Sustaining Performance Excellence: Why Organizations Lose Their "Mojo" and How They Can Regain It

Ever since I started following Formula 1 auto racing, with a field that typically averages ten-thirteen teams per year, there always seems to be a handful of teams that are the perennial winners and who have consistently dominated the sport: Ferrari, McLaren, Red Bull and Mercedes.?

I suspect that this happens in other areas of sport and it certainly happens with business and industry across all sectors. I have always been quite interested in performance excellence that sticks —? gaining a better understanding of those key drivers of success, and why it is so hard to consistently maintain top-ranked positions.?

Sustaining Performance Excellence: Why Organizations Lose Their "Mojo" and How They Can Regain It

We’ve all seen it before. Companies, sports teams, and organizations rise to the top of their fields, only to falter. Despite every effort to stay at the pinnacle of their game, they lose their "mojo." What exactly happens to those once-mighty organizations? Why is it so difficult to sustain excellence over the long term, and what can be done to ensure that success doesn’t become fleeting?

To answer these questions, we need to explore research from organizational psychologists and sociologists, dive into real-world examples, and even consider some insightful discussions from podcasts like WorkLife with Adam Grant and The High Performance Podcast. Along the way, I hope to discover some of the core reasons why performance excellence is often non-sustainable and why some organizations manage to stay on top while others collapse.

Why Performance Excellence is Hard to Sustain

One of the main reasons organizations struggle to sustain excellence is the unavoidable issue of leadership changes. When a leader who has driven success leaves, the vacuum can be tough to fill. Research shows that poor succession planning can lead to disastrous results for an organization. For example, Grusky's (1963) early work on leadership succession showed how transitions often result in performance dips, particularly in the absence of clear planning. Leadership plays such a central role in shaping an organization’s culture and vision that any disruption at the top can easily cascade into confusion and underperformance.

We can see this in the tech world with Nokia. Nokia was at the height of its power in the early 2000s, leading the mobile phone market. But when their leadership failed to pivot the company toward the emerging smartphone revolution, the brand quickly lost its edge. A lack of clear direction during leadership transitions, coupled with an inability to innovate, led to Nokia's rapid decline (Doz & Kosonen, 2008).

Another common factor that causes organizations to falter is organizational inertia. This is the resistance to change that many organizations experience, even when they know that change is necessary. WorkLife with Adam Grant frequently touches on this concept, emphasizing that sticking to what worked in the past can become a trap. This unwillingness to adapt often causes organizations to stagnate. Research by Hannan and Freeman (1984) on organizational ecology underscores that larger organizations are especially prone to this problem, as they have more entrenched processes that make pivoting difficult.

A great example is Blockbuster, a company that dominated the video rental industry but ultimately failed to respond to changes in technology and consumer behavior. The company had several opportunities to adapt, including an early chance to partner with Netflix, but its reluctance to embrace change led to its downfall.

The Role of Culture and Motivation in Declining Performance

When it comes to sustaining performance excellence, organizational culture is critical. As Denison (1990) argues in his research on culture and organizational effectiveness, a strong, unified culture can be the glue that holds an organization together during challenging times. But when that culture begins to erode—perhaps due to growth, mergers, or turnover—an organization's performance can quickly deteriorate.

Take the case of AC Milan, a European football club that was at the top of its game in the early 2000s. The club had a strong team culture and leadership under Carlo Ancelotti, but after changes in management and a failure to refresh the squad with new talent, the team lost its competitive edge. A study by Szymanski (2003) highlights how team cohesion and the constant renewal of talent are key to maintaining success in the world of sports. AC Milan’s decline is a testament to the dangers of letting culture and cohesion slip away.

Motivation is another major factor in why organizations lose their way. Performance excellence often requires relentless effort, and as much as we admire those who seem to have endless energy, burnout is a real problem. Maslach and Leiter (2016) studied how burnout can erode not only individual well-being but also team performance. When athletes, team members, or executives are constantly under pressure to deliver, motivation declines, and performance suffers.

In sports, Serena Williams provides an interesting case. Despite numerous wins and an exceptional career, she struggled with burnout at times. In interviews and on The High Performance Podcast, Williams talks about how maintaining motivation in the face of expectations can be overwhelming. Without a strategy to manage stress and maintain well-being, even the most talented individuals can falter.

Formula 1: Lessons from the Pinnacle of Motorsport

The world of Formula 1 provides a fascinating window into the dynamics of sustaining performance excellence. The extreme levels of competition, rapid technological change, and high-stakes environment make F1 a perfect case study of how organizations can rise and fall, sometimes within a matter of seasons.

