Jim Collins, author of Good to Great and coauthor of Built to Last, now tells us why even great companies can fail and how some survive and thrive after coming close to disaster.
In his new book, How the Mighty Fall, Collins offers leaders the hope that they reverse their course when they are failing. He says every institution, no matter how great, is vulnerable to decline. Any of them can fail and most eventually do. But some companies recover and become stronger.
Collins gives these stages of decline.
Stage 1.Complacency – know why specific things are a success and under what conditions they will no longer work. Good leaders realize that luck has played a role in their success and don’t become convinced that they personally were responsible for it.
Stage 2. Undisciplined pursuit of more. Do not neglect negative data and put a positive spin on ambiguous factors.
Stage 4. Grasping for salvation – lurching into a new area or product rather than getting back to the discipline that brought success in the first place.
Stage 5. Capitulation to irrelevance or death. The longer a company grasps for silver bullets, the more likely it is that it will continue the downward spiral.
To survive and thrive, companies need to listen to customers in an unemotional way. They should tune in to the customer experience. As long as they can avoid getting entirely knocked out of the game, hope remains.
How the Mighty Fall: And Why Some Companies Never Give In, by Jim Collins, published by Jim Collins, 240 pages,