How The Mighty Fall: And Why Some Companies Never Give In (Good to Great, 4)

The silent creep of impending doom is the title Collins chose for the first chapter in this excellent review of how companies go astray. As usual, Collins did an in depth research to discover why companies fail and how that failure is shaped. He determined that there are five stages of decline for an organization: * Stage 1 is characterized by hubris born of success * Stage 2 is marked by undisciplined pursuit of more * Stage 3 is the peak of ascendancy and characterized by denial of risk and peril * Stage 4 begins the precipitous decline with the organization grasping for salvation * Stage 5 is the final capitulation to being irrelevant or accepting death Collins points out that a company does not have to go through all stages of decline, they can determine when they are in decline and can turn things around with some effort and attention. He also points out that not all companies deserve to survive; it's good that some fail. To make his case on the stages of decline and the results, Collins has provided many examples from companies we might know. What stands out most in this book is how we can see that in our very success lie the seeds of our own demise. It makes Andy Grove's view of "only the paranoid survive" one that makes sense. If we are always concerned and afraid that we won't make it to the next year and that competitors are about to best us and customers abandon us then we are not too likely to become victims of hubris and excess. We can learn from that attitude. As an example of Stage 1, Collins recounts the track Motorola is on from about 1983 through the 1990's explaining that their success in growing the company from $5 Billion to $27 Billion lead to arrogance and neglect. He also traced Circuit City's demise and drives home the point that our very success leads us to be blind to the things going on around us. This is true of individuals and organizations of all makes, models and sizes! Collins provides the following as "markers" for Stage 1: * Success entitlement, arrogance * Neglect of a primary flywheel * "What" replaces "Why" * Decline in learning orientation * Discounting the role of luck In the chapter on Stage 2, Collins discusses Ames and its undisciplined pursuit of growth starting with the acquisition of Zayers. Here he makes the distinction between overreaching and complacency. Collins points out that of the cases he studied only one had a clear cut case of complacency and that was A&P in retail. Because the acquisition of Zayers, Ames destroyed the momentum it had built up over a decade. Meanwhile, WallMart was minding its "p's and q's," relentlessly building its stores across the country. One followed their plan and was content to manage growth, the other was intent on growth for the sake of growth and overreached to the point of failure. Collins provides the following as "markers" for Stage 2: * Unsustainable Quest for Growth, confusing big with great * Undisciplined discontinuous leaps * Declining proportion of right people in key seats * Easy cash erodes cost discipline * Bureaucracy subverts discipline * Problematic succession of power * Personal interests placed above the organizational interests Motorola makes another appearance in Stage 3. This time it is for making big bets in the face of mounting evidence that you're going in the wrong direction. But Motorola was intent on establishing satellite telephone (recall Iridium?) and disregarded all the signs that they were attacking a market that didn't exist - full on denial of risk and peril. Collins warns "audacious goal stimulate progress, but big bets without empirical validation, or that fly in the face of mounting evidence, can bring companies down, unless they're blessed with unusual luck. And luck is not a reliable strategy." In addition, Collins reviewed the issue with Challenger. "Can you prove that it's safe to launch?" was the traditional guide for a launch decision. However, the frame had inverted to "Can you prove that it's unsafe to launch." If NASA had not made that frame shift, or if the data had been absolutely definitive, Challenger very likely would have remained on the launch pad until later in the day. Collins provides the following as "markers" for Stage 3: * Amplify the positive, discount the negative * Big bets and bold goals without empirical validation * Incurring huge downside risk based on ambiguous data * Erosion of healthy team dynamics * Externalizing blame * Obsessive reorganization * Imperious detachment After a successful run from 1992 through 1998, HP's CEO Lew Platt found himself being described as "struggling, perhaps even failing," as the company ran into the Internet economy. Fiorina joined HP and created a real sense of urgency. They were embarking on a Stage 4 decline where they were grasping for salvation. As a contrast, Collins brings up the Gerstner years at IBM. Gerstner took his time, analyzed what needed to be done, steadily increased profitability and revenues. Fiorina admitted in her book, Tough Choices, "I was in a hurry . . . ." Collins advises that we, "Breathe. Calm yourself. Think. Focus. Aim. Take one shot at a time." He identifies the following as "markers" for Stage 4: * A series of silver bullets * Grasping for a leader-as-savior * Panic and haste * Radical change and "revolution" with fanfare * Hype precedes results * Confusion and cynicism * Chronic restructuring and erosion of financial strength Stage 5 is characterized as being "Capitulation to irrelevance or Death." It's important to remember that a company can be profitable and bankrupt. The case study here is Scott Paper who fell so far behind P&G and Kimberly-Clark that it had little choice but to take on huge debt to reinvest in a series of last-gasp efforts to catch up. The board hired Al Dunlop who slashed 11,000 jobs including more than 70% of upper management. Collins makes it clear that no company they studied was destined to fall all the way through Stage 5. There is hope because companies have figured out that they were headed for disaster and then turned things around. It means a quick culture change, overcoming the panic, the desire for quick fixes, silver bullets and denial of the reality of the situation. This is a must read book for those in leadership and management positions.

