Why Good Times Are the Most Dangerous

It's easy to get too comfortable, which leaves you unprepared when disaster strikes. That's why the best leaders are always a bit paranoid

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By Keith R McFarland

January 24, 2007 at 12:26 AM UTC

This article is for subscribers only.

Though managing in tough times can test a leader's mettle, the bigger test often comes when times are good. A crisis, if well-managed, can bring out the best in a company—increasing focus, intensity, and commitment. It's when a business gets a comfortable lead that the greatest dangers lurk: Complacency creeps in on little cat feet.

When I was in my mid-30s, I became chairman of a promising Los Angeles-based technology company. The business had doubled revenues every year except one for 15 straight years, growing into a national company with 3,500 clients. It had twice made the and had even been featured on 's cover. We were about to close on some badly-needed venture capital to prepare us for an IPO, and we had just inked alliances with Mellon Bank (MEL) and EDS (EDS). Times were indeed good, or so we thought.