Serving Bread

See larger image How The Mighty Fall: And Why Some Companies Never Give In (Hardcover) By (author) Jim Collins List Price: $23.99 USD New From: $10.23 In Stock Used from: $5.15 In Stock Release date May 19, 2009.

I’m a fan of Jim Collins’ works–especially Good to Great. He does an excellent job observing what makes companies succeed and identifies the warning signs that keep companies from achieving greatness. In this book, he focuses his energy on interpreting why some great companies have fallen into oblivion. Take Zenith, for example. This company was once synonymous with TV sets. Today, you may find a Zenith product at a yard sale or the thrift store. What happened? In this book, Jim Collins sets out to find the answer to that question.

Like his previous works, Collins identifies a set of companies as case studies and compares them to similar companies that did not fall but instead succeeded. What helped one company thrive in the same time frame that brought capitulation to another?

1. All companies are subject to demise. This book is also a sort of addendum to his previous ones. For example, in Good to Great, he touts Circuit City as a company that made the jump to greatness. Today, Circuit City is just a wikipedia entry, having declared bankruptcy, sold its name, and closed all of its stores a couple years back.
2. Good leadership will not be the only ingredient to a company’s success, but bad leadership can ruin a company.
3. Great enterprises can become insulated by success. Arrogance and entitlement to success will begin the process of decline. As the Proverbs say, “Pride comes before the fall.” (Stage 1: Hubris born of success)
4. More growth and acclaim without discipline. Collins writes, “When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall.” (Stage 2: Undisciplined pursuit of more)
5. A fall will be quickened when leaders discount negative data, amplify positive data and put a positive spin on ambiguous data. In this principle, Collins writes of the debates that happened on the eve of the Challenger’s launch where decision-makers where trying to interpret some ambiguous data that proved tragic. (Stage 3: Denial of risk and peril)
6. Those who grasp for salvation have fallen. A leadership team will often respond to decline (to its peril) by looking for a charismatic savior or a blockbuster product. (Stage 4: Grasping for salvation)
7. Most companies will fall at some point and some will fall beyond repair. (Stage 5: Capitulation to irrelevance or death)

I read this book with a bit of soberness as I’ve reflected on past leadership successes and failures. I am especially thoughtful of how stages 1 and 2 can be all too easily accessible in my leadership toolbox–where success is gone unchecked and the desire for more can shift me away from my core values and principles.

In the coming months, I will extract some more leadership principles from this book.