1. Mercedes-AMG Petronas Formula One Team: Sustained Excellence Between 2014 and 2020, Mercedes achieved unprecedented dominance in F1, winning seven consecutive Constructors' Championships. Much of this success is attributed to Toto Wolff's leadership, which emphasized team culture, strategic innovation, and long-term planning. In interviews on The High Performance Podcast, Wolff has often discussed the importance of maintaining a culture where failure is viewed as an opportunity for growth, echoing Edmondson’s (1999) concept of psychological safety. Mercedes’ ability to continually push the boundaries of innovation while fostering a strong, collaborative team culture enabled them to remain at the top of the sport for such a long period. However, their dominance began to wane as rule changes in 2022 shook up the competitive landscape. Mercedes struggled with technical issues related to car design, illustrating how even the most successful teams can face challenges when innovation is disrupted. Despite this, Wolff’s leadership in maintaining team morale and fostering an innovative mindset kept the team competitive, though they are no longer the outright dominant force.
2. Ferrari: The Struggle to Regain Former Glory Ferrari is one of the most storied teams in F1 history, with a legacy of success dating back to the mid-20th century. However, since their last Constructors' Championship in 2008, Ferrari has struggled to reclaim their dominance. Many observers attribute this decline to leadership instability and organizational politics, which have caused internal dysfunction. Research on leadership by Grusky (1963) suggests that constant changes at the top can erode an organization's stability and focus—a pattern clearly visible in Ferrari's frequent changes in team principal. Additionally, Ferrari’s failure to innovate at key moments, such as the hybrid engine revolution in 2014, further exacerbated their decline. Much like Nokia, Ferrari found themselves reacting to changes rather than leading them, a trait that organizational inertia can often foster (Hannan & Freeman, 1984).
3. Williams Racing: From Dominance to Decline Williams Racing, once a dominant force in Formula 1 with multiple championships in the 1980s and 1990s, has faced a significant decline since the 2000s. The team struggled to maintain financial resources and keep up with the technological advancements that other well-funded teams were implementing. Studies on resource dependence theory (Pfeffer & Salancik, 1978) explain how organizations are constrained by their external environments, and in Williams' case, the inability to secure sponsorship and financial backing led to a slow erosion of their competitive edge. Williams’ downfall is also a reminder of the importance of continuous strategic innovation. Unlike Mercedes, which invested heavily in new technologies, Williams was unable to keep pace with the increasing complexities of F1 engineering. Without the resources to attract top talent or maintain the latest technology, Williams’ performance has stagnated.

Insights from Podcasts: Adam Grant and The High Performance Podcast

One of the recurring themes from WorkLife with Adam Grant is the idea that failure is a stepping stone to future success. Grant often talks about the importance of framing failure as an opportunity to learn and grow. Organizations that do this—like Pixar, which famously embraced failed ideas and experiments during its creative process—are better positioned to innovate and maintain high performance. This ties directly to the research of Edmondson (1999), who introduced the concept of psychological safety. Edmondson’s work shows that when employees feel safe to take risks and make mistakes, they are more innovative and adaptive—key traits for sustaining success.

The High Performance Podcast brings another dimension to the conversation by focusing on mental toughness and resilience. Interviews with athletes like Chris Hoy and F1 team principal Toto Wolff reveal how psychological well-being is just as important as physical conditioning when it comes to maintaining performance excellence. As Wolff mentions, without mental resilience and a culture that embraces failure as part of growth, sustaining long-term success is nearly impossible.

Real-World Examples: Companies and Sports Teams from 2000-2024

Looking at real-world examples can help crystallize these concepts. Between 2000 and 2024, several organizations either managed to sustain excellence or dramatically lost their footing. Let’s break this down into two categories: those that sustained success and those that fell from grace.

• Sustained Success: New Zealand All Blacks (Rugby) The All Blacks are a legendary rugby team that consistently maintained top performance between 2000 and 2024. Their success can be attributed to a strong team culture, clear leadership, and constant renewal of talent. Organizational psychologist James Kerr (2013) explored the All Blacks’ emphasis on humility, self-discipline, and legacy, which has helped the team remain dominant for decades. Kerr’s findings align with Denison’s (1990) research on culture: strong cultural values provide the stability needed for long-term success.
• Decline: Blockbuster and Nokia Both Blockbuster and Nokia serve as cautionary tales. Blockbuster’s failure to innovate and Nokia’s leadership struggles show the consequences of organizational inertia and poor leadership transitions. As Hannan and Freeman (1984) predicted, large organizations are often the most vulnerable to these kinds of failures, as their structures and processes become too rigid to adapt to change.

Key Drivers of Decline and Strategies for Sustaining Excellence

So, why do some organizations manage to sustain excellence while others fall from grace? The answer lies in addressing the key drivers of decline:

1. Failure to innovate: Organizations like Nokia and Blockbuster failed to stay ahead of the curve, while companies like Apple thrived because they consistently innovated and adapted to changes (Doz & Kosonen, 2008).
2. Leadership instability: Poor leadership transitions, such as what happened with AC Milan and Ferrari, often lead to a loss of focus and vision. Succession planning and clear leadership strategies are essential for maintaining momentum (Grusky, 1963).
3. Cultural erosion: Strong cultures, like that of the All Blacks and Mercedes-AMG Petronas, help sustain performance, while a decline in cultural cohesion can have disastrous effects on performance (Denison, 1990).
4. Burnout and motivation decline: Without strategies to manage stress and renew motivation, high-performing individuals and teams will eventually face burnout (Maslach & Leiter, 2016).

Sustaining performance excellence is no small feat. Whether it’s a sports team, a company, or any organization, the keys to long-term success lie in adaptability, effective leadership, a resilient culture, and a commitment to innovation. By learning from both research and real-world examples—whether in business or Formula 1—it’s clear that while many factors contribute to performance decline, those organizations that address these challenges head-on are the ones that manage to stay on top.

References

Denison, D. R. (1990). Corporate culture and organizational effectiveness. Wiley.

Doz, Y., & Kosonen, M. (2008). The dynamics of strategic agility: Nokia’s rollercoaster experience. California Management Review, 50(3), 95–118.

Edmondson, A. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44(2), 350–383.

Grusky, O. (1963). Managerial succession and organizational effectiveness. American Journal of Sociology, 69(1), 21–31.

Hannan, M. T., & Freeman, J. (1984). Structural inertia and organizational change. American Sociological Review, 49(2), 149–164.

Kerr, J. (2013). Legacy: What the All Blacks can teach us about the business of life. Constable.

Maslach, C., & Leiter, M. P. (2016). Burnout: The cost of caring. Malor Books.

Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. Harper & Row.

Szymanski, S. (2003). The economic design of sporting contests. Journal of Economic Literature, 41(4), 1137–1187.