In his new book, How the Mighty Fall, bestselling author, Jim Collins articulates research-based evidence for the five stages of decline in organizations. If you’ve ever read Built to Last or Good to Great, you know that Jim Collins is true to the research and has a great ability to draw powerful insights from organizational data. The research for How the Mighty Fall is no less impressive. Collins’s team took over 6,000 years of combined corporate history and focused on 60 major corporations dating back more than 70 years. From their research, they identified eleven cases that “met rigorous rise-and-fall criteria at some point in their history.” Those companies included: A&P, Addressograph, Ames Department Stores, Bank of America (before it was acquired by NationsBank), Circuit City, Hewlett-Packard (HP), Merck, Motorola, Rubbermaid, Scott Paper, and Zenith. Interestingly, Collins notes that organizational decline is largely self-inflicted with recovery largely in our control and that there are more ways for a company to fall than to become great. Let me unpack the first of the five stages of decline: Hubris Born of Success.
Hubris simply implies pride or arrogance. Collins states, “Dating back to ancient Greece, the concept of hubris is defined as excessive pride that brings down a hero, or alternatively (to paraphrase classics professor J. Rufus Fears), outrageous arrogance that inflicts suffering upon the innocent.” During this first stage of decline, leaders often become arrogant about their success and almost view it as an entitlement. As a result, they lose sight of what caused their success in the first place. You may recall from Good to Great that one of the keys to greatness was Level 5 Leaders–leaders that had an important blend of humility and will. Collins says, “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.”
Collins contrasts Sam Walton, founder of Wal-Mart, and his successor, David Glass, with the CEO of Ames Department Stores. Walton was deeply humble and possessed a learning orientation. “Part of his answer for how to stave off hubris came in handing the company to an equally inquisitive, self-deprecating CEO, the quiet and low-profile David Glass.” But Ames was led by a CEO that was more of a “knowing person” rather than a “learning person.”
“Knowing people” drive their organizations to decline in two ways–they become dogmatic about their specific practices OR overreaching by “moving into sectors or growing to a scale at which the original success factors no longer apply.” In other words, their pride and ego gets in the way of thinking clearly about their success, and as a result, they “fossilize around their practices” (focusing on what they do–current practices–rather than why they do it–the enduring principles of their success). Furthermore, they try to do more than they are capable of doing, and lose focus on what they do best. When leaders and organizations find themselves in this situation, Collins challenges them to ask two questions:
1. Does your primary flywheel (the thing that made you successful in the first place) face inevitable demise within the next five to ten years due to forces outside your control–will it become impossible for it to remain best in the world with a robust economic engine?
2. Have you lost passion for your primary flywheel?
Collins summarizes the first stage of decline by identifying five markers:
- Success entitlement, arrogance
- Neglect of a primary flywheel
- “What” replaces “why”
- Decline in learning orientation
- Discounting the role of luck
I find it interesting that hubris born of success is the first stage of decline. Collins’s research reminds me of a Scripture that could serve as the theme for the beginning of decline: “Pride goes before destruction, a haughty spirit before a fall” (Proverbs 16:18).
Question: Has your ministry or organizational success created a sense of arrogance in you, your team, or your organization? What would others that know you well say if they answered for you?