Like me, you may have followed Jim Collins work through the excellent “Good to Great”, to “Built to Last” and “Beyond Entrepreneurship” (possibly having previously read the seminal “In Search of Excellence” by Peters and Waterman). And now Collins is back with a new work entitled, “How the Mighty Fall and Why Some Companies Never Give In”, which appears quite timely in the current economic landscape.
The headline premise of this work is that: -
Decline can be avoided
Decline can be detected
Decline can be reversed
In the book, Collins identifies the 5 main stages of decline which he describes as: -
Stage 1: Hubris born of success
Stage 2: Undisciplined pursuit of more
Stage 3: Denial of risk and peril
Stage 4: Grasping for salvation
Stage 5: Capitulation to irrelevance or death
In essence, he is looking for the main reasons why companies fall, and the stage that they go through from being successful to completely failing; he asks if such decline can be spotted early (much like a screening for a medical condition) and, if treated early, repaired.
The book is full of anecdotal examples of the good, the bad and the ugly in business and is short, punchy and very readable at 123 pages long (211 pages when taking into account the appendices and associated notes).
In my opinion this is a great reference resource for all senior executives to read and reflect on. By looking in to the corporate mirror with complete honesty, does your company fall into any of the 5 stages of decline? According to Collins, even if they do, it may not be terminal as long as you take the right action now.