TBI’s Amazing Shrinking Business! (Part 3 of 3)

With TBI Sudirman closed and TBI Kuningan ‘downsized’ to a smaller and less prestigious address, it seemed time to talk about the elephant in the room: TBI’s shrinking business and the sclerotic management team behind it. In this series we have argued that TBI has now ‘progressed’ from the early to later stages of business failure. They are no longer just losing market share at a rapid rate; they are now being forced to close or vacate their more expensive properties. Not only have their closed TBI Sudirman, a high-profile school in Jakarta’s financial district, they have also had to abandon their flagship school, TBI Kuningan, opting for a more modest premises instead. In this final post of the series we will argue that they now display many of the symptoms of business collapse.

CORPORATE COLLAPSE: ARGENTI’S CLASSIC STUDY

One of the classic books  on the literature on business failure is Corporate Collapse: The Causes and Symptoms by John Argenti. For this post, I decided to look at his model of business collapse and compare it with what we have seen at TBI (The British Institute). Sadly for TBI, they exhibit a wide range of warning signs and symptoms. Potential investors in particular would be well-advised to stay clear.

Management Weaknesses

Argenti compiled a check-list of management weaknesses which he found to be very common in collapsing companies. In many ways, they sound like he was writing a description of TBI itself! Let’s work through a few of them:

  1. Autocratic CEO / Director: We have covered this in great detail. Ibu Mariam used to behave like Donald Trump on an episode of ‘The Apprentice”, screaming, “You’re fired” to victim after victim. She was constantly scapegoating her direct reports for her frequent and epic stuff-ups.
  2. Passive Board of Directors: Mariam’s in-laws were on the Board of Directors and actively involved with the management of USG, the ‘charity’ which owned TBI. Issues of nepotism also frequently arose around Ibu Ning and her family’s businesses.
  3. Lack of Skills in Management Team: What skills? Apart from the Academic team, some of which had basic certification in TEFL, skills were largely imaginary or non-existent. Ibu Mariam’s degree was in Choreography not business administration and she appointed her coffee buddies into major roles without any experience in education management.
  4. Weak Finance Director: Pak Reza, the former Finance Director, once lost a half a billion rupiah deposit due to lack of due negligence in renting a new premises. As a result of his incompetence, he got a promotion. He was also compliant in allowing Ning and Mariam to extract hundreds of millions of rupiah in mysterious ‘management fees’ from the revenue of various schools.
  5. Poor Response to Change: TBI is just utterly unwilling to change and deaf to advice. You couldn’t tell them anything: they were already the experts. It didn’t matter that they were losing market share month after month to more tech-savvy outfits such as Wall Street. They were sticking to their ‘textbooks ordered off a book catalog’ model and nothing would move them.

A DOWNWARD SPIRAL

TBI displays many of  the signs which Argenti identified as being typical symptoms of a failing company. In addition to those above, we also noted the following paragraph, which really seemed to be on point.

“In a company which fails, there are usually a number of warning signs. Some of the most  telling of these include frozen management salaries, delayed capital expenditure, falling market share and rising staff turnover.”

In recent months we can confirm that every single one of the things on that list has happened at TBI. You could also add closing branches, downsizing branches and staff layoffs to the list. One informant claimed that only two of their fifteen or so schools are now profitable. TBI is now clearly a failing business in a downward spiral. They seem to believe that heading downmarket will save them, but we are happy to count ourselves among the skeptics.

 

 

3 thoughts on “TBI’s Amazing Shrinking Business! (Part 3 of 3)

  1. The current director is a disaster also. he has another job in another company. TBI is only a part-time job for him. check his linkedin

  2. Rumour is that they’ll be shutting down the Fatmawati centre as well to ultimately maintain only one school, the one in Lotte Avenue. Is this true?

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