How the Mighty Fall | Jim Collins

Author: Jim Collins
Author: Jim Collins

Main Theme: Leadership, Character and Failure
For People Who: Want to keep themselves and their organizations from failing.

Jim Collins, or “Ol’ Jimmy” as he is affectionately known around my house, is, without a doubt, my favorite author. The way he writes is engaging, applicable, and strikes at the heart of what leaders and their organizations face. What I appreciate so much about How The Mighty Fallis that as you read it you realize it’s not only a book about how organizations can fail, but it is an outline for how people fail. When we fail or make mistakes, we rarely ever stop long enough to consider, “What happened?” or “What was my part in that mistake?” Consequently, this dooms us to repeat the mistakes of our past as well as the mistakes of others, both organizationally and personally. But what if we could set up roadblocks to warn us when we begin descending onto the road toward failure? I believe you can do just that when you read How The Mighty Fall.This statement removes all the normal excuses for failure and strikes at the heart of the matter:

We are not imprisoned by our circumstances, our setbacks, our history, our mistakes, or even staggering defeats along the way. We are freed by our choices. –How the Mighty Fall, pg. 120

Take-Aways

  • No person or organization is too big to fail. Usually, it’s when we think we cannot fall that we inevitably begin taking our first steps toward it.
  • When we notice we are in the process of failing, it’s not too late! To reverse a downward decline requires a return to basic practices. Big new ideas are not the way to go.
  • Often it is our craving for more that can get us into trouble. When we begin reaching into areas we have no business stepping in to, you can guarantee that trouble is on the way because we get away from what we set out to do.
  • When you’re in a state of decline, reaching for a “silver bullet solution” is usually our first reaction. But reaching for a quick-fix is not usually the right fix. (Both organizationally and personally.)
  • Calculate risk before you take it. Ask yourself: “What is the ‘up side’ if this succeeds?” and weight it against the answer to the question: “What is the ‘down side’ if this fails?” The ultimate question is: Can you truly live with the downside?

The very moment when we need to take calm, deliberate action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear. -How the Mighty Fall, pg. 96

Brief Summary

The Silent Creep of Impending Doom

Collins begins his book by dismissing the myth that some are “too big to fail.” His key example is Bank of America (which was purchased by NationsBanks in 1998 who then went under the name Bank of America). At the beginning of 1980 BOA was considered one of the greatest companies in the world. Yet before the end of the 80s it would decline and post some of the greatest losses in American banking history. How does such a successful organization like that fall?

I’ve come to see institutional decline like a staged disease: harder to detect but easier to cure in the early stages, easier to detect but hard to cure in the later stages. An institution can look strong on the outside but already be sick on the inside, dangerously on the cusp of a precipitous fall. –How the Mighty Fall, pg. 5

Five Stages of Decline

One of the reasons I love Jim Collins’ books is because they are so empirical. Opinions are not simply stated. Suggestions are made based on facts, research, and hard data. Collins, as in his other books, lays out the process of gathering data, how they compared different companies who declined and failed versus those who declined and then climbed. He then lays out a brief summary of the five stages of how the mighty fall. But two principles emerge here:

  1. We do ourselves a disservice by studying only success…Furthermore, one of the keys to sustained performance lies in understanding how greatness can be lost.” (pg. 24)
  2. I ultimately see this as a work of well-founded hope. With a roadmap of decline in hand, institutions heading downhill might be able to apply the brakes early and reverse course.” (pg. 25)

Stage 1: Hubris Born of Success

Hubris is defined as excessive pride and arrogance that tramples over others because you yourself have been successful. One of the biggest problems with hubris is that you become blind to what is plain for everyone else around you to see. It causes you to get away from the foundational practices that made you great in the first place. When you turn your eyes away from your original purpose in order to pursue other opportunities, you will inevitably falter in what you originally set out to do. The reason we consistently steer away from our best practices organizationally and personally? Because we forget why we do them in the first place.

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. How the Mighty Fall, pg. 39.

Stage 2: Undisciplined Pursuit of More

Any enterprise that becomes complacent and refuses to change or innovate will eventually fall. But…the companies in our analysis showed little evidence of complacency when they fell. Overreaching much better explains how the once-invincible self-destruct. –How the Mighty Fall, pg. 47

Leaders are driven, passionate, and always calling others to a desired goal. The problem is that some leaders don’t know when to stop and focus on what’s right in front of them. Often we sometimes think that if we work really hard and set lofty goals then we will be immune to decline. “Great leaders do seek growth…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. (pg. 54) What often happens is when “growth at all costs” becomes the mantra of an organization, the development of leadership within the organization to sustain that growth is neglected, leading to a really…big…fall.

