Companies do not fail because they run out of cash: they run out of cash because their strategy, their governance and their information systems failed first. The cash squeeze is the last link \u2014the most visible one\u2014 in a causal chain that began years earlier.<\/strong><\/p>\n In 2012, Daron Acemoglu and James Robinson published Why Nations Fail<\/em>,<\/strong> the book that, together with Simon Johnson\u2019s work, earned them the 2024 Nobel Prize in Economics. Their thesis is well known: a nation\u2019s prosperity or decline does not depend on geography, culture or bad luck, but on its institutions. Inclusive institutions distribute power, protect initiative and allow the \u201ccreative destruction\u201d that Schumpeter described as the engine of capitalism; extractive institutions concentrate power in an elite that captures the rents and blocks any change that threatens its position. The former generate virtuous circles; the latter, vicious circles that perpetuate themselves.<\/strong><\/p>\n The parallel should be used with care, because a company is not a country: it can be sold, change hands or reallocate resources within months, and it is subject to competition, contracts and company law in a way a State is not. But the analogy is useful, because every company also has its institutions: the board, the incentives, management information, capital allocation, culture and succession<\/em>.<\/p>\n After twenty-five years on management committees, boards and refinancing tables, my conclusion is that most companies that fail had, long before their first missed payment, extractive internal institutions<\/strong>: governance captured by the founder or by a group of shareholders, incentives that rewarded volume rather than profitability, no checks and balances, and an almost physical resistance to creatively destroying what no longer worked.<\/p>\n And yet the usual diagnosis keeps looking in the wrong place:<\/strong> \u201cliquidity problems\u201d, \u201cthe banks turned off the tap\u201d, \u201cinterest rates\u201d, \u201ca bad year\u201d. It is understandable, because cash is what hurts and what has a maturity date. But the income statement and the cash position are lagging indicators: by the time they show the problem, the cause has been operating for years.<\/strong> This article separates causes from consequences, ranks them by importance and explains why a restructuring that starts at the bank\u2019s table, rather than with a diagnosis, usually fails.<\/p>\n If we transfer Acemoglu and Robinson\u2019s framework to the company, its \u201cinstitutions\u201d are better defined by the question each one must answer than by the body that embodies it:<\/strong><\/p>\nThe institutions of a company: six questions<\/h2>\n