How the Mighty Fall

One of the highlights of my holiday reading this year was How the Mighty Fall, by Jim Collins – he of Good to Great and Built to Last.

Like all of Collins’s books this is based on pretty thorough academic research, with about half the slim volume being devoted to Appendixes and supporting documents. It’s also easy to believe that he’s often stating the bleeding obvious, but then no one has stated the obvious in quite this way before.

His central point is that falling companies go through 5 key stages:

1. Hubris Born of Success

This is where companies believe that success is their natural right, with arrogance often allowing management to ignore what made them successful in the first place, often under-investing in their primary business and pouring money into a bunch of sexy new ventures. How can they go wrong?

It’s often accompanied by forgetting that luck (and certainly timing) often plays a key part in the original success, not necessarily just the brilliance of the founders.

2. Undisciplined Pursuit of More

Pretty self-evident as a core message, but accompanied by loss of leaders in key seats, lots of ready cash eroding cost discipline and a rise in bureaucracy.

3. Denial of Risk and Peril

Denial of unpalatable truths in favour of positive date, externalising blame, obsessive re-orgs. Sounds just like the music industry as a whole in the last 10 years!

4. Grasping for Salvation

This is where we often see a charismatic leader appointed and a frantic search for silver bullets.

5. Capitulation to Irrelevance or Death

The company sells itself or the rump just collapses and gives up the ghost.

There’s no time frame for this to take place – it can be over many years – and the good news is that if you catch things before the terminal Stage 5, you can reverse the process and return to being great again eventually with the right management.

You can probably recognise companies you do business with on a daily basis who are at various stages in this cycle and I had some fun scribbling various examples in the margin of the book. I think I’d better keep quiet about my conclusions, otherwise it might seem a little partisan. However, feel free to leave a comment with your ideas – media owners, agencies or ad networks.