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Writer's pictureIan Kirkby

Why do Great Companies Still Fall?

I have just reviewed the highlights of Jim Collins' insightful book 'How the Mighty Fall' - why some companies go from success to failure.


Here are the key reasons (you may want to score your organisation out of 10 in each area to identify key risks):


1. Every company is vulnerable to decline, and it is almost always self-inflicted, e.g., the Nokia phone.


2. Great success can lead to arrogance and hubris leading to over-reach and ending in failure, e.g., Motorola's StarTAC initiative.


3. Some companies lose focus chasing unsustainable levels of innovation and growth, e.g., Rubbermaid with its 'one new product to their range per day' strategy. Lack of discipline caused costs to spiral and they failed to fulfil orders. 


4. When decline begins, it is ignored or blamed on others, e.g., Motorola's Iridium Satphone, developed when normal cell phone coverage was rapidly improving.


5. Struggling companies are tempted to take ill-considered, sweeping risks in the hope of finding a 'silver bullet' solution, e.g., Hewlett Packard's sweeping changes to culture in the 1990s which caused a loss of focus and drive.


Collins then examines the remedies and concludes that the number one priority is the leadership's attitude. In short, stay humble, never stop learning, and keep fighting! 


Another key step is to remain calm and disciplined, taking only measured risks. 


Summary - Any company, big or small, can experience decline and any such decline is likely to be exacerbated by knee-jerk reactions. The cure is to provide sound leadership by remaining calm, sticking to good business practices and setting an example in terms of humility (owning mistakes and learning from them) and visionary tenacity.


Aspire MCL has a proven track record of empowering leaders and teams to realise their potential and create the conditions for sustained growth. Get in touch today and leu us help YOU go from good to great - and stay there!


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