Jim Collins’ book looks into the decline of great, even invincible companies. By learning from mistakes that took these companies from iconic to irrelevant, today’s leaders can avoid others’ tragic fate.
- Focus on good questions instead of right answers
- Institutional decline is a disease: harder to detect but easier to cure in the early states, and vice versa in later stages
- More ways to fall than to become great
- When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall
- Nordstrom, Disney and IBM fell…and yet came back
- Past accomplishments do not guarantee future success…you need self-initiated progress and improvement (i.e. creative renewal)
- Change must have rationale
- Growth should not undermine long-term value, and should not be equated with excellence
- Succession planning: failure to develop strong successors so that there is a leadership vacuum of no prepared replacements
- Outside leader does not fit the core values, and is ejected by the culture like a virus
- Build a culture that is not dependent on a heroic leader
- Bureaucratic rules subverts the ethic of freedom and responsibility and discipline culture….people think “jobs” instead of “responsibilities”
- Waterline rule for risks…will the issue be below or above a ship’s waterline?
- With ambiguity in decision-making: What’s the upside? What’s the downside? Can you live with downside?
- Bad teams: shield those in power from grim facts/harsh reality due to fear of punishment, strong opinions without data, low questions-to-statements ratio avoids critical input, undermine decisions, seek culprits rather than wisdom, blame outside factors for failures
- Good teams: bring up unpleasant facts (backed by data) for discussion, challenge for insight, unify behind decisions, give credit to others
- Reorganizations create false sense that you are doing something productive
- The signature of mediocrity is chronic inconsistency…need intense, methodical, and consistent approach…not grasping from one false salvation to another
- Distinct negative correlation between building great companies and going outside for a CEO…performance worsens under saviors from the outside
- You can be profitable and bankrupt…you pay your bills with cash
- Hire people who already have a predisposition to your core values/character (not skills) and hang on to them
- If you need to tightly manage someone, you made a hiring mistake…should not need motivating or managing…remove those who fail to deliver on their responsibilities
- Core values never change…operating strategies/cultural practices endlessly adapt to a changing world
What are you doing to ensure your company does not fall?
