Book Review: How the Mighty Fall by Jim Collins

By Allen White

In How the Mighty Fall, Jim Collins compares similar companies during similar time periods facing similar adversity. The companies that succeed are humble, diligent, methodical and assured. The companies that fail are arrogant, growth-obsessed, panicky and unfocused. (Taken from my other blog:  http://galatians419.blogspot.com)

You could get the impression from Collins’ writing that he is a moralist. He cites that the problems with failing companies stem from a lack of humility, self-discipline and eventually, a savior. Yet, Collins’ deity in this book is not the Divine, rather it is data. He doesn’t isogete the current economic and political situation by starting with conclusions, then backing them up with data. He starts with a question: “Is America renewing its greatness, or is America dangerously on the cusp of falling from great to good?” The data, then, speaks for itself.

The casual assumption would be that in tough economic times every company is suffering. And, to some degree they are. The reality is that while some companies utterly fail in bad times, others move forward with focus and resolve. Similar companies in similar industries in similar tough times should receive similar results. But, that is not the case.

Collins recognizes five stages of decline from his research: (1) Hubris born of success, (2) Undisciplined Pursuit of More, (3) Denial of Risk and Peril, (4) Grasping for Salvation, and (5) Capitulation to Irrelevance or Death. Most professionals as well as consumers knew that Zenith had peaked long ago. Their failure was no surprise. But, Motorola? Motorola had invented themselves into new industry after new industry. They had moved from Good to Great. How could they slide from Great to Grasping?

While Collins will give you the complete data, let me summarize the stages:

Stage One: A lack of humility caused by refusing to count your blessings. This lack of gratitude makes the successful regard themselves more highly than the ought.

Stage Two: Discipline is the hedgehog concept from Good to Great. Being the best at what you do. Keeping the focus crystal clear. Lack of discipline increases the waist line and shrinks the bottom line. More is not better. Better is better.

Stage Three: Denial of Risk and Peril commonly appears as “This will never happen to us. We will never fail.” Activity is mistaken for effectiveness. Cash flow is mistaken for profits. Size is correlated with greatness. Whether you study the Roman Empire or Motorola’s Iridium, the might do, indeed, fall. Denial of this peril only accelerates the descent.

Stage Four: Grasping for Salvation – Who is the new renegade CEO who will charge in and save us? What is the new product that will catapult us back into success? Many of these external “saviors” have only turned into martyrs in the end. While Collins notes that it’s not impossible to recover at this stage, the reality is that no industry possesses or ever will possess a silver bullet that will deliver them to success.

Stage Five: Irrelevance and death are the end result of prideful, undisciplined leadership. The only good news is that start-ups will come along to capitalize on the opportunities that these Stage Five companies missed.

This book merits you and your organization conducting an Autopsy without Blame. How has your organization been blessed? What was skill and what was luck? How has your organization drifted from your core principles and mission? What are the key indicators that you need to monitor? What are the “prophets of doom” saying about your organization? Are you tempted to pursue something or someone new to turn things around?

If you catch things in time, you can still re-engineer and turn things around. It’s possible to return to great.

Copyright © 2010 by Allen White

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