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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
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