By Kelley Reynolds

Jim Collins is one of the authors who brought us Built to Last: Successful Habits of Visionary Companies and From Good to Great: Why Some Companies Make the Leap and Others Don’t. A few years ago, Collins was facilitating a session for military generals, CEOs and other leaders. During one of the breaks, one of the participants asked Collins, “When you are on the top of the world, the most successful company in your industry, your power and success might coverup the fact that you are already on the path to decline. How would you know?” This conversation inspired Collins to conduct research which lead to this book.

Collins previous books were focused on companies building on greatness. Collins was now curious to understand the decline of once great companies. This book is the embodiment of the philosophy of “We learn more from our failures than we do by our successes.”

Each chapter is easy to read. There are interesting examples provided to illustrate the findings of his research. Most every company used as an example was well known, for example A&P, Rubbermaid and Scott Paper. Collins also shared experiences and lessons learned from his life. Although the research started with one question, the answer lead to more questions. The chapters flow logically from each new question. For those who are interested in greater details, there are several appendices which provide additional information for the companies referenced in the book.

From Collins previous works, Good to Great and Built to Last, he and his research team had already amassed records which reflected a combined 6000 years of corporate history. They selected 60 major companies. Within the 60, they identified 11 companies that met their rigorous criteria which included a rise and fall.

Armed with the new information, the team updated their previous research. The questions they sought answers to were: What happened leading up to the point at which decline became visible and what did the company do once it began to fall? They utilized historical materials. Materials that were produced from the time of the companies’ founding to its decline, focusing on specific eras. These materials included such items as annual reports, major articles published about the company and industry reference materials. Collins did not want to rely upon retrospective interviews as those could be clouded or biased. The documents used were published and written at the those points in time without the knowledge of what would occur to the businesses.

As they researched, the team selected as a control set, a successful company that was a contemporary of the business that had fallen. The companies selected had risen at the same time and were in the same industry, such as Circuit City and Best Buy; Ames and Wal-Mart.
Collins considered the following questions: Are there clearly distinguishable stages of decline? If so, can you spot decline early? Are there telltale markers? Can you reverse decline? If so, how? Is there a point of no return?

Based upon the research, Collins and his team identified five stages of decline:

Stage 1: Hubris Born of Success

Collins cited many examples of hubris including undisciplined endeavors into areas where a company cannot excel; ignoring evidence to make risky decisions and outright denial that their company is at risk. One form of hubris Collins referred to was Arrogant Neglect. He provided the example of Circuit City that diverted its attention from their primary “flywheel,” what made the company successful, to chase the next big thing, on the assumption that their original success will take care of itself. As in relationships, if you divert your attention or ignore someone long enough, the relationship will decline.

Stage 2: Undisciplined Pursuit of More

During the research portion, Collins expected to find that companies had rested upon their laurels and had become complacent. However, in most of the companies reviewed, this was not the case. The opposite was found; the companies were found to have overreached. The companies were obsessed with growth. They strayed from their core purposes and values. When attempting to grow quickly, the companies were unable to fill vacant seats with the right people. The #1 ingredient for a culture of discipline is having the right people. The people who are self- managed and exemplify self-motivation do not require lots of rules and bureaucracy. When a company instituted many needless rules and bureaucracy, the company drove away the right people. The businesses suffered from vacancies born of rapid growth and loss of their key people.

Stage 3: Denial of Risk

This stage was marked with discounting negative or unpleasant information rather than addressing what was wrong with the company. The leaders made decisions that were not based upon the facts of the situation. The leaders shifted to dictatorial management, or, the members stopped telling the leaders what the leaders were unwilling to hear.

Stage 4: Grasping for Salvation

Panic is not pretty. The companies changed leaders. They moved headquarters. They searched for silver bullets. They restructured, again and again. This lead to confusion and disappointment. Collins described this reactive behavior as counter intuitive. It was contrary to survival. When the companies behaved in a frantic manner it accelerated their demise. Collins shared lessons learned from a combat veteran. Remain calm. Focus and take one shot at a time.

Stage 5: Capitulation to Irrelevance or Death

Collins research revealed two versions of stage 5. CEOs either decided to stop fighting for the company; or they continued to fight until there were out of options. Once those in power gave up hope, there was nothing left for them to give.

Well Founded Hope

The final chapter of the book Collins sought to prepare and empower leaders. He wanted to give hope.

