How do we grow successfully and avoid the pitfalls that have caused many to fall?
As we grow our business, I am always reading and learning from as many sources as possible. I just finished a book entitled, How the Mighty Fall by Jim Collins. He also authored one my favorites, Good to Great. I have summarized some of Mr. Collins’ insights.
History shows, repeatedly, that the mighty can fall. The Egyptians, China’s Chou Dynasty, The Mayan Civilization all fell. Athens fell, Rome fell. Even Britain, which stood a century before as a global superpower, saw its position erode. How do the mighty fall? How can we avoid their fate?
If companies like Motorola and Circuit City-icons that once served as paragons of excellence-can succumb, then no one is immune. Every institution is vulnerable, no matter how great. No matter how much you’ve achieved, no matter how far you’ve gone, no matter how much power you’ve garnered, you are vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do.
Those that fall are those that couldn’t change with the times couldn’t lead with vision, couldn’t make bold moves, couldn’t seek new business opportunities and new markets. What do we learn by studying the contrast between success and failure? When an organization grows beyond its ability to fill key seats with the right people, it has set itself up for a fall. Although complacency and resistance to change remain dangers to any successful enterprise, overreaching better captures how the mighty fall.
The collapse of financial companies like Bear Stearns and Lehman Brothers highlights the terrifying speed at which some companies fall. One of the keys to sustained performance lies in understanding how greatness can be lost. All companies go through ups and downs, and show signs of success and decline at some point in their histories. In order to stay strong there must be a culture that instills a belief that past accomplishment guarantees nothing about future success. There must be an almost obsessive need for self-initiated progress and improvement.
Great companies foster a productive tension between continuity and change. On the one hand, they adhere to the principles that produced success in the first place, yet on the other hand, they continually evolve, modifying their approach with creative improvements and intelligent adaption.
The best leaders remain students of their work, relentlessly asking questions---why? why? why?----and they have an incurable compulsion to vacuum the brains of people they meet. They are always learning. They hire great people, build great cultures and expand into new areas while adhering to the principles that made them great in the first place.
Those who build great companies have drive and passion and intensity for progress. However, catastrophic decline can be brought about by driven, intense, hard-working , and creative people. It’s hard to argue that the primary cause of the Wall Street meltdowns of 2008 lay in a lack of drive or ambition; if anything, people went too far---too much risk, too much leverage, too much financial innovation, too much aggressive opportunism, too much growth.
We need to grow, but not be obsessed with growth. We need to remember the law that says that no company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth, otherwise they will simply stagnate or decline. Whether or not a company sustains exceptional performance depends first and foremost on whether it continues to have the right people in the right positions.
All businesses experience setbacks. The signature of the truly great versus the merely successful is not the absence of difficulty, but the ability to come back from setbacks stronger than before.
