Last April I had the opportunity to sit in on a workshop organised by Kevin Bowring and facilitated by Chris Grant. The workshop explored group dynamics and the final part of the workshop looked at turning around failing teams.
I was reminded of the issues Chris raised when a colleague shared with me a link to a book excerpt from Jim Collins’ How the Mighty Fall and Why Some Companies Never Give In. In the excerpt, Jim Collins asks:
How do the mighty fall? If some of the greatest companies in history can go from iconic to irrelevant, what might we learn by studying their demise, and how can others avoid their fate? … Might it be possible to detect decline early and reverse course—or even better, might we be able to practice preventive medicine?
Jim Collins and his colleagues undertook a comparative and historical analysis of their company database that “yielded a descriptive model of how the mighty fall that consists of five stages that proceed in sequence.”
Stage 1: Hubris Born of Success
- Success regarded as an entitlement
- Lose sight of the true underlying factors that created success
- The rhetoric of success replaces penetrating understanding and insight
Stage 2: Undisciplined Pursuit of More
- More scale, more growth, more acclaim, more of whatever those in power see as “success”
- Stray from the disciplined creativity that led them to greatness in the first place
- Making undisciplined leaps into areas where they cannot be great or growing faster than they can achieve with excellence—or both
Stage 3: Denial of Risk and Peril
- Internal warning signs begin to mount, yet external results remain strong enough to “explain away” disturbing data
- Leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data.
- Those in power start to blame external factors for setbacks rather than accept responsibility.
- The vigorous, fact-based dialogue that characterizes high-performance teams dwindles or disappears altogether.
Stage 4: Grasping for Salvation
- A charismatic visionary leader
- Bold but untested strategy
- Radical transformation
- Dramatic cultural revolution
- A hoped-for blockbuster product
- A “game-changing” acquisition
- Any number of other silver-bullet solutions
The very moment when we need to take calm, deliberate action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear. By grasping about in fearful, frantic reaction, late Stage 4 companies accelerate their own demise.
Stage 5: Capitulation
- Accumulated setbacks and expensive false starts erode financial strength and individual spirit
- Leaders abandon all hope of building a great future
Jim Collins cautions that the really scary part is “You do not visibly fall until Stage 4! Companies can be well into Stage 3 decline and still look and feel great, yet be right on the cusp of a huge fall. Decline can sneak up on you, and—seemingly all of a sudden—you’re in big trouble.”
Two concluding thoughts from this excellent excerpt:
- “The signature of the truly great vs. the merely successful is not the absence of difficulty. It’s the ability to come back from setbacks, even cataclysmic catastrophes, stronger than before. … As long as you never get entirely knocked out of the game, there remains hope.”
- “The path out of darkness begins with those exasperatingly persistent individuals who are constitutionally incapable of capitulation. It’s one thing to suffer a staggering defeat … and entirely another to give up on the values and aspirations that make the protracted struggle worthwhile. Failure is not so much a physical state as a state of mind; success is falling down—and getting up one more time—without end.”