📚 "How did you go bankrupt?" "Two ways. Gradually, then suddenly."

You can often feel it in your gut, even though you don’t want to admit it.

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually, then suddenly.”

This quote from is Ernest Hemingway’s book The Sun Always Rises. (Honestly, quoting Hemingway is only me trying to impress. I’ve never read any of his books!)

The quote is resonating with me, and is relevant to many aspects of life: relationships, finances, fitness and health, business or even the global climate.

Although negative events often feel sudden and dramatic, they are more often the result of a long-term trend. I’ve written before about Norwegian Airlines who made a huge bet back in 2012 when they purchased 222 new airplanes. They took up a large loan to cover the investments, and expanded fiercely into new markets. Then in 2018, they changed strategy from fast growth to becoming profitable. They had very little cash left in the bank, and had to start cutting costs.

In other words, it shouldn’t surprise anyone that Norwegian Airlines is walking a tight line these days, verging on the brink of total collapse and bankruptcy. In May 2016, its share price traded at $46.00; currently it’s trading at $0.07 😵

The same can be said about WeWork (see earlier article). In the wake of their failed IPO, more and more stories came out about a work culture with no cost control and lavish spending. WeWork’s sudden failure was the result of gradual decline. Another pertinent example is the ongoing pandemic; it felt sudden, but in reality was a consequence of ongoing poor animal welfare and hygiene in food markets.

But sometimes we have to take major risks. Perhaps it was the right decision for Norwegian Airlines to invest in 222 new airplanes in 2012. Maybe it was the only way they were going to compete successfully against Ryanair and EasyJet.

However, I’m wondering when Norwegian’s gradual decline started. Did some senior executives see already back in 2013 or 2014 that they were gradually going bankrupt? Could the course have been altered, and would that have changed the outcome we’re seeing today? 🤷‍♂️

It’s a healthy exercise to look back at the last month, quarter and year, and ask yourself if the current decline is part of a short-term trend, or whether it’s more systemic and has been going on for a longer period of time. You can often feel it in your gut, even though you don’t want to admit it. I think the best cure is an open work culture where criticism of senior leadership is welcomed.

Business aside – for everything that matters to us, we should have regular check-ins (maybe not as formal as quarterly reviews 🤪 ). How are our relationships doing now compared to a month ago? How is our health?

And remember: In the same way as gradual decline leads to bankruptcy, gradual increase will inevitably lead to success 🥳