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

Reviewed by Bridgett Johnson

 

Jim Collins' management book How the Mighty Fall: And Why Some Companies Never Give In explains how even big successful corporations can crumble if they are not managed properly. On the second page, Collins recalls the famous empires of the world that fell. He says:

History shows, repeatedly, that the mighty can fall. The Egyptian Old Kingdom, the Chou Dynasty, the Hittite Empire—all fell. Athens fell. Rome fell. Even Britain, which stood a century before as a global superpower, saw its position erode. Is that the U.S.'s fate? Or will America always find a way to meet Lincoln's challenge to be the last best hope of Earth?

From the very beginning Collins draws the reader into the theory that America might not live on top of the capitalist world forever. Fortunately the book does not stop on page two and Collins leads the reader into hope that the current economy situation can be reversed. With the help of the quote – “Don’t try to come up with the right answers; focus on coming up with good questions" – from his mentor, Stanford professor Bill Lazier, Collins uses research to understand why leading companies seemingly in possession of every competitive advantage so often manage to fall from greatness or out of existence.

 

 Collins’ research shows that there are five stages of decline. According to the book, Stages One through Three are invisible from the outside because a company can look great on the outside but be failing from within. By the time a company hits Stage Four, things are certainly in turmoil. Even though the road to recovery is challenging, a company can recover and return to greatness as long as it avoids Stage Five. The five stages are:

• Hubris born of success: In this stage, success entitlement turns into arrogance, leaders neglect a primary flywheel, “what” replaces “why,” learning orientation declines, and the company refuses to see that luck might have been apart of their success.
• Undisciplined pursuit of more: In this stage, companies confuse size with greatness and therefore cause an unsustainable quest for growth. Another characteristic of this stage is the decline of having right people in their key seats.
• Denial of risk and peril: In this stage, the company starts to see that there is a problem, but denies that anything is wrong. Leaders take a positive view of the problems instead of attacking them head on. Communication between departments is becoming nonexistent and instead of taking full responsibility leaders point to external factors to affix blame.
• Grasping for salvation: In this stage, the company looks for some type of “miracle worker” to come in and save the corporation. Expectations are set very high and instead of settling for small results, the leaders of the company want big changes to be made fast. If results don’t happen in a hasty manner, great disappointment and confusion will follow.
• Capitulation to irrelevance or death: When all the resources are used and every measure has been taken, the company has no choice to sell out to someone else or give of the fight and dismantle. Of course this is the hardest stage for leaders, shareholders, managers, and employees.

After each stage, Collins sums up the chapter by setting out bullet points that tell the reader what problems to look for and how to avoid falling into each particular stage.

 

At the end of the book, Collins lays out his hope and advice for the future of the economy. He uses the life and accomplishments of Winston Churchill as an example of how decline can happen to the most charismatic leader but redemption is possible with time and effort.

   

I believe that the five steps outlined by Collins are a good representation of the concept of new management. Characteristics discussed in class about new management include: being flexible, fluid, decentralized, tied together by a shared vision and value, and communication between groups. Collins believes that the only way for a company to have true success lies within internal leadership and communication between the higher leaders and the lower employees. Collins’ five steps also follow closely with Peter Drucker’s five roles of management, which include: setting objectives, organizing, motivating, measuring, and developing people. Collins says that the CEO of a company should most likely be an internal person who has worked with or for the company for many years. This internal person is best fit for the position of CEO because she or he not only knows the failures, successes, and structures of the company but also knows which people are best sued for positions within the company. Preparing for success and failure outcomes is crucial to the survival of a company. The financial and communication problems many companies face can be avoided by listening to the steps and advice given by Collins.

 

I would definitely recommend How the Mighty Fall to public relations students because it uses research findings to explain and correct common problems made by big and small corporations. The book is a good and easy read that clearly outlines the main and important points from Collins study. The bulk of the book is not filled with complicated charts or graphs, but Collins does include several appendices at the end for those who want to review his research. No matter how stable or great an institution might be it is vulnerable to decline. Decline does not have to be a permanent state and usually there are many measures a company can take before it reaches a point of no return. PR practitioners have active roles in recovery of a company’s image after a financial situation. It is important for the PR department to work with the CEO and leaders to make sure that the employees and customers know the plan of action to escape from decline. One of Collins’ key points said that communication is key to resolving the existing issues within a failing corporation. Because PR is all about communication and relationships, it is useful to learn from this management book about how relationships work in the business world.