Good companies go bad when they get too comfortable, when they prefer hierarchy to getting things done, when they get too big to budge, and when they let technology outflank them. They go bad when they assume they have a "brand", but really only have a "product", when they forget entrepreneurship, and when they forget to be good people.

Most of us understand how companies succeed: they find a hole in the marketplace, launch a new product that appeals to millions, then follow the craze of skyrocketing sales. Good companies are like rockets: they can soar, leaving lesser competitors choking on their smoke trail and discover new worlds. But these rockets can also land far astray of their target, and even blow up.

We rarely look at how these demigods fail. Yet their failures can present us with just as many lessons on how to succeed as their much-touted successes. Here are some of the ways that good companies go bad.

First and foremost, good companies go bad when they forget to be good. Companies become success stories by focusing on a guiding principle. For Sony, the original focus and creed was innovation and quality (yes, that's probably two principles, but not bad ones to have). Sony created radios of exceptional quality (a friend still plays his original, collectible Sony transistor radio in his kitchen). Once those products passed the "Made In Japan" skepticism, they surpassed everything on the 1960s American market. Sony innovated television sets that didn't have to go to the repair shop. They created the Walkman, as ubiquitous in its time as the iPod is today.

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