Friday, June 12, 2009

All the World's (Failures) a Stage

By Drew

Happy Friday everyone.

Our esteemed leader Mitchell sent me this email last night. I think he wanted me to do something with it, since he feels he's already been posting enough for one week - especially since he's technically still on sabbatical until the end of this month. (And on that score he keeps muttering something about "publishing later this year" or something like that, so I guess we'd better keep our eyes open.)

Anyway, what he sent me was a link to a quote from business writer Jim Collins, who has a new book out on how good companies go bad. Among other things, he lists five stages that lead to a company's self-destruction: (link courtesy of Stephen Spruiell at NRO)

Stage 1 is hubris born of success. The company's people become arrogant, regarding success as virtually an entitlement.

Stage 2 is the undisciplined pursuit of more — more scale, more growth, more acclaim. Companies stray from the disciplined creativity that led them to greatness in the first place, making undisciplined leaps into areas where they cannot be great or growing faster than they can achieve with excellence, or both.

Stage 3 is denial of risk and peril. Leaders of the company discount negative data, amplify positive data and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks rather than accept responsibility.

Stage 4 is grasping for salvation. Common "saviors" include a charismatic visionary leader, a bold but untested strategy, a radical transformation, a "game changing" acquisition or any number of other silver-bullet solutions.

Stage 5 is capitulation to irrelevance or death. Accumulative setbacks and expensive false starts erode financial strength and individual spirits to such an extent that leaders abandon all hope of building a great future. In some cases their leaders just sell out. In other cases the institution atrophies to utter insignificance.

Mitchell accompanied this with a cryptic note asking if this reminded me of "anyone you recognize?" I think we probably all do, whether a past or current employer, or a company we've witness hit the wall and sink without a trace (or even more frequently, to self-destruct spectacularly, creating more flames than the immolation scene from Götterdämmerung.

But, as NRO noted in linking to Collins' points, this doesn't apply simply to companies. It can apply to countries as well - and presidential administrations. Look at each of those five stages carefully. We may be looking not only at the past (as in a post-mortem), but at the future as well. And it isn't a pretty picture.

Regardless of the context, as always, we must keep in mind that those who forget the past are doomed to repeat it. We have before us the blueprint for failure - will we choose to learn from it before it's too late?

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