In the early pages of this cautionary, wake-up call, Jim Collins mentions what a mentor told him about effective teaching: "don't try to come up with the right answers; focus on asking good questions." I started to count the elbow-in-the-ribs questions, but I ran out of ribs. Some best-selling authors are one-book wonders. Not Collins. The author of Built to Last and Good to Great has delivered another barn-burner. While it builds on all of his previous work--like a good business book should--it aptly kick-starts you in the gut with not just good questions, but extraordinary insights. These are the "I-better-listen-carefully-and-not-mess-up" kind of soul-stirring questions timed perfectly for today's economic environment. He writes, "I've come to see institutional decline like a staged disease: harder to detect but easier to cure in the early stages, easier to detect but harder to cure in the later stages. An institution can look strong on the outside but already be sick on the inside, dangerously on the cusp of a precipitous fall." It's not a happy book--it's a must-read book. Leaders that are in it for the long haul will learn principles and best practices for preventing, detecting and reversing decline. Collins identifies five stages of decline: * Stage 1: Hubris Born of Success * Stage 2: Undisciplined Pursuit of More * Stage 3: Denial of Risk and Peril * Stage 4: Grasping for Salvation * Stage 5: Capitulation to Irrelevance or Death "Overreaching" is one of the symptoms of Stage 2. "When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall," he warns. So why study failures? "We do ourselves a disservice by studying only success." Collins adds that "most companies eventually fall, and we cannot deny this fact." If you're leading a company, nonprofit or church today, it's possible that your own arrogance is blocking your view of reality, but there is hope. "Organizational decline is largely self-inflicted, and recovery largely within our control."

Having read the author's "Good to Great" some years ago I was very curious as to how Collins would address this very timely topic of failure. While the book is not a long or heavy read, it offers a very real and believable look at what happens to companies when they go bad and perhaps why this happens so often. As we come out of the back side of the "great recession" this book offers a compelling explanation of how managers can avoid a similar fate. Having lived through an experience such as Collins describes recently, it is perhaps good therapy to help me understand how the company that I worked for declined so quickly. While the signs were surely there long before things began to go very badly, the rapidity of the descent was breathtaking and wrenching. I encourage leaders of large and small companies to take this book seriously.

Ich habe dieses Buch vor 15 Jahren zum ersten mal gelesen. Es beschreibt am Beispiel verschiedenen Techniken-Firmen wer es geschafft hat und wer nicht als sie die Rahmenbedingungen und Technologien verändert haben. Unterhaltsam und lesenswert - auch im Hinblick auf die aktuelle Situation

Tal vez sea el libro más crudo de Collins y por ello el más necesario. Analiza la caída de muchas empresas, algunas de las cuales eran tomadas como referencia en sus libros anteriores. ¿Cómo caen? ¿Qué errores cometen? ¿Hay pautas en común? Este libro es un poco "cuando las barbas de tu vecino veas pelar, pon las tuyas a remojar", un recordatorio de que las cosas pueden ir mal que sin duda ayuda a que no vayan mal.

Highly recommended in the corporate environment and for senior directors.

It is difficult to think that you might read a business book that can change your life, but this book might just do that - your business life, that is. I recently bought Collins' Good to Great, but saw this and decided to read it first. Having started a business in 2004 and a second, subsidiary business just over a year ago, I wanted to find ways in which to better react to what are difficult times, with recession and a whole lot of changes and avoid the temptation just to pack it all in and retire. Collins describes 5 steps or stages of decline: Hubris born of success; Undisciplined pursuit of more; Denial of risk and peril; Grasping for salvation and lastly, Capitulation to irrelevance or death. Even over a period of 10 years, I have seen my own business go through the first four stages and am only just beginning to see some green shoots of regeneration. The book, far from being doom and gloom, offers advice and positive steps, with good examples, for how to counter risks at every stage: obviously the further down the slipery slope you are, the harder it will be to recover, but not impossible and this is the point of the book - how to start to become great again. I found myself marking pages and returning to different sections of the book and using it it to plan, train and retrain myself and others into a different way of thinking. I have read and studied many books on business and management: while much is useful, even illuminating, few have the impact, for me at least, of this book. Counter-intuitively, a book about how companies fail, might just be the thing to ensure against failure, identify with ones own mistakes and make sure they will not be repeated. If you are in business and in tough times, I heartily recommend this book: if you are enjoying good times, you might just benefit also: a great read.

Awesome