That Pesky Hubris
Lately I’ve been re-reading one of my favorite management writers, Jim Collins, the author of the best-selling “Good to Great”, and co-author with Jim Porras of “Built to Last”.
Collins’ writing style. is direct, engaging, and unburdened by the weighty jargon, obtuse dialect, or excessive acronyms of some management experts. He has a sense of humor, and a knack for relating management learning to a variety of non-business, real life situations. His work and writing are research and data-driven, but never dry or statistical. Although his primary research target is Fortune 500 companies, he strives to uncover management lessons which hold true across national boundaries and cultures, which is why his books sell so well in many different languages around the world.
He is currently engaged in a new magnus opus, with his long-term collaborator Morten Hansen, on managing through the current environment of “turbulence”; or, what it takes to manage when the world around you seems to be spinning out of control.
Meanwhile, he usefully allowed himself to be distracted from this major new project to write a relatively short book called “How The Mighty Fall”, which is a very good read. He describes writing the preface (which the reader sees first in a book, but is usually the last task for the writer) on September 25, 2008, as all hell was breaking loose in the run-up to the worst financial crisis the world had seen since the Great Depression. He emphasizes there that the book’s timing was entirely coincidental to the timing of that crisis.
“How The Mighty Fall” takes a look at why great companies sometimes stumble and fail, and how in some cases they reverse course and return to greatness. Collins describes how the idea for the book was planted by an interesting question posed to him by a corporate CEO at an unusual gathering he was invited to address at America’s famous West Point Academy. The small but elite group gathered there consisted of 12 U.S. Army Generals, 12 CEOs, and 12 social sector leaders, brought together to discuss the future of America.
As the group hotly debated whether America was in decline or renewal, one CEO asked Collins how he would know if his own organization was in decline, or poised for a failure. This got Collins thinking and ultimately led to the research and writing of “How the Mighty Fall.”
The book begins with a discussion of the once mighty Bank of America, and observes that “if a company as powerful and well-positioned as the Bank of America was in the late 1970s can fall so far, so hard, so quickly, then any company can fall.”
“Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.”
He then outlines the 5 Stages of Decline, beginning with Stage One which he calls “Hubris Born of Success”. Hubris to the ancient Greeks was an excessive pride which can bring a hero down. The markers of Stage One are institutional leaders who become arrogant, regarding success almost as an entitlement, losing sight of the true underlying factors that created their success in the first place. In this stage, the rhetoric of success replaces penetrating insight and understanding.
Stage Two is the “Undisciplined Pursuit of More” in which an exaggerated sense of confidence arises from hubris, and leaders chase growth, scale, expansion, acclaim etc. as markers of success.
Stage Three is Denial of Risk & Peril. Despite internal warning signs, leaders fixate on positive external results to explain away the growing array of negative data, or define problems as passing, temporary ones.
Stage Four is Grasping for Salvation, in which a sharp pattern of decline becomes obvious to all concerned, and leaders lurch for a quick, dramatic solution rather than returning to the basic disciplines which built the original success story.
Stage Five is Capitulation to Irrelevance or Death, which becomes more probable the longer the duration of Stage Four continues.
Far from being a pessimistic tome, Collins’ message is the importance of studying how companies fail, not just how they succeed, so that leaders can respond in a timely, realistic, and disciplined way rather than repeat some of the lessons of failure which history has shown us. As he writes:” Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.”
I’m looking forward to his next book.