Lessons of ‘How the Mighty Fall’
You may be familiar with the work of business writer Jim Collins, author of the popular books "Built to Last" (with Jerry Porras, 1994) and "Good to Great" (2001).
Like these earlier works, Collins’ 2009 effort, "How the Mighty Fall," is based upon meticulous research of real companies. While the title seems to portend doom, Collins insists the book is a work of "well-founded hope."
The book is subtitled, "And Why Some Companies Never Give In." Collins provides many object lessons showing how some deeply troubled companies managed to turn things around.
This makes appropriate reading for the radio industry, which hears so much about its impending demise. As we noted in our previous column, this pronouncement often is overblown, but what radio companies have to worry most about are their own missteps — which is why the book seems so on point.
If the shoe fits
The central thesis of the book is presented as the "Five Stages of Decline," not unlike the well-known Kübler-Ross model of the five stages of grief.
But Collins’s approach is more about what causes a business’s demise rather than the process of its recognition. In fact, Collins points out that most businesses don’t even realize they are failing until Stage 4 — although he shows how even at that late date the course can still be reversed.
While the entire book is recommended reading, a quick synopsis of the five stages is telling. See if any of these sound familiar:
- • Stage 1: Hubris Born of Success
- • Stage 2: Undisciplined Pursuit of More
- • Stage 3: Denial of Risk and Peril
- • Stage 4: Grasping for Salvation
- • Stage 5: Capitulation to Irrelevance or Death
If you think there are some radio companies already deep into Stage 4 and others well on their way there, I’d agree. In fact, it seems Collins could have conceived his five stages purely from observing the radio business today — although no broadcasting companies are included in the book’s analyses.
Where the book is perhaps most useful is in its study of companies that were able to stave off failure late in the game (prior to Stage 5), in some cases coming back stronger than ever.
Given that Collins’ research shows corporate decline largely is self-inflicted, it stands to reason that it can also be self-healing, once the problems are acknowledged. This is perhaps the most frightening point he makes: that decline is insidious, often masked by executive denial, and not noticed or accepted until it has already wreaked much havoc across the enterprise.
For example, the book presents numerous cases where companies failed to continue innovating because things were going so well for them. Once their momentum was thus lost, it was only a matter of time before things began to go downhill fast.
Other cases are simply a factor of "corporate lifecycle," by which young companies feel free to take big risks, yet after they pay off, the increasingly mature organization grows reluctant to remain so adventurous and becomes more conservative. Collins recommends the perspective of "paranoid humility" as an antidote.
Timing is everything
Although Collins began his research well before the current economic crisis began, the timing of its publication earlier this year was serendipitous. The book garnered immediate, strong attention in the business community (it would have anyway given the author’s track record, but the climate no doubt helped), including a cover story in Business Week and many positive reviews in major newspapers and elsewhere.
Not all have praised the book, however. One critic, Don Sull, a professor at the London Business School, thinks that Collins accurately documents the symptoms of management actions, but that these are not the root causes of corporate decline.
In other words, Sull feels the book is more about how than why businesses fail. For example, Collins says companies get into trouble when they stray too far from their core strength, but Sull counters with research showing just the opposite: that failure is more often bred from companies sticking too close to their comfort zone.
I believe a case can be made for either premise, leading to the conclusion made frequently in this column that proper balance between those two extremes — the "innovation sweet spot," if you will — is key to success for any company or industry undergoing a gradual environmental transition, as radio currently is experiencing: Maintain core strength while developing and evaluating new ventures.
Collins concludes with a fundamental point that is often lost in the noise of commerce: The goal is not corporate survival, but creation of an enterprise that provides impact so significant that it cannot be easily replaced by another.
I would add that today this objective is not a static accomplishment but an ongoing process, and that this is the primary takeaway from the discussion for radio right now.
Ours clearly is an industry that has made such a potent mark upon society, but now other venues threaten to match and perhaps exceed radio’s value. Collins would argue that this is when radio’s leaders must step up to push the industry beyond simply keeping its head above water, and struggle to find the next nonpareil. The aim is not simply to retain relevance in a burgeoning marketplace, but to provide the next level of service that no other entity can match.
A lofty target perhaps, but such is the aspiration that radio deserves from its current captains.
"How the Mighty Fail: And Why Some Companies Never Give In" is by Jim Collins, published by Jim Collins, 2009.
Skip Pizzi is contributing editor of Radio World. Follow him on Twitter at twitter.com/skippizzi.