I just finished reading Jim Collins’ new book, How the Mighty Fall, his first major book since Good to Great. Despite its buzz-killing title, it’s absolutely inspiring. And it couldn’t be more timely.
Collins builds his book around 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
To root out what matters, Collins employs his familiar matched-pair methodology, in which companies that pulled themselves out of decline are compared to similar companies that did not. So IBM is compared to Hewlett Packard, Best Buy is compared to Circuit City, and so on.
For me the most valuable pages are the brief histories of how IBM, Nucor (a steel manufacturer) and Nordstrom reversed their declines.
Today, we all know IBM’s revival in the 1990s as a classic turnaround story. But CEO Lou Gerstner’s quiet, disciplined approach was sometimes scorned by business reporters, because he wasn’t seduced by the myth of the charismatic savior. He was hired to save the company, to be sure, but he carefully deflected the attention away from himself and towards the company and the task at hand. He played the game for the long haul and didn’t get distracted by unproven myths of corporate turnarounds. The contrast with the Carly Fiorina’s failure at HP is memorable and sobering.
Industries, as well as companies, follow these cycles. I thought of today’s most disruptive industry crises: automobiles, finance and newspapers. Could associations exhibit some of the same symptoms? Some might. Like most of us in the association sector, my medical society is exploring how we should do our business in the new economic order. I worry about how we will know the difference between doing the smart thing and the dumb thing. Collins’ writing have me some takeaways.
- You’d think that companies who failed were complacent. Some were, but that’s not what killed them. Collins says it the opposite: a peripatetic, undisciplined search for magic bullets. Collins clearly and passionately distinguishes disciplined from undisciplined growth.
- Hubris born of success occurs when we confuse how we do things with why we do things. Collins says we must never confuse the nobility of our purpose with the wisdom of our actions.
- “Whether you prevail or fail … depends more on what you do to yourself than on what the world does to you,” Collins writes. “We are not imprisoned by our circumstances, our setbacks, our history, our mistakes, or even staggering defeats along the way. We are freed by our choices.”
In the end, that may be the most inspiring takeaway of all.