Jim Collins followed up his all time best selling leadership book Good to Great with this incredible work on why some of these once great companies now have fallen as well. He writes, “Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.”
Based on his thorough teams research there are five major stages that lead to failure:
- Hubris Born of Success: This stage kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place.
- Undisciplined Pursuit of More: Companies in this stage stray from the disciplined creativity that led them to greatness in the first place, making undisciplined leaps into areas where they cannot be great or growing faster than they can achieve with excellence, or both.
- Denial of Risk and Peril: At this stage leaders discount negative data, amplify positive data and start to blame external factors for setbacks rather than accept responsibility.
- Grasping for Salvation: The sharp decline now becomes visible to all and the common saviors include a charismatic visionary leader, a bold but untested strategy, a radical transformation, a dramatic cultural revolution, a hoped-for blockbuster product or maybe game changing acquisition.
- Capitulation to Irrelevance or Death: At this stage accumulated setbacks and expensive false starts erode financial strength and individual spirit to such an extent that leaders abandon all hope of building a great future.
All companies go through ups and downs but if you are willing to admit your mistakes and make the necessary changes early then this death spiral cannot only be overcome it can be avoided entirely.
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