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? –How the Mighty Fall, pg. 57

If an organization (or a person for that matter) is to take a leap, it’s leaders must be able to answer affirmatively to the following tests:

  1. Do they ignite passion and fit with the company’s core values?
  2. Can the organization be the best in the world at these activities or in these arenas?
  3. Will these activities help drive the organization’s economic or resource engine? (pg. 63)

Stage 3: Denial of Risk and Peril

Each of these stages builds on the previous one. “Stage 1 hubris leads to Stage 2 overreaching, which sets the company up for Stage 3, Denial of Risk and Peril.” (pg 68) Additionally, the blame-game begins to settle into the leadership’s mindset. When we fail to own our part of the decline, or try to explain it away without proper reflection, we are simply oiling the gears that are propelling us toward serious trouble. Leadership teams cannot fail to deal openly and honestly with the cold hard facts of their circumstances. Decisions and corrections must be made as team members rally behind a common goal. It may be easier to put your head in the sand, but ultimately the captain and crew who explain away, or blame others for, the leaks in the hull go down with the ship.

Stage 4: Grasping for Salvation

If you want to reverse decline, be rigorous about what not to do. –How the Mighty Fall, pg. 97

I think it’s in our human nature to want quick-fixes when we know we’re in trouble. We don’t like the long, hard road of recovery. We want a solution and we want it now. We want to turn the Titanic on a dime when we see an iceberg coming and yet we ignored all the warnings we received along the way…until it was too late. Organizations are no different. In fact, I would make the case that organizations take on the personalities of their leaders. So if you struggle with maintaining basic practices the chances are high that the organization you lead will also struggle with basic practices that are necessary to move forward.

The key point is that they [organization leaders] go for a quick, big solution or bold stroke to jump-start a recovery, rather than embark on the more pedestrian, arduous process of rebuilding long-term momentum. –How the Mighty Fall, pg. 89.

Stage 5: Capitulation to Irrelevance or Death

Hope. Just saying the world prompts the image of an oasis in the desert. Yet nevertheless, hope is not enough to wade out of the dark and back into the light. It comes down to our choices, our “strategic choices” as Collins says. What are we going to do when we find ourselves in a place of irrelevance or death? Collins makes a unique distinction between denial of the inevitable and the hope to continue: “If you cannot marshal a compelling answer to the question, ‘What would be lost, and how would the world be worse off, if we ceased to exist?” then perhaps capitulation is the wise path.” (pg. 111) Purpose – that is what brings hope to continue for an organization. To accomplish this restoration from decline:

…requires leaders who retain faith that they can find a way to prevail in pursuit of a cause larger than mere survival (and larger than themselves), while also maintaining the stoic will needed to take whatever actions must be taken, however excruciating for the sake of that cause. –How the Mighty Fall, pg. 112

Well-Founded Hope

The signature of the truly great versus the merely successful is not the absence of difficulty, but the ability to come back from setbacks, even cataclysmic catastrophes, stronger than before…As long as you never get entirely knocked out of the game, there remains always hope. –How the Mighty Fall, pg. 120

An organization doesn’t have to decline, it can recover and soar once more. Dick Clark, the head of Merck manufacturing put it this way: “A crisis is a terrible thing to waste.” (pg. 116) Strangely enough, how we respond to our difficulties defines who we really are inside. Anyone can succeed when things are easy – but true leadership is forged in the fire of the desert. The choice lays before you, will you give up and give in? Pick yourself up, evaluate yourself and your organization with honesty, and humbly embrace the foundational practices that made both you and your organization great in the first place. “The path out of darkness begins with those exasperatingly persistent individuals who are constitutionally incapable of capitulation.” (pg. 123).

Conclusion

I found this book to be immensely helpful for both leadership and life. As a pastor, I wrote in the margins very early in the book: “What an incredible series this would make.” So that’s what we did at Journey Church. We did a 4-part series called “How the Mighty Fall” and discovered that great men like Samson, Uzziah, and Saul could have written this book from their life experience. Naaman, however, was able to recover from them and return with restoration. My hope is that we evaluate ourselves and our organizations with honesty and reflect upon our lives. Taking ownership of our part in the failures of our lives, no matter how small or great our part was, will enable us to move past our mistakes. None of us is too mighty to fall. So stop for a moment and look ahead to the future and ask, “What do I need to do now to keep myself from failing in the future?” so that you won’t look back on this moment and say, “I wish I knew then what I know now.”

Information and Personal Rating

General Information:

Personal Ratings (1-10)

    • Applicability: 8-9
    • Readability: 8
    • Originality: 8
    • Recommendation: Yes, absolutely!
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