Jim Collins writes excellent business books, and his latest effort How the Mighty Fall and Why Some Companies Never Give In is no exception. This short book sets out to explain what causes companies which were once great to collapse, and he describes a five-step process: hubris born of success, undisciplined pursuit of more, denial of risk and peril, grasping for salvation, and finally capitulation to irrelevance or death.
Collins describes a research project in which his team set out to discover whether it is possible to detect and reverse the early stages of decline in a major corporation. However, Appendix 1 of the book, which sets out the selection criteria for companies covered by the research, reveals that only a small set of companies was studied. In my view this makes the findings vulnerable to statistical aberrations.
The book is very helpful in the way it explains many of the symptoms of decline. However, it conveys the message that the biggest cause of corporate decline is change, and not complacency. Collins says that a major contributor to the collapse of the companies studied was too much change. While this may be correct for the limited sample studied, I cannot see how it can be true as a general principle. The book seems to contradict the message of John Kotter’s A Sense of Urgency, and in my view on this issue Kotter’s advice is to be preferred.