There's an article on the web by a famous writer Jim Collins entitled "How The Mighty Fall: A Primer On the Warning Signs." It was printed in Business Week some time back. In it he chronicles some of the warning signs that let companies know that they are in trouble. He talks about how there have been companies that didn't see the signs and fell and couldn't get out of it like Motorola, Circuit City and Fannie Mae – icons that once served as paragons of excellence. If they can succumb to the forces of gravity, anyone can. But there have been other companies that have seen the seeds of decline early, and have managed to reverse that decline, as in the case of IBM, Hewlett-Packard, Merck and Nucor. They have managed to claw their way back."
In this article, he basically outlines the Five Stages of Decline and it makes for interesting reading. As we look at it, we might be able to do a check and see where we are in our own journeys within the companies and in our own lives maybe.
1. Hubris Born Of Success. Hubris is the Greek word for excessive pride or self-confidence. This first stage kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place. That's a good starting place, to just check and see if we are getting proud of the fact that we are doing this well or just getting cocky or arrogant about what we are doing. Are we beginning to talk about things like "We're successful because we do these things," not really understanding a whole lot but just marching on the fact that things are going well?
2. Undisciplined Pursuit Of More. From the first stage we go to the stage where we say, "We're so great we can do anything" and it leads to moving into growth that is really not backed by good due diligence that has been done. It's fuelled more by the success. Companies in Stage 2 stray from the disciplined creativity that led them to greatness in the first place, making undisciplined leaps into areas where they cannot be great or growing faster than they can achieve with excellence – or both. They are moving into areas where they ought not to, just riding that particular wave. This always leads into the 3rd stage.
3. Denial Of Risk And Peril. Here, there are internal warning signs beginning to mount, but the external results – it seems that the successful things that are going on, like profits still being there, seem to overwhelm the internal red flags that are beginning to come up. Most leaders don't look at that and just ride this wave; they discount negative data, amplify positive data and put a positive spin on ambiguous data. From that stage on, it's almost downhill.
4. Grasping For Salvation. Trying to find out anything that will bring the company back on track, looking for common 'saviors' – a charismatic visionary leader, a bold but untested strategy, a radical transformation, a new product, and so on.
5. Capitulation To Irrelevance Or Death. The longer a company remains in Stage 4, the more likely it will spiral downward.
I thought of all these 5 stages and I began to look at different companies. You may have heard of the company Sbarro which makes Italian pizza. It came in in 1956 and has always been in malls and food courts and airport spaces. They have been facing decline. One of the reasons is, as one researcher said, if you look at Sbarro, they are the same today as they were 10 years back. They haven't evolved into anything. Darren Tristano says, "If you don't change while the world changes, you lose relevance."
RadioShack is another one that has just gone down the tubes. One of the early electronic companies in the US, almost number one – anyone who wanted anything electronic, went there. Today, they are hanging in there for any kind of relevance. In fact, at the Super Bowl a couple of years back, they pushed for a huge ad featuring retro celebrities like Mary Lou Retton and ALF, the tagline being: "The '80s called. They want their store back." They didn't read the signs. What that ad really did was reinforce RadioShack's image as a company that, in an era of near-constant technological innovation, is 30 years passé. They hadn't changed. They were still in the '80s, not realizing that everybody had moved on. "RadioShack's main issue is irrelevance," says Sheehan at Focus Ventures. "I'm actually amazed they've gotten as far as they have."
But sometimes you try and do something to bring something out of that irrelevance, like the Stage 4 that Jim Collins talks about – Grasping for Salvation.
McDonald's has been losing a lot of money recently. In fact, the world's largest restaurant company is losing market share, losing sales, and suffering quite a bit in corporate identity crisis. What will they do to try and get their mojo back? In 2013, they brought in the Mighty Wings. This was something that had been very successful in Hong Kong - chili-pepper coated wings that had really done well. They wanted to bring it into the US. They tested it in Atlanta and the test was good. So they invested heavily in it and an 8-week heavily advertised promotion was done. At the end of it, McDonald's was left with 10 million pounds of unsold chicken, a whopping 20% of its inventory. As the writer said, "The Mighty Wings didn't flap."
What happened? McDonald's forgot that when people look at McDonald's, they look at them in terms of quantity and rarely associate quality with their product. When they brought the wings in, these were huge wings, and they felt that because they were huge, they could charge more. But people weren't really looking at the wings; they just looked at the price and said, "This is too much. We can get more for this in some other place." the one thing they were trying to get out in the Salvation stage, failed them dramatically.
Reading all this, I thought that even beyond the companies that you work for and the responsibilities that you have, it would be good to just stop and ask yourself: Are we getting too cocky about things, just riding the wave of success? Do we really need to look underneath at some of the internal things that are coming up that we need to take cognizance of? But even more than that, just to be able to ask the question: What about my own life? Am I riding the crest of a wave? Are things going well? Or am I in a kind of decline where things aren't going well? Is there something that I need to change? Is there something I need to be aware of?
Winston Churchill is famous for his line: "Never, never, never, never give in." and yet, in the 1930s, everybody thought that Churchill's career had ended. In fact, Lady Astor who was visiting Joseph Stalin, and was quizzed on the political landscape in Britain, said when asked about Churchill, "Churchill?" she said will a disdained wrinkle of her nose, "He's finished." But Churchill came back. He gave Britain its voice to stand against the forces that were against them at that time in World War 2. He got the Nobel Prize in Literature, came back as Prime Minister at the age of 77, was knighted by the Queen – all that because he never let go.
A wonderful quote by Jim Collins: The path out of darkness begins with those exasperatingly persistent individuals who are constitutionally incapable of capitulation. It's one thing to suffer a staggering defeat – as will likely happen to every enduring business and social enterprise at some point in its history – and entirely another to give up on the values and aspirations that make the protracted struggle worthwhile. Failure is not so much a physical state as a state of mind; success is falling down – and getting up one more time – without end.
I don't know where you are today. Maybe you're riding the crest of a wave, things are going very well. Maybe you just need to ask the question – do I need to look a little deeper? Am I getting too arrogant, too cocky? Do I need to investigate where I am? Or are you in a downward spiral where things are not going well? You are wondering whether to just walk away? I want to encourage you. Success is about falling down and getting up one more time, continuously without end. We never quit. Don't quit on that culture you have developed over the years that says, "Even when things don't go well, I will still rise up and walk and never give in." above all, I love this fact that, our Almighty God is with us. He offers the strength and wisdom in times like this. He gives us insights into things that we ought to notice, even if we are getting to proud or cocky. If you're down and out today, I love the picture that we have in our Bible where Peter is about to fall into the water and he calls out to Jesus who picks him up immediately. Maybe, that's what you need today, to say, "Lord, help me," and know that He will.
May I pray with you? Almighty God. Bless each one of us on this call. You know where we are and You know exactly what we need. Give us wisdom, insight, a helping hand, a firm footing. Let your blessing be upon each one of these precious ones on this call. Help us to look to you as our Savior always. In Jesus' name we pray. Amen.
• Jim Collins, "How the Mighty Fall: A primer on the warning signs." http://www.jimcollins.com/article_topics/articles/a-primer-on-the-warning-signs.html
• Beth Kowitt, "Fallen Arches: Can McDonalds get its Mojo Back?" http://fortune.com/2014/11/12/can-mcdonalds-get-its-mojo-back/
• Jason Daley, "Why these 3 Once Thriving Franchises Have Fallen on Hard Times." http://www.entrepreneur.com/article/235379
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