Monday, August 10, 2009

How The Mighty Fall, by Jim Collins

How The Mighty Fall: And Why Some Companies Never Give In, by Jim Collins

Not too bad a read.
But...Yes, lots of buts too.
The book has a hurried feel to it. Like Collins took his last two books, copied the template from those two, and replaced some words and added some new paragraphs. And viola! You have a new book. The style is too reminiscent of Good to Great: Why Some Companies Make the Leap... and Others Don't, but without the details of the former. This book needed to have covered new ground, or in a different way, or should have insights that would have been illuminating. It does none.
Some of the material, especially on people and bureaucracies, is indeed timeless, and useful, and I have copied extracts in this review. But he has covered that to some extent in Good to Great: Why Some Companies Make the Leap... and Others Don't. If you have not read that book, then this book is useful enough. When comparing or contrasting two firms that went to a particular stage, and one recovered and the other did not, you don't really get an insightful answer. The example of TI and Motorola is one. Or that of IBM and HP. HP seemed to have gone down the tube under the leadership of Carly Fiorina, but has been on the mend with its new CEO, Mark Hurd. Was the acquisition of Compaq all that big a failure as is made out to be? What was it that HP did to come back from the brink? Sheer persistence seems to be one answer per the author. Per, doggedness down a path of futility can look much the same as one that leads to recovery and salvation. How to tell the apart? That is not clear or even attempted in the book. TI does not seem to be doing too well these days. The leadership is the same. What changed? IBM is very successful, having been rescued from the brink of collapse by Gerstner, but it is now less a software products company than a software services company. Is that a recipe for continued success? You will not get these answers by reading this book.

There is a great opportunity for making this book truly great when Collins quotes Tolstoy's novel Anna Karenina.
"All happy families are alike; each unhappy family is unhappy in its own way." ... I've concluded that there are more ways to fall than to become great. [page 19]
But that's pretty much the start and end of any attempt to move the book from mediocrity to good, let alone great.

According to Collins, companies that fail, tend to follow five stages of decline. Companies can fall one or more levels and still recover, but many keep sliding from one level to another, their descent punctuated only by frantic efforts at reorganization, rapid-fire change in leadership, random changes in the business model, brutal layoffs, and more.
The five stages are:
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.

Companies can seem to be in rise even as they go through stages 1, 2, and 3. Decline visible to world, seems to occur only at stage 4, at which point most companies will inevitably slide down further and further. The book's first half is all about these five stages.That is all of 124 pages or so. Yes. 124 pages of large type on paper size that is smaller than most paperbacks. The next 90 pages are notes and appendices for each section. 29 pages of notes, the rest are appendices. So, if you skip the references and notes and all, as most people do, you could be done reading the book before you are halfway on a flight from Seattle to San Jose.

Collins is aware of the criticisms leveled against his previous book, and does sort of acknowledge that there is no magic mirror or crystal ball or even a formula that will yield answers with mathematical preciseness.
If we could conduct double-blind, prospective, randomized, placebo-controlled trials, we would be able to create a predictive model of corporate performance. But such experiments simply do not exist in the real world of management, and therefore it's impossible to claim cause and effect with 100-percent certainty. [page 17]

In some ways, the bar was set very, very high with Good to Great: Why Some Companies Make the Leap... and Others Don't. One measure of the book's popularity can be gauged from the fact that after almost eight years since its publication, it is still available only a a hardcover edition. The paperback has not come out. And it has attracted a lot of attention from other management gurus and academics. It is not really scientific. The selection of companies is too narrow. At least two of the companies in the list - Circuit City and Fannie Mae - have gone into bankruptcy. And so on. Valid perhaps. My take is that you have to leave out the companies mentioned in the book, and instead focus on the learnings and the findings that Collins has to offer. A lot of it is, in my opinion, valuable, and common-sensical. Whether it would hold up to an empirical validation is moot. There is perhaps no management book that can claim that distinction, and "Good To Great" is not an exception. Management is not mathematics. It is not physics. And even physics has 'uncertainty' in it.

Packard's Law states that no company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth and still become a great company. ... (We named this law after David Packard, cofounder of HP, inspired by his insight that a great company is more likely to die of indigestion from too much opportunity than stavation from too little.) [page 55]

You break Packard's Law and begin to fill key seats with the wrong people; to compensate for the wrong people's inadequacies, you institute bureaucratic procedures; this, in turn, drives away the right people (because they chafe under the bureaucracy or cannot tolerate working with less competent people or both); this then invites more bureaucracy to compensate for having more of the wrong people, which then drives away more of the right people; and a culture of bureaucratic mediocrity gradually replaces a culture of disciplined excellence. When bureaucratic rules erode an ethic of freedom and responsibility within a framework of core values and demanding standards, you've become infected with the disease of mediocrity. [page 56]

Perhaps the answer to the question as to why this book has such a hurried feel, and why it feels so 'lightweight', even for a pulp-management title, lies on page 118, where Collins writes:
While working on How the Might Fall, my colleague Morten Hansen and I have been simultaneously working on a six-yearl research project to study companies that grew from vulnerability to greatness... [page 118]
In my opinion, therein lies the answer. This book is likely going to be succeeded by a more substantial tome in 2010, one which will ignite sales of this book - How The Mighty Fall: And Why Some Companies Never Give In, and that this book is really a filler, meant to keep the buzz of Collins alive even as people wait for his next work. For movie buffs, this reminds one of the re-release of the original Star Wars Trilogy, that allowed Lucas to get the money he needed to finance his Star Wars 'prequel' trilogy. Except that it is not, if you know what I mean.
This book is just so disappointing that even the one-star reviews would not be unjustified. How can Collins be the same person who wrote Good to Great: Why Some Companies Make the Leap... and Others Don't and Built to Last: Successful Habits of Visionary Companies and then came up with this clunker?

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© 2009, Abhinav Agarwal. All rights reserved.