Published: 06/10/2005 Volume 115 No. 5976 Page 30

Beware success: it breeds failure. Management literature is preoccupied with finding excellent organisations and then tells the rest of us what makes them so successful. Yet all too often these shining examples slump into decline a few years later.

Paradoxically, it is when a business is at the peak of success that it is most vulnerable to failure.

When an organisation is doing well, executives can suffer from 'delusional optimism'. Dan Lovallo and Daniel Kahneman define this as a tendency to overemphasise a project's potential benefits while underestimating likely costs and ignoring the possibility of mistakes. They argue this is fed by:

taking credit for positive outcomes while attributing negative outcomes to external factors;

downplaying the role of chance and luck;

ignoring competitors' capabilities and plans;

approving proposals with the highest probability of failure;

rewarding optimism and interpreting pessimism as disloyalty.

Most of these are actually symptoms of 'groupthink', the term coined by Irving Janis to explain why seemingly capable and intelligent leadership groups are able to pursue catastrophic courses of action even in the face of strong evidence telling them not to do so. Paul Stanton, Professor Aidan Halligan, Ron Cullen, Professor Sir Liam Donaldson and I explored this in relation to NHS boards and put forward strategies to tackle it.

Peter Robertson explores the dangers of organisational success in his recent book, Always Change a Winning Team . He shows that managers in successful organisations can easily become complacent - believing their prosperity will continue unchallenged and unchecked. Worse still, success feeds vanity, making businesses inflexible and resistant to change.

To avoid the success trap, organisations must constantly reinvent themselves. But to do that effectively they need to be ever mindful of the importance of creating a strong sense of stability and security among staff.

Jay Bevington is associate director of board development at the NHS clinical governance support team.