When I opened this book for the first time, I prepared myself mentally to be bored to death reading about companies that I had probably never heard of or thought twice about. Companies come and go and I had always assumed it was just part of the natural order of a world in which only the strong survive. Never thinking twice to analyze the reasons for their decline, or the steps that could have been taken to halt or reverse it. Having finished the final chapter of Collins book, my mind churns in thought about what companies today could be entering one of the 5 stages of decline. Do they even realize it? Have the CEO’s read this book? Is my 401K invested in any of them? Collins did an excellent job of analyzing the companies and identifying causes of both their rise to greatness and the fall from it. I, along with any CEO, could learn from this book and be able to look at a company from a new ...view middle of the document...
Just as detrimental is the unwillingness to transform as industries grow and revolutionize. Hubris can lead to a false comfort zone where you feel insurmountable even as competition stiffens, industries modernize and finances deteriorate.
Stage one seems like it would naturally lead to the pursuit of more. But what is most dangerous about stage two is the lack of discipline. Companies that are successful should crave more expansion and more profits; however, there has to be a disciplined strategy rather than just random expansion. When a company starts to stray from its core businesses in attempts to make grandiose gestures, it has entered stage two. Collins discussed the purchase and subsequent closing of Zayre department stores by Ames and I can remember shopping there with my mother when I was a child. It is interesting to now understand some of the factors that could have contributed to its closing.
This extreme lack of discipline is followed by stage three’s severe case of denial. This point is reached when a company’s leaders refuse to admit that it is in trouble. Often they continue on the same troubling path that got them to stage three. Whether out of ignorance of the problems or resistance to change, companies in this stage sometimes blame their troubles on outliers or environmental causes beyond their control.
Denial is followed by the search for the silver bullet that will save the company. This stage is marked by ramped reorganization, new leaders or new and untested product launches. All of which are acts of desperation according to Collins that could ultimately lead to the final stage of capitulation. Collins demonstrates that though it may be difficult, it is not impossible to come back from any of the first four stages before giving up. I appreciate Collin’s research methodology of comparing successful companies to their unsuccessful contrasts. I also appreciated the educational tone of the book and that it stressed that any company can avoid or reverse decline if it can learn to detect it. Overall, it was an interesting perspective on why some companies falter and a lot can be learned for any business.