Sunday, November 15, 2009

How the Mighty Fall- Jim Collins

I enjoyed the book How the Mighty Fall – here are a few quotes I enjoyed…

“It turns out that a company can indeed look like the picture of health on the outside yet already be in decline, dangerously on the cusp of a huge fall.”

“I have concluded that there are more ways to fall than to become great.”

Some things that are markers that a company is on the verge of a fall

Stage 1
• They are neglecting their primary flywheel
• Arrogance and expecting success regardless of the quality of our investments and decisions
• Losing focus on continuous learning
Stage 2
• Unsustainable quest for growth- confusing big with great
• Undisciplined discontinuous leaps
• Declining proportion of the right people in the right seats
• Using cash just because we have it. Not investing wisely
• Too much bureaucracy
• Poor succession planning
Stage 3
• Amplify the positive- discount the negative
• Big bets and bold goals without empirical validation
• Incurring huge downside risk based on ambiguous data
• Erosion of health team dynamics
• Externalizing blame
• Obsessive reorganizations
Stage 4
• A series of silver bullets
• Searching for a leader-savior
• Panic and haste
• Radical “revolution” with fanfare
• Hype precedes results
• Initial upswing followed by disappointment
• Confusion and cynicism
• Erosion of financial strength
Stage 5
• The death spiral



“While no leader can single-handedly build an enduring great company, the wrong leader vested with power can almost single-handedly bring a company down”

The waterline principle- “If you blow a hole above the waterline, you can patch the hole, learn from the experience and sail on. But if you blow a hole below the waterline, you can find yourself facing gushers of water pouring in. pulling it toward the ocean floor. “

“There is no organizational utopia, all organizational structures have their trade-offs and every organization style has inefficiencies. We have no evidence from our research that any one structure is ideal in all situations, and no form of reorganization can make risk and peril melt away.”

“The right leaders feel a sense of urgency in good times and bad, whether facing threat or opportunity, no matter what. They’re obsessed, afflicted with a creative compulsion and inner drive for progress- the burning hot coals in the stomach- that remain constant whether facing threat or not. To manufacture a crisis when none exists, to shriek that we’re all standing on a “burning platform” soon to collapse in a spectacular conflagration, creates cynicism. The right people will drive improvement, whether standing on a burning platform or not, and they never take well to manipulation. “