How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 1

effective teaching: don’t try to come up with the right answers; focus on coming up with good questions.

Answer 1

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 2

organizational decline, unlike cancer, is largely self-inflicted.

Answer 2

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 3

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.

Answer 3

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 4

Five Stages of Decline

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 5

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

Answer 5

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 6

“What do we learn by studying the contrast between success and failure?”

Answer 6

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 7

The variables we identify in our research are correlated with the performance patterns we study, but we cannot claim a definitive causal relationship.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 8

We therefore derive our frameworks primarily from evidence from the actual time of the events, before the outcome is known,

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 9

Tolstoy’s novel Anna Karenina. It reads, “All happy families are alike; each unhappy family is unhappy in its own way.”

Answer 9

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 10

STAGE 1: HUBRIS BORN OF SUCCESS.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 11

Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place.

Answer 11

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 12

Luck and chance play a role in many successful outcomes, and those who fail to acknowledge the role luck may have played in their success—and thereby overestimate their own merit and capabilities—have succumbed to hubris.

Answer 12

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 13

STAGE 2: UNDISCIPLINED PURSUIT OF MORE. Hubris from Stage 1 (“We’re so great, we can do anything!”) leads right into Stage 2, the Undisciplined Pursuit of More—more scale, more growth, more acclaim, more of whatever those in power see as “success.”

Answer 13

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 14

Although complacency and resistance to change remain dangers to any successful enterprise, overreaching better captures how the mighty fall.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 15

STAGE 3: DENIAL OF RISK AND PERIL. As companies move into Stage 3, internal warning signs begin to mount, yet external results remain strong enough to “explain away” disturbing data or to suggest that the difficulties are “temporary” or “cyclic” or “not that bad,” and “nothing is fundamentally wrong.” In Stage 3, leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data.

Answer 15

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 16

STAGE 4: GRASPING FOR SALVATION.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 17

STAGE 5: CAPITULATION TO IRRELEVANCE OR DEATH. The longer a company remains in Stage 4, repeatedly grasping for silver bullets, the more likely it will spiral downward.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 18

Stage 1: Hubris Born of Success

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 19

hubris is defined as excessive pride that brings down a hero,

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 20

no excuse to let it just run on autopilot. Exit definitively or renew obsessively, but do not ever neglect a primary flywheel.

Answer 20

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 21

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 adaptation.

Answer 21

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 22

The best leaders we’ve studied never presume that they’ve reached ultimate understanding of all the factors that brought them success. For one thing, they retain a somewhat irrational fear that perhaps their success stems in large part from luck or fortuitous circumstance.

Answer 22

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 23

Like inquisitive scientists, the best corporate leaders we’ve researched remain students of their work, relentlessly asking questions—why, why, why?—and have an incurable compulsion to vacuum the brains of people they meet.

Answer 23

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 24

Wal-Mart maintained its near-religious fanaticism about its core values, purpose, and culture, Ames did the opposite in its quest for quick growth,

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 25

• SUCCESS ENTITLEMENT, ARROGANCE: Success is viewed as “deserved,” rather than fortuitous, fleeting, or even hard earned in the face of daunting odds; people begin to believe that success will continue almost no matter what the organization decides to do, or not to do. • NEGLECT OF A PRIMARY FLYWHEEL: Distracted by extraneous threats, adventures, and opportunities, leaders neglect a primary flywheel, failing to renew it with the same creative intensity that made it great in the first place. • “WHAT” REPLACES “WHY”: The rhetoric of success (“We’re successful because we do these specific things”) replaces understanding and insight (“We’re successful because we understand why we do these specific things and under what conditions they would no longer work”). • DECLINE IN LEARNING ORIENTATION: Leaders lose the inquisitiveness and learning orientation that mark those truly great individuals who, no matter how successful they become, maintain a learning curve as steep as when they first began their careers. • DISCOUNTING THE ROLE OF LUCK: Instead of acknowledging that luck and fortuitous events might have played a helpful role, people begin to presume that success is due entirely to the superior qualities of the enterprise and its leadership.

Answer 25

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 26

Stage 2: Undisciplined Pursuit of More

Answer 26

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 27

Certainly, any enterprise that becomes complacent and refuses to change or innovate will eventually fall. But, and this is the surprising point, the companies in our analysis showed little evidence of complacency when they fell. Overreaching much better explains how the once-invincible self-destruct.

Answer 27

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 28

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.

Answer 28

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 29

All three companies from Built to Last that fell in this analysis—Merck, Motorola, and HP—pursued outsized growth to their detriment.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 30

in all our research that those who resisted the pressures to succumb to unsustainable short-term growth delivered better long-term results by Wall Street’s own definition of success, namely cumulative returns to investors.

Answer 30

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 31

Those who built the great companies in our research distinguished between share value and share price, between shareholders and shareflippers, and recognized that their responsibility lay in building shareholder value, not in maximizing shareflipper price. The greatest leaders do seek growth—growth in performance, growth in distinctive impact, growth in creativity, growth in people—but they do not succumb to growth that undermines long-term value. And they certainly do not confuse growth with excellence. Big does not equal great, and great does not equal big.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 32

the problems of Stage 2 stem not from growth per se, but from the undisciplined pursuit of more.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 33

a great company is more likely to die of indigestion from too much opportunity than starvation from too little.

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How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 34

no company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth and still become a great company.

Answer 34

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 35

If you have the right people, who accept responsibility, you don’t need to have a lot of senseless rules and mindless bureaucracy in the first place!

Answer 35

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 36

You break Packard’s Law and begin to fill key seats with the wrong people; to compensate for the wrong people’s inadequacies, you institute bureaucratic procedures; this, in turn, drives away the right people

Answer 36

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 37

When bureaucratic rules erode an ethic of freedom and responsibility within a framework of core values and demanding standards, you’ve become infected with the disease of mediocrity.

Answer 37

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 38

If I were to pick one marker above all others to use as a warning sign, it would be a declining proportion of key seats filled with the right people. Twenty-four hours a day, 365 days a year, you should be able to answer the following questions: What are the key seats in your organization? What percentage of those seats can you say with confidence are filled with the right people? What are your plans for increasing that percentage? What are your backup plans in the event that a right person leaves a key seat?

Answer 38

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 39

One notable distinction between wrong people and right people is that the former see themselves as having “jobs,” while the latter see themselves as having responsibilities.

Answer 39

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins

Question 40

Every person in a key seat should be able to respond to the question “What do you do?” not with a job title, but with a statement of personal responsibility. “I’m the one person ultimately responsible for x and y. When I look to the left, to the right, in front, in back, there is no one ultimately responsible but me. And I accept that responsibility.” When executive teams visit our research laboratory, I sometimes begin by challenging them to introduce themselves not by using their titles, but by articulating their responsibilities.

Answer 40

How the Mighty Fall: And Why Some Companies Never Give In by Jim Collins