Collins believed that decline was largely self-inflicted and recovery was often within the leader’s control. Companies experienced peaks and valleys. Just because a company experienced a decline did not mean it would fail. Being great did not preclude a company from falling. At the same time, just because a company fell, did not preclude it from raising again.

With empowerment, you have choices in how to respond to your situations. With adversity comes opportunity for growth and greatness. Collins wrote: “The signature of the truly great versus the merely successful is not the absence of difficulty, but the ability to come back from setbacks, even cataclysmic catastrophes, stronger than before.”

He ended the book with this: “Success is falling down and getting up one more time, without end.”

By Kelley Reynolds

Patrick Lencioni has written a leadership fable about fictional Kathryn Petersen, the new CEO of DecisionTech. He has identified five dysfunctions that cause problems within organizations. Within each section, Petersen instructs her team through a series of exercise. The appendix offers additional specific exercises to overcome each of the dysfunctions.

Reading about the dysfunctions of team and thinking of the converse, high performing teams, one thought jumps into my brain: SWAT teams. These are the law enforcement special weapons and tactic teams. There are probably military teams who operate under the same philosophies, but my familiarity is limited to law enforcement. SWAT teams are highly specialized, highly trained cohesive teams. They HAVE to function. The consequences of dysfunction within one of their teams is not merely a slow quarter nor is not a lost sale. Dysfunction within a SWAT team could result in lost lives, civilian and law enforcement.

1. Absence of trust
Lack or loss of trust is at the core of any type of broken relationship; whether we call the relationship marriage, friendship or colleague. Without trust in place, there is no level of emotional intimacy. At best the interactions are cordial, the other end of the spectrum could include open hostility or worse. To have a cohesive team, you have to be able to be honest with each other. As well, there needs to be trust within the team for one to be honest about oneself while communication with the other team members.

You might be thinking, “Wait a minute. You mentioned a SWAT team. Where do emotions and intimacy come into play?” Oh, tough SWAT officers have emotions. Have you ever seen the tears well up in their eyes when their brand new armored SWAT vehicle is delivered from the showroom?

There are such rigorous standards to qualify for the team, from the beginning, the members know the new member is of high caliber. They train together. Hard, dirty, sweaty training. They build camaraderie through shared experiences.

2. Fear of Conflict
Without trust, team members will not have open discussion of ideas. What options are there for the team, if new ideas aren’t shared? If trust was lost, how can it be rebuilt until the issue is addressed. Addressing the issue is oftentimes going to involve conflict.

Okay, do you think SWAT team members have a fear of conflict? Yeah, me neither. Do they have conflicts on the team? You bet! However, they know what is at stake if they allow the conflict to fester and that is simply not an option. They address issues. Conflicts within the team get resolved.

3. Lack of Commitment
It is much easier to gain buy-in if everyone has an opportunity speak and is willing to share their ideas. Then, the team needs to engage in healthy debate surrounding the ideas. If the members aren’t involved in healthy conflict, it may impact their commitment to the plan.
So, SWAT members engage in discussion about executing search warrants. They weigh the pros and cons of using a flash-bang or other devices. Once the plan is made, all of them understand the plan and are committed to it.

4. Avoidance of Accountability
Without commitment and little to no trust, the fourth dysfunction occurs, and it is two-fold. If someone did not buy into the plan, how much responsibility will they take for their behaviors? “It wasn’t my idea. I knew it wasn’t going to work.” You can hear them say it. If there is little trust among peers, who among the team will hold them accountable?

This is where SWAT teams excel. There is no avoiding accountability. After every event, the SWAT team debriefs. Everyone in the room is given an opportunity to speak, twice. The first time around, the team member is expected to acknowledge any action they took or failed to take. If, during the first time around, someone failed to take responsibility for their own actions, on the second go-round, it is the other team members responsibility to point out the unacknowledged errors.

5. Inattention to Results
When members of the team fail to hold each other accountable, the team loses focus of the big picture. At this point, individual members may put their needs above the team or the team may look no further than itself without consideration to the organization’s needs.
The results of the SWAT team’s work is usually on the nightly news. Criminals may be arrested. There may be law suits filed. It is virtually impossible to ignore the results of a SWAT team’s work. Furthermore, the lessons learned from the debrief are incorporated into their training. They may become policy and best practice.

Learning from their experiences and modifying their tactics to keep citizens and officers safe is the mission of the police department. Teams working toward the mission of the organization is the goal that Lencioni’s book attempts to achieve.