By Jim Collins. Collins digs into the collapse of several large companies to uncover the themes driving the collapse.
Collins contends that collapse goes through five stages...
Stage 1. Hubris born of success. The companies views success as an entitlment. When “we are successful because we do these specific things” replaces penetrating understanding and insight from “we are successful because we understand why we do these specific things,” decline will likely follow.
Stage 2. Undiciplined persuit of more.
The greatest warning sign for declining companies is a declining proportion of key seats filled with the right people. Collins covered this in "Good to Great" as well. He strongly belives that great people drive success more than great vision or process.
Stage 3. Denial of risk and peril. when those in power blame others or external factors for what has gone wrong, rather than confronting the frightening reality that the company may be in serious trouble. Another manifestation of denial that occurs in stage 3 is obsessive reorganisation. Reorganising and restructuring can create a false sense that you are actually doing something productive. When you begin to respond to data and warning signs with reorganisation as a primary strategy, you may well be in denial
Stage 4. Grasping for salvation. begins when an organisation reacts to a downturn by lurching for a silver bullet. The key point is that they go for a quick, big solution to jump-start a recovery rather than embarking on the slower more arduous process of rebuilding long-term momentum. The signature of mediocrity in dying companies is not an unwillingness to change, but chronic inconsistency.
That's in important point-- silver bullets don't work, or rather they don't appear reliably enough to use as a strategy.
Stage 5. Capitulation to irrelevance or death.
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