How the Mighty Fall: And Why Some Companies Never Give In

Every great institution stumbles at some point in its history. All companies, no matter how established or successful, can fail. The crucial questions are, “how do you know if you’re on the verge of a decline”, and “how can you turn things around”? Through four years of research, Jim Collins discovers that most great companies fall through five stages of decline, which can be detected early and avoided. In this review of “How the Mighty Fall: And Why Some Companies Never Give In”, we’ll give a synopsis of each of these five stages of decline, and how to prevent, detect or reverse the decline before it’s too late.

Jim Collins’ bestselling books, “Good to Great” and “Built to Last” looked at how good companies broke away from the rest to consistently outperform the market, and how visionary companies like Disney and 3M lasted the test of time to lead and shape their industries. Yet, some of these great companies (e.g. Merck, Motorola) eventually fell. This book builds on earlier research to uncover what happened, and to identify if such decline could be foreseen, avoided or reversed.

Jim Collins shares the research methodology leading to the selection of 11 companies that demonstrated the rise-and-fall phenomenon: Great Atlantic and Pacific Tea Company (A&P), Addressograph, Ames Department Stores, Bank of America, Circuit City, Hewlett-Packard (HP), Merck, Motorola, Rubbermaid, Scott Paper, and Zenith.

Here are the five sequential stages of decline in a nutshell.

  • Stage 1: Hubris from Success. “Hubris” refers to excessive pride or arrogance. Stage 1 starts when people become over-confident, and forget the true foundations of their success. People start to take success for granted, lose the hunger for learning, get distracted by non-core areas, and confuse their “Why” and “What”.
  • Stage 2: Undisciplined Pursuit of More. The arrogance from Stage 1 leads the company to overstretch, jumping into areas where it can’t be great, or pursuing growth without the right people or resources. They become obsessed with growth (to the point of losing focus and discipline), and make the fatal error of growing faster than they can get the right people, and/or don’t put the right successors in place.
  • Stage 3: Denial of Risk and Peril. At this stage, the company is still delivering results, but there are growing signs of danger. Unfortunately, leaders view the data through colored lenses and neglect the threats. Leaders play up the positives, play down the negatives, read ambiguous data favorably, and attribute problems to external factors. Fanatical reorganization, and deterioration of team dynamics & culture are common.
  • Stage 4: Grasping for Salvation. At this phase, the decline becomes undeniable. But, the organization’s death is not yet imminent. Leaders’ responses at this point determine if the organization sinks or swims. Those who panic and seek quick salvation (e.g. bringing in an external “Savior”, or jumping into drastic, untested changes) will accelerate their fall to Stage 5. Revival is only possible with a return to fundamentals, i.e. the organization must laboriously rebuild and reinforce the flywheel once again, one step at a time.
  • Stage 5: Resignation to Downfall. The longer an institution stays at Stage 4, and the more its people try to find magic solutions, the faster its downward decline. Eventually, the financial resources dry up and people run out of steam. Collins calls this stage “Capitulation to Irrelevance or Death”. At this point, there are usually two paths a company can take: (a) give up and sell the company, or (b) keep going until it exhausts its options.

All great companies stumble at some point, e.g. IT, IBM, Nordstrom, Disney, Boeing, HP, Merck. So long as you haven’t fallen too far to run out of options, you can still refocus and rebuild, one step at a time.


COVID-19: Nigeria Close To ‘Flattening The Curve’ ― Analysis

Nigeria may be close to flattening the curve of the COVID-19 pandemic as confirmed cases in the country keep dropping weekly, Tribune Online analysis has shown. This is even as the much-expected COVID-19 vaccines arrived in Abuja, the Federal Capital Territory last Tuesday…

Inside Ibadan Bound Train From Lagos

The train started the 156.65 kilometres journey to Lagos at exactly 08:00hrs. The pace of its acceleration was minimal.

At about 25 minutes, the train slowed down at the uncompleted Omi-Adio terminal, a village on the Abeokuta/Ibadan expressway; it’s a stone throw from Apata in Ibadan. Conveyance of passengers from there and other terminals has not kickstarted as the terminals are still under construction and workers were found there…

Killer Herdsmen: Untold Story Of Ibarapa’s Worst Nightmare + VIDEOS

“Please do not talk to my father. He is yet to come to terms with the death of his son. It is a most tragic experience. How does one quantify the loss of a dear brother? My brother was killed like an animal by two herdsmen. His offence was that he asked them to drive their cows off his already cultivated farmland,” Bisi Olaosepin, whose brother was hacked to death, struggled to hold back his tears as he relayed to Sunday Tribune the horrible experience that culminated in the passage of his brother…

Pollution, Deforestation: How Ignorance, Unclear Environmental Policies Influence Booming Fish Smoking Industry

Rays of the afternoon sun pelted her head as she fanned the embers beneath the half-cut iron drum with the smoke permeating the air. “This smoke is unbearable, Iya Maria,” said one of the three neighbours conversing under a makeshift shed about five meters away. Their voices rose and fell intermittently…


You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More