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

Just finished this book today. I didn't expect anything less from Jim Collins. He's my number one writer on management from now on. Really enjoyed it and learnt a lot of things. Recommended.

This book follows the classic Jim Collins format of scientific approach to business mechanism. Rigorous research, control groups, elimination of bias. This book is shorter than the other Jim Collins books (Built to Last, Good to Great) as it is written as a side project from the major unnamed research project that Jim Collins is currently working on. The Book has been criticized for being 50% appendix, but this is OK. It is in the Raw data of the Appendices that the basis for the conclusions is presented, this is the most important part of the book. The book does not need to be any longer to prove its point. The conclusion of the book can be summarized in 1 line. "Only the humble survive". Recommended Reading for all Entrepreneurs and business leaders.

In the early pages of this cautionary, wake-up call, Jim Collins mentions what a mentor told him about effective teaching: "don't try to come up with the right answers; focus on asking good questions." I started to count the elbow-in-the-ribs questions, but I ran out of ribs. Some best-selling authors are one-book wonders. Not Collins. The author of Built to Last and Good to Great has delivered another barn-burner. While it builds on all of his previous work--like a good business book should--it aptly kick-starts you in the gut with not just good questions, but extraordinary insights. These are the "I-better-listen-carefully-and-not-mess-up" kind of soul-stirring questions timed perfectly for today's economic environment. He writes, "I've come to see institutional decline like a staged disease: harder to detect but easier to cure in the early stages, easier to detect but harder to cure in the later stages. An institution can look strong on the outside but already be sick on the inside, dangerously on the cusp of a precipitous fall." It's not a happy book--it's a must-read book. Leaders that are in it for the long haul will learn principles and best practices for preventing, detecting and reversing decline. Collins identifies 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 "Overreaching" is one of the symptoms of Stage 2. "When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall," he warns. So why study failures? "We do ourselves a disservice by studying only success." Collins adds that "most companies eventually fall, and we cannot deny this fact." If you're leading a company, nonprofit or church today, it's possible that your own arrogance is blocking your view of reality, but there is hope. "Organizational decline is largely self-inflicted, and recovery largely within our control."

"Come, let us build ourselves a city, and a tower whose top is in the heavens; let us make a name for ourselves, lest we be scattered abroad over the face of the whole earth." -- Genesis 11:4 How the Mighty Fall takes a methodology similar to Built to Last and Good to Great and searches for differences among paired companies (Loser--Winner; A & P--Kroger; Addressograph--Pitney Bowes; Ames--Wal-Mart; Bank of America--Wells Fargo; Circuit City--Best Buy; Hewlett Packard--IBM; Merck--Johnson & Johnson; Motorola--Texas Instruments; Rubbermaid--None qualified; Scott Paper--Kimberly-Clark; and Zenith--Motorola) As you can see, it all makes for strange bedfellows (Motorola is on both sides of the divide and Rubbermaid doesn't have a winning comparison partner). As before, the analysis relies on public information from that period (such as annual reports, business journalism articles, and analyst reports). From these data, Jim Collins discerns the following taxonomy of stages: 1. Hubris (excess pride) due to prior success 2. Undisciplined pursuit of more 3. Denial of risk and peril 4. Grasping for salvation 5. Capitulation to irrelevance or death Reaching any one of these stages doesn't mean that stage 5 is inevitable in Collins' view. The result is more like a monograph than a full business book with limited examples and observations. Many readers will find themselves hungering for more. I was grateful to Mr. Collins for the excellent way that he defined and described his cases. As a result, I was able to look into what he was measuring to see what else might be there. I had the good fortune to work with most of these companies as a consultant either just before or during the measurement period. As a result, I was able to think about what people inside the company had told me at the time about what they were doing and why they were doing it as well as what I observed about how they went about doing their work. From those additional perspectives, I thought there were some other lessons: 1. Capable continual business model innovators (Kroger, Pitney Bowes, Wal-Mart, Wells Fargo, Best Buy, IBM, TI, and J & J) outperform those who mostly try to make old business models more efficient and effective. 2. Companies are more likely to try to do too much and swerve off in weird directions because the CEO feels insecure (Addressograph, Ames, Bank of America, Merck, Motorola, Scott, and Zenith) compared to a predecessor and the predecessor's track record (or a competitor CEO and that CEO's track record) rather than because of excess pride. 3. Denial of risk and peril arrives long before the company's performance peaks (Addressograph, Ames, Bank of America, Circuit City, Motorola, Scott, and Zenith). It just shows up as a problem later after a change in the environment causes the company to be exposed to worse results because of risk than before. 4. Ignorance about how to do big acquisitions successfully is rampant in large organizations (Ame

