence indicates that management became aware of serious problems years ago. Some employees reportedly wrote directly to Stumpf, attempting to warn him that aggressive sales goals were encouraging unethical behavior.
Regarding Samsung, shock and fire risks are nothing new--although previous safety situations have involved products other than phones.
For example, in 2003 the company recalled 184,000 microwave ovens due to a defective part that caused them to "begin operation unassisted," resulting in smoke or fire. Smaller recalls included 43,000 microwaves in 2009 and 20,000 washing machines in 2007, both for shock or fire risks.
And you might be surprised to learn that Chipotle's first major setback with food-borne illness wasn't in 2015. No, for that you'd have to go back to 2008, when the chain fell victim to not one but two separate incidents, one dealing with hepatitis and the other with norovirus.
Additionally, internal problems with employees--including the nearly 10,000 workers who accused the company of forcing them into unpaid overtime--may have contributed to a culture where leadership wasn't taken seriously.
It may take only a few moments to do long-lasting, possibly irreversible, damage to your company. But the problems always start behind the scenes, and are often years in the making.
The key is for company leaders to continue to identify weaknesses, and cultivate a culture of continuous improvement. Don't just seek feedback; make sure you're listening to it as well.
This is especially important when you've achieved a measure of success. Yes, continue to focus on what you're doing right. But don't ignore the warning signs.
Because Rome may have fallen in a day, but it started falling apart years earlier.