Imagine you’re legendary business guru Jim Collins. Decade ago Good to Great and Built to Last made him the new Peter Drucker. He’s a guy USAToday says would rather be rock-climbing than helping companies learn the secrets of making “the leap to greatness.”
But that was nine years (and two brutal recessions) ago. Then, shortly after the Iraq War started, he was forced back to the drawing boards, and wrote How the Mighty Fall. Why? His summary in BusinessWeek explains: “Some of the great companies we’d profiled … had subsequently lost their positions of prominence,” including the Bank of America.
Why do “The Mighty” fall? “If some of the greatest companies in history can go from iconic to irrelevant, what might we learn by studying their demise, and how can others avoid their fate?” Then fate did intervene, a call came that for the adrenaline flowing master than hanging high on rocky cliff: “Would like you to come to West Point to lead a discussion with some great students?” A seminar for cadets? No, “12 generals, 12 CEOs, and 12 social sector leaders … and they’ll really want to dialogue about the topic.”
What topic? “America!” America? “What could I possibly teach this esteemed group about America?” A lot. The core issue became clear when the CEO of one of America’s top companies pulled him aside: “We’ve had tremendous success in recent years,” but “when you are at the top of the world … the most powerful nation on Earth … the most successful company in your industry … the best player in your game … your very power and success might cover up the fact that you’re already on the path of decline?”
The 5 danger signals planting the dark seeds of failure
Yes, success is blinding. When everyone says you’re the best, the leader, the most powerful player, when the press, your competition and your enemies all put you on a pedestal: “How would you know you’re not already on the path of decline?” That CEO’s questions inspired the new research, into what Collins calls “the silent creep of doom.” The problem: “Institutional decline is like a 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.” Happens to the best on Wall Street, Washington Corporate America CEOs: You’re on top, but “sick on the inside, dangerously on the cusp of a precipitous fall” … but you don’t even know it.
The wake-up call: “If a company as powerful and well-positioned as Bank of America in the late 1970s could fall so far, so hard, so quickly, then any company can,” Collins discovered. “Every institution is vulnerable, no matter how great. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall, and most eventually do.”
Collins sounds like anthropologist Jared Diamond in Collapse: “One of the disturbing facts of history is that so many civilizations collapse,” sharing “a sharp curve of decline” that “may begin only a decade or two after it reaches its peak population, wealth and power.” Yes, if it happened to Bank of America, why not America? Collins research exposed the “Five Stages of Decline.” (More)