Jim Collins’ (bestselling author of Built to Last and Good to Great) most recent product, a powerful little book called How the Mighty Fall is an intriguing look into the Fortune 500 companies that had it all – a strong brand, global recognition and a seemingly immoveable presence on all the global stock exchanges. They had it, and then they lost it. In the recent past of our global economy, I can think of no better book to learn the secrets to their rapid descent from greatness. Secrets that, if learned from and remembered in our daily activity, may help to stave off our own eventual demise. In this book, as in most business books, the lessons are applicable to our individual lives as much as they are to business. They say that “art mimics life”. That may be true, but I would suggest that business mimics life pretty readily as well.
Collins uses How the Mighty Fall to explain and exemplify “five stages of decline”; that is, the five stages we can watch for in our own lives and businesses to avoid going the way of the dodo bird.
The Five Stages of Decline:
- Hubris Born of Success
- Undisciplined Pursuit of More
- Denial of Risk and Peril
- Grasping for Salvation
- Capitulation to Irrelevance or Death
By Collins’ own admission, How the Mighty Fall is a step towards “the dark side”; a change of pace from his usually uplifting subject matter. However, as Collins’ research shows, the value to knowing the five stages of decline is in also knowing that any company finding themselves in one of the first four stages can reverse the decline, and move themselves back towards greatness. The key is, as usual, quite simple.
Silver bullets only work on vampires and werewolves
"Stage 4 begins when an organization reacts to a downturn by lurching for a silver bullet."
Stage four – the dangerous position close to the end. Chances are you’ve been there – in your business or in your life. Particularly if you’re an entrepreneur, you’ve experienced this:
You’ve backed yourself into a corner. It doesn’t really matter how you got there, you’re now in a position where desperation starts to rear its ugly, sleepless, sweaty head. (Or possibly that’s your head, when you’re in this state). But we all do the same thing – we start thinking about that “silver bullet”, that one activity/client/employee/conference/etc. that will save the day and make it all ok. We can easily fixate on our fantasy solution and abandon all the hard work, energy and brilliance that made us great in the first place. So here’s the thought…
Stop fantasizing, stop abandoning hope and action. There is almost never one outside influence that will save you. The only way to climb out of the hole you’re in is to refocus on what made you great in the first place. Focus on that. Panic and lottery tickets won’t get you the results you’re looking for. What will is consistent action; the kind of action that makes you unique, trustworthy and valued. Avoid all other distractions. As Collins puts it:
“If you want to reverse decline, be rigorous about what not to do.”
So how do you avoid decline in the first place?
Embrace Packard’s Law
"A great company is more likely to die from indigestion from too much opportunity than starvation from too little. … Packard’s Law states that no company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth and still become a great company."
Expansion and growth are great, but not at the expense of your core offering. Stay true to what made you great in the first place and focus on becoming the best in your world at that. It’s easy to get distracted by “shiny objects” – new opportunities that seem so much more exciting than what you’re currently doing. Here’s the truth – We’re in an unprecedented world of competition. Unprecedented opportunity, too, no question. But the real opportunity is in picking one thing you’re passionate about and then doing it better than everyone else. Repeat: one thing. There are a lot of people/companies out there. All of them have ideas. Most have the drive to realize those ideas. If you start jumping from one idea to the next, one company to the next – if you start moonlighting and trying to tackle too many opportunities at once, you’ll fall short on all of them. You’ll fall behind the guy with the single passionate focus. Because of his (or her, obviously) burning desire to be #1 in one pursuit, he/she will surpass you. It’s just a matter of time.
Expansion and new ventures are appropriate when your core offering runs on autopilot; you have a staff that runs the office better without you than with you, or you have found a way to do your job in your sleep. Until then – stick with what you’re good at. Like Steam Whistle Brewery – “Do one thing really, really well.”
"When the rhetoric of success (‘We’re successful because we do these specific things’) replaces penetrating understanding and insight (‘We’re successful because we understand why we do these specific things and under what conditions they would no longer work’), decline will very likely follow."
A good leader asks his or herself “Why didn’t this work?” after a failed venture. They learn from their mistakes and move on. A great leader asks “Why did this work?” after a successful venture.
Do you know why what you do makes you successful? Being successful can go to your head. In fact, it usually does, in some way. We’re all human, and the recognition and reward that comes from being successful makes us more confident. There’s nothing wrong with that. The fundamental flaw lies in when we figure we’ve “made it”. We’ve put in our dues and now figure we deserve long term success without any additional effort. But the world doesn’t work like that. As we discussed above, there’s always someone coming up behind you. True and lasting greatness comes from asking the penetrating questions – “Why was that the result?” Whether it’s geared towards success or failure, we need to keep asking – keep digging – to understand the reasons for our results. Certainly, enjoy the celebration, but make sure you understand the “why” of what got you here, otherwise you’ve learned nothing from the experience.
How the Mighty Fall is a great reminder that life is a journey of ups and downs. Each goal we strive for, and then achieve, is but a resting place on the path to further greatness. By staying humble, focused and inquisitive, we have the power to reach and maintain great things. Enjoy the trip.