December 6, 2017 Back to basics

As I continue to read about “How the Mighty Fall,” by Jim Collins the theme seems to be a mixture of doing what works and not panicking.  Collins describes the stages of decline in which the first three stages are easier to correct but harder to recognize and the latter two are easy to see but hard to recover from in time.  Stage four is really your last opportunity to recover but stage for is not the end.

Reading this chapter I can see why there is so much confusion and failure in Corporate America.  You see people naturally panic and do the opposite of what they know they should do.  “When we find ourselves in trouble, when we find ourselves on the cusp of falling, our survival instinct—and our fear—can evoke lurching, reactive behavior absolutely contrary to survival. 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” Jim Collins “How the Mighty Fall.”

Here are the key markers described by Collins for recovering and recognizing stage four.

MARKERS FOR STAGE 4

  • A SERIES OF SILVER BULLETS: There is a tendency to make dramatic, big moves, such as a “game changing” acquisition or a discontinuous leap into a new strategy or an exciting innovation, in an attempt to quickly catalyze a breakthrough—and then to do it again and again, lurching about from program to program, goal to goal, strategy to strategy, in a pattern of chronic inconsistency.
  • GRASPING FOR A LEADER-AS-SAVIOR: The board responds to threats and setbacks by searching for a charismatic leader and/or outside savior.
  • PANIC AND HASTE: Instead of being calm, deliberate, and disciplined, people exhibit hasty, reactive behavior, bordering on panic.
  • RADICAL CHANGE AND “REVOLUTION” WITH FANFARE: The language of “revolution” and “radical” change characterizes the new era: New programs! New cultures! New strategies! Leaders engage in hoopla, spending a lot of energy trying to align and “motivate” people, engaging in buzzwords and tag lines.
  • HYPE PRECEDES RESULTS: Instead of setting expectations low—underscoring the duration and difficulty of the turnaround—leaders hype their visions; they “sell the future” to compensate for the lack of current results, initiating a pattern of overpromising and under delivering.
  • INITIAL UPSWING FOLLOWED BY DISAPPOINTMENTS: There is an initial burst of positive results, but they do not last; dashed hope follows dashed hope; the organization achieves no buildup, no cumulative momentum.
  • CONFUSION AND CYNICISM: People cannot easily articulate what the organization stands for; core values have eroded to the point of irrelevance; the organization has become “just another place to work,” a place to get a paycheck; people lose faith in their ability to triumph and prevail. Instead of passionately believing in the organization’s core values and purpose, people become distrustful, regarding visions and values as little more than PR and rhetoric.
  • CHRONIC RESTRUCTURING AND EROSION OF FINANCIAL STRENGTH: Each failed initiative drains resources; cash flow and financial liquidity begin to decline; the organization undergoes multiple restructuring attempts; options narrow and strategic decisions are increasingly dictated by circumstance.

“Stage 4 grasping can produce a brief improvement, but the results do not last. Dashed hope follows dashed hope follows dashed hope yet again. Companies stuck in Stage 4 try all sorts of new programs, new fads, new strategies, new visions, new cultures, new values, new breakthroughs, new acquisitions, and new saviors. And when one silver bullet fails, they search for another and then yet another. The signature of mediocrity is not an unwillingness to change. The signature of mediocrity is chronic inconsistency.” Jim Collins. “How the Mighty Fall.”

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