How The Mighty Fall is the third book by Jim Collins. Using the empirical approach made famous in Good to Great and Built to Last, Collins looks at the markers to spot how and why a company stumbles, falls and collapses under the weight of its own decisions.
How The Mighty Fall by Jim Collins
How The Mighty Fall is an empirical study into corporate decline and collapse.
Adopting the trademark style made famous in Good to Great and Built to Last, Jim Collins sets out to explore the five stages of corporate decline – Hubris, Lack of Discipline, Denial, Grasping and Capitulation.
Below are some of the key ideas I took from this book:
- “All happy companies are alike but all unhappy companies are unhappy in a unique way” – it is easier to plot the seeds of growth then decline.
- Stage I Markers include entitlement, arrogance, neglect of a primary flywheel, what replacing why, discounting the role of luck and adopting a fixed mindset.
- Stage II Markers include growth at all costs mentality, undisciplined moves, people issues, erosion of cash primacy, bureaucracy over discipline, lack of corporate unity and succession planning problems for key roles.
- Stage III Markers include overstating upside, bets without validation, taking on downside risks, erosion of team dynamic, externalising blame, wholesale reorganisation and distancing of the board from the shopfloor.
- Stage IV Markers include repeat silver bullets, seeking leader as saviour, panic/haste over calm, hype before results, confusion of company values and erosion of financial fundamentals.
- Stage V involves either giving up the fight with a managed decline or sale or alternatively running out of options as financial fundamentals overwhelm the sinking ship forcing an abrupt closure of the business.
- The life and career of Winston Churchill is an effective metaphor for carrying on the fight when all seems lost, recovering from catastrophic failures and isolation to lead a glorious second act based on hope and unwavering determination.