The cover of the current (May 25) issue of BusinessWeek features Good to Great author Jim Collins, and inside the issue is an exclusive excerpt from his new book How the Mighty Fall: And Why Some Companies Never Give In.
Collins is the author (Good to Great) or co-author (Built to Last with Jerry Porras) of two of the top-20 best selling management books of all time, both of which are in line with a management research tradition of the Stanford Graduate School of Business. Stanford's Tom Peters with Robert Waterman of McKinsey & Co. began the management blockbusters that came out of the Stanford Business School with the best selling management book ever, In Search of Excellence.
In Collins' latest research he looked into why great, highly successful companies, such as Bank of America, Fannie Mae, and Circuit City plummet into a steep decline and even fail. In the BusinessWeek excerpt, which, if you're interested in management, I urge you to read, Collins identifