Here is an article written by Dave Logan for CBS MoneyWatch, the CBS Interactive Business Network. To check out an abundance of valuable resources and obtain a free subscription to one or more of the website’s newsletters, please click here.

Photo courtesy of Flickr user 401(K) 2012

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(MoneyWatch) This week I visited a company that could become the next Zappos or DaVita: BNotions in Toronto. In a session with a few dozen of their leaders, my colleagues Carrie Kish and Jill Fagan and I explained that even great companies may have the seeds of future mediocrity. But the potential for this must be faced squarely and the seeds prevented from sprouting. We learned from our visit that BNotions’ great fear was “becoming boring.”

When Carrie, Jill and I left the company, it was like exiting a Disneyland ride and returning to normal life. And then it struck us that BNotions lives in fear of the global pandemic of business mediocrity, whose first symptom is extended periods of boredom at work.

In fact, the company is paranoid about it. And for good reason. The odds are high that there are symptoms of the illness are present in your company.

Many fictional pandemic stories start with a science experiment (like a new virus to cure cancer) gone wrong, a stray virus devastating the population. The mediocrity pandemic starts with an important goal: the desire to formalize things, establish common practices and make sure everything is orderly. People should be in the right jobs, paid fairly, and promotions should occur according to established procedures. I call this approach tightening up.

The problem is that this tightening-up initiative easily gets out of hand, driving away genius, creating a “my life sucks” culture, destroying innovation and ensuring the company will be very well managed as it disappears into irrelevancy. Stephen Covey has called this approach “straightening the deck chairs on the Titanic.”

The CEO of a midsize company recently told me that he’d love to hire a person I had recommended, but couldn’t persuade his human resources group to go along. The candidate is a true genius — with an IQ several deviations above average. I warned the CEO that this individual wouldn’t fit into any established job description. The CEO liked the person — a lot — and felt he would be uniquely valuable to the company. But the SVP of HR said the hire was risky, that it would send the wrong message to employees, and that the candidate would not make a good fit. “What can I do?” the CEO asked me. “I can’t undercut my HR guy.”

In the year since this exchange, the company’s revenue and reputation are both in free fall. Last time I talked with the CEO (a few weeks ago), he said that everything at his company was “just great,” that “we’re finally getting things in shape.” His biggest challenge? “To convince the employees that we’re headed in the right direction.” If this company were publicly traded, I’d short their stock. This is a pattern for poor management: Tightening up creates systems that executives are afraid to override. Work becomes orderly and boring. And there’s no place for a genius whose capabilities will shake things up and reset a company’s course.

There is a proven way to stop the mediocrity pandemic: Perform a quick diagnosis of the biggest problem in the company. If the problem is systems, tightening up is the right thing to do.

But if the problem is something else — strategy, what the company offers to its customers or culture, “the way people talk about themselves, their work and each other” — then tightening up creates an organizational death spiral.

Tightening up is to companies what antibiotics are to a human body. Given the right diagnosis, antibiotics can save a life. Given to a person who has a different problem, they can make a person sicker and vulnerable to superbugs that science can’t stop. (I talked more about this approach to leadership in my “How to Fix Your Company” blog post in December.)

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Logan then recommends three specific actions to begin the repair process. To raed the complete article, please click here.

Dave Logan is a USC faculty member, management consultant, and the best-selling author of four books including Tribal Leadership and The Three Laws of Performance. He is also Senior Partner of CultureSync, a management consulting firm, which he co-founded in 1997. To read all of his articles for CBS MoneyWatch, please click here.