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

December 02, 2009 - by: Carol Hacker 0 COMMENTS

Corporate culture and leadership expert Gayle Watson reviews How The Mighty Fall: And Why Some Companies Never Give In, the newest book by Good to Great: Why Some Companies Make the Leap… and Others Don’t and Built to Last: Successful Habits of Visionary Companies author Jim Collins.

I just finished reading Jim Collins’ new book, How the Mighty Fall: And Why Some Companies Never Give In. Collins writes that he hopes the book will equip leaders with knowledge about the stages of decline so that they may reduce their chances of falling all the way to the bottom. I particularly liked it because his research provides more evidence that values-based leadership is a differentiating factor between successful companies and those that fail.
How the Mighty Fall by Jim Collins

The book is based on the framework of “Five Stages of Decline,” which has emerged from new research. The research team reviewed 70 years of data gathered from prior studies referenced in Collins’ earlier books. Their effort was focused on the two-part question: What happened leading up to the point at which decline became visible, and what did the company do once it began to fall?

Collins identifies the “Five Stages of Decline”:

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

All of the stages are important to understand, but I was most interested in the first two because each involves leaders who fail to stick with core values in their decisions and behaviors. In the first stage, leaders become arrogant and lose sight of the true underlying success factors. Collins discusses the concept of “arrogant neglect,” in which leaders believe success will continue almost automatically and therefore divert their attention from the core business, culture, and values.

If hubris isn’t checked, it eventually leads to stage two, Undisciplined Pursuit of More. In this stage, leaders become obsessed with growth to the point that it is unsustainable. One of the mistakes that leaders make in this stage is to take actions, such as mergers and acquisitions, that are inconsistent with the core values. Another mistake is failing to place the right people in key seats during large-scale growth.

Ultimately, Collins finds the best leaders are those who have humility, recognize the need to build an executive team, and build a culture based on core values. Collins’ main message is that of “well-founded hope.” His hope is that leaders aren’t imprisoned by their circumstances, setbacks, history, mistakes, or even staggering defeats. Great companies as well as individuals can fail and recover.

This book presents a new perspective about leadership in these turbulent times and is an engaging quick read (only 123 pages of main content with 84 pages of Appendices and Notes). I suggest that all HR professionals read it and recommend it to your executive team. The “Five Stages of Decline” model gives your organization an opportunity to assess its leadership practices and create strategies for recognizing and responding to the stages of decline. HR has a key role in helping business leaders avoid the pitfalls of what Collins calls “obsessive growth.” This involves the implementation of hiring processes that ensure the “right people are on the bus” –- hiring people who are competent and who fit your organization’s culture and core values.

For more information about the book, go to www.jimcollins.com

Gayle Watson is VP (Visionary of People) for People Ink, a full-service consulting firm that helps clients build values-based corporate cultures. The former Chief Learning Officer for Bank One Texas, she has more than 30 years of experience developing corporate universities and facilitating leadership development programs for a variety of industries including health care, financial, retail, technology, customer service, and non-profit. For more information about People Ink go to www.peopleink.com.

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