I just realized I hadn’t completed the series on How the Mighty Fall. To expedite the process, I’ll try to cover the rest in one last post.
To recap, this book is now making its way through our company’s leadership ranks. It started with one of our Executive VPs sending our CEO an article on Jim’s book. Our CEO, Dave Ramsey, then read it in staff meeting. After that, our CEO picked up the book. The EVP, Bill Hampton, picked it up for his leadership team, and we went through it together.
Stage 4 – Grasping for Salvation
In stage 4, the company is in a precarious situation. They’ve tried multiple solutions to no avail. Collins starts out the chapter referring to Lew Platt of HP and how he led the company to quintuple profits over a 7 year period from 1992 to 1998. Then in 1999, many viewed Platt as a failure for missing the internet wave. HP hit a wall and perhaps Platt should have left some growth on the table for Wall Street. In mid 1999, Carly Fiorna became the new CEO. Collins then goes on to contrast Carly with Louis Gerstner who was brought in to revive IBM.
Jim moves on to comments on companies searching for “The Silver Bullet” to fix their problems. It doesn’t exist. As companies enter stage 4, the end is not inevitable, but as they continue searching for the silver bullets, strings of bad decisions mount further eroding the likelihood of a recovery. Research showed that 90% of CEOs that led companys from good to great came from inside the company. While over two-thirds of companies that hired a CEO failed to generate the same similar results.
Markers for Stage 4
- A series of silver bullets
- Panic and haste
- Radical change and “revolution” with fanfare
- Hype precedes results
- Initial upswing followed by disappointments
- Confusion and cynicism
- Chronic restructurin and erosion of financial strength
Stage 5 – Capitulation to Irrelevance and Death
I love the quote, “You can be profitable and bankrupt”.
Collins says his team found 2 basic versions of Stage 5. (1) the leaders in power begin to believe capitulation is a better option than continuing to fight for the life of the business, (2) the leaders in power continue the fight, but they run out of options as their position and finances decline eventually causing the business to die or become a non-factor in the industry never returning to past grandeur.
In the end, Jim leaves us with a spark of hope by providing an inspiring story about Anne Mulcahy as she became the CEO of Xerox. As and insider, Anne was able to believe in Xerox and with some extremely hard work revive it from the throes of death.