Five Stages Of Decline

HOW THE MIGHTY FALL AND WHY SOME COMPANIES NEVER GIVE IN - JIM COLLINS

From the book

About The Book

About The Book

• Previous research “Good to Great” and “Built to last”

• 60 falling corporations • 11 cases of rise-and fall • Criteria and pattern• Research dimensions

Main Research Question

• What happened leading up to the point at which decline became visible and what did the company do once it began to fall?

Stage 1:Hubris Born of Success

Stage 2: Undisciplined Pursuit of More

Stage 3: Denial of Risk and Peril

Stage 4: Grasping for Salvation

Stage 5: Capitulation to Irrelevance or Death

The Book

• Depressing not inspiring• Guide to the way out• Markers

Markers Of Each Stage

Stage 1: Hubris Born Of success

• SUCCESS ENTITLEMENT, ARROGANCE

• NEGLECT OF A PRIMARY FLYWHEEL

• "WHAT" REPLACES "WHY”

• DECLINE IN LEARNING ORIENTATION

• DISCOUNTING THE ROLE OF LUCK

Stage 2: Undisciplined Pursuit of More

• UNSUSTAINABLE QUEST FOR GROWTH,

CONFUSING BIG WITH GREAT

• UNDISCIPLINED DISCONTINUOUS LEAPS

• DECLINING PROPORTION OF RIGHT

PEOPLE IN KEY SEATS

Stage 2: Undisciplined Pursuit of More cont’d

• EASY CASH ERODES COST DISCIPLINE

• BUREAUCRACY SUBVERTS DISCIPLINE

• PROBLEMATIC SUCCESSION OF POWER

• PERSONAL INTERESTS PLACED ABOVE

ORGANIZATIONAL INTER- ESTS

Stage 3: Denial of Risk and Peril

• AMPLIFY THE POSITIVE, DISCOUNT THE

NEGATIVE

• BIG BETS AND BOLO GOALS WITHOUT

EMPIRICAL VALIDATION

• INCURRING HUGE DOWNSIDE RISK BASED ON

AMBIGUOUS DATA

Stage 3: Denial of Risk and Peril cont’d

• EROSION OF HEALTHY TEAM DYNAMICS

• EXTERNALIZING BLAME

• OBSESSIVE REORGANIZATIONS

• IMPERIOUS DETACHMENT

Stage 4: Grasping for Salvation

• A SERIES OF SILVER BULLETS

• GRASPING FOR A LEADER·AS·SAVIOR

• PANIC AND HASTE

• RADICAL CHANGE AND "REVOLUTION" WITH

FANFARE

Stage 4: Grasping for Salvation cont’d

• HYPE PRECEDES RESULTS

• INITIAL UPSWING FOLLOWEO BY

DISAPPOINTMENTS

• CONFUSION AND CYNICISM

• CHRONIC RESTRUCTURING AND EROSION OF

FINANCIAL STRENGTH

Stage 5: Capitulation to Irrelevance or DeathNo options

Time

Well-founded HopeFocusing

The Way Out

Thank You