Argenti Trajectories

Argenti operated at a lower level of abstraction and espoused different objectives than Penrose (examining decline, not growth), but his work is nevertheless a valuable methodological exemplar for us. His approach consisted of two steps. First, he identified the three archetypical collapse trajectories shown in figures below. Second, he developed archetypical ‘process stories’ which outline the sequence of events that drive these trajectories of collapse. Argenti’s motivation for developing such ‘storylines’ underpinning failure was dissatisfaction with the prevailing practice of identifying factors associated with decline: “… I have now come to believe that a mere list of causes and symptoms, no matter how coherent and comprehensive it may be, is not enough. What is missing from such an inventory – and indeed from all previous work in this field – is the dynamics of failure, the sequencing of events. We need a storyline that binds together all these causes and symptoms into a working model” [Corporate collapse : the causes and symptoms by John Argenti 1976, p. 121]

John Argenti’s Trajectories of Corporate Collapse

Performance Fantastic Excellent Good
5,6,7,8,9,10
610

11,1 4

15 1,2,3,4 16
5,6

,7

8,9,10

,11

12-16

Poor Failure

1,2

,3,

4

11, 1

5 4,

17 18 17

2,1

3

1,2

3 4 to 14 years

2 to 8 years

1. Type-1 Trajectory a. Implement appropriate systems, add managerial skills to the proprietor 2. Type-2 Trajectory a. Intervene at 8, 9 or 10 b. Some type of regulation necessary (eg: Consolidate) 3. Type-3 Trajectory a. Intervene before 12 b. Restructure; Divest; reduce gearing; cut back trading if needed c. Introduce structured strategic planning/management

Improvement possibilities

Layout © 2003, M. Azmeer ([e-mail])

1. Starts with defective management structure 2. Follows up with poor accounting system 3. Gearing increased, adding to risk 4. ‘The BIG Project’ – costing underestimated 5.