Jim Collins has already written some of the seminal works on business strategy and management with Built to Last and Good to Great. While those books are great, How the Mighty Fall a short eclipses them in my opinion, its stated as a focused side project and it stays just that focused at about the right length and tone. My recommendation is simple: get this book, read it, reflect on it and see where you stand. This is an example of what a five-star business book should be. Why? Well the answer is simple, its well researched, clearly written, devoid of significant pontification and provides advice that everyone can use. While these factors were present in Collins other works, they were not so to this degree. Here is what I mean. Good to Great provides the characteristics of great companies in terms of some simple to remember characteristics, for example, level 5 leadership. These characteristics in good to great described what executives aspired to become. That aspiration is born out of executive desire to be successful. That led to many people seeing themselves as having these characteristics when clearly they did not. When Good to Great came out I cannot tell you how many executives I met with you said that they were or aspired to be level 5 leaders when the best they could manage was 1 and 3/4s. We all want to see ourselves as successful and that undermined the applicability of the Good to Great ideas. Not this book. How they Mighty Fall clearly describe five stages of enterprise failure and distress. Because no one wants to be them, the guidance these stages provide create an environment for real discussion about the company rather than self-reflective revisionism on how we are great. That clarity, which supports the Good to Great principle of "Confront the Brutal Facts," is what sets this book apart. It should a design principle for Collins current project on managing in turbulence. The five stages all describe the antithesis of the Good to Great concepts, which is ok, but the book is more than just inverting good to great - it looks beyond that. Stage 1: Hubris born of success - describing the cultural tipping point when hard work and focus to earn the business turns into a sense of entitlement to future success. This is the death of Level 5 Leadership. Stage 2: Undisciplined pursuit of more - building from stage one is people chasing goals that take them away from their core, their competitive advantage all in the name of growth, or the grand strategy. This leads to thinking what before you think about who and abandoning the hedgehog concept in favor the rabbit's pursuit of quick gains. Stage 3: Denial of risk and peril - now that you are chasing things that are not part of your core, you fail to see the problems or blame the problems on the outside world. In this stage you are blind to the brutal facts. Stage 4: Grasping for salvation - often in the form of the silver bullet, visionary leader all of which ke

One thing that strikes me about Jim Collins' work is that he is passionate about what he does. He and his researchers dig down deep into companies and examine them from different perspectives over a period of time. As he says, "We do not decide which companies we 'want' to study... we lay out the criteria for the study-set selection before we see the data and systematically eliminate companies from consideration based on whether they meet the criteria." This has given him great insight into what success is, not just for corporations, but for any institution. What comes through in his recent book, along with passionate study, is honesty. Collins previously chose Fannie Mae as a "Good to Great" institution. Recently, they have demonstrated anything but greatness in facing economic and marketplace changes. There are other companies he chose, like Circuit City, that have gone the same path. Collins discusses why these enterprises were chosen in his previous book and why they fell on hard times after once being great. Because a great company stumbles into mediocrity does not mean the criteria is flawed or the framework wrong. Rather, as the study shows, somewhere along the way these companies strayed away from what once made them great. "How the Mighty Fall" uses the same criteria from "Good to Great," only in reverse, to show how and why once great enterprises have fallen. Collins does this with the same attention to detail and passion as in his previous works. There are a couple of parts that I found most interesting from the book. First is the chapter entitled "The Undisciplined Pursuit of More." The examples of Ames and Rubbermaid, along with the other ideas presented in this chapter, really hit home in light of recent developments in our financial markets. The second part is appendix 6 where he gives brief case studies on IBM, Nucor and Nordstrom using the "Good to Great" framework to demonstrate how they went from struggling companies back to greatness. I recommend this book to anyone who is interested in an honest assessment of either business success or success principles in general.