Economic hard times, Jim Collins’ lessons about How the Mighty Fall

Management guru Jim Collins urge failings companies to heed the words of Winston Churchill.

Management guru Jim Collins urge failings companies to heed the words of Winston Churchill.

The past few months have seen former economic titans going hat in hand to the American government, looking for money and salvation.

General Motors and Chrysler, both of whom symbolized the potency of the American automobile industry that was central to our national economy, are just two examples of this wider phenomenon.

Management guru Jim Collins has written previously about companies’ emergence into greatness and maintaining that standard in Good to Great and Built to Last.

In his most recent book, How The Mighty Fall: And Why Some Companies Never Give Up, Collins spells out how some of these former giants stumble and die or manage to right the ship and rise again to prosperity and prominence.

Collins and other researchers analyzed about 6,000 years of corporations’ performance and identified a five-stage process by which companies decline.  While their demise may seem immediate, he argues that their downward movement often begins years before the collapse.

The stages include: hubris born of success; the undisciplined pursuit of more; denial of risk and peril; grasping for salvation; and capitulation to irrelevance or death.

Collins spends time explaining and providing examples for each of these periods.  Ironically, some of the companies he describes like Motorola or Bank of America, are the very ones he wrote about in his earlier works.

The good news is that the downward spiral is not irreversible.  

Drawing on the words of  Winston Churchill, Collins both urges companies not to give up and notes that problems met head on sooner rather than later have better chances of a positive outcome than those that are ignored.

How the Mighty Fall is not earth-shattering material, but is a useful guide both for economic observers and commentators as well as for workers weighing their options and next steps while employed by companies that are struggling during these tough times.

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