How the Mighty Fall - Jim Collins

 

Film careers aren’t the only business to follow cycles of failure. Stefan Stern’s piece in the Financial Times titled “Time to understand how the mighty fall” outlines the 5 stage process of business failure from Jim Collins book ‘How the Mighty Fall’

  1. Hubris Born of Success – “People begin to believe that success will continue almost no matter what the organisation decides to do, or not do.”
  2. Undisciplined Pursuit of More – “Big gets confused with great.”
  3. Denial of Risk and Peril – “Rather than confront the brutal realities, the enterprise chronically reorganises.”
  4. Grasping for Salvation – “Panicky moves – maybe a big acquisition – are made.”
  5. Capitulation to Irrelevance or Death – “Requires no further explanation.”

He looks at the case study of Toyota’s much publicised failures a few years back.

  • “The lesson is: never be seduced by the glowing story people may tell about you. Critics will probably exaggerate on the downside, too. The chances are that your business is neither as brilliant nor as awful as people say it is. The same rule applies to chief executives. They are rarely geniuses or morons, merely something in between. Success in business is never guaranteed, in spite of the enticingly simple promises made by some of the titles on the airport bookshelves. Luck and timing have more to do with companies’ success than many people realise, or are prepared to admit. And, as Mr Collins is at pains to say these days, even those companies that, in his view, completed the journey ‘from good to great’ had no right to claim the label of greatness indefinitely. In ‘How The Mighty Fall, ‘ he offered this warning: ‘Every institution is vulnerable, no matter how great. No matter how much you’ve achieved, no matter how far you’ve gone, no matter how much power you’ve garnered, you are vulnerable to decline … Anyone can fall and most eventually do.’”

The phases reminded me of Karla Jennings’ brilliant tongue-in-cheek 6 phases…

  1. Enthusiasm
  2. Disillusionment
  3. Panic
  4. Search for the guilty
  5. Punishment of the innocent
  6. Praise and honors for the non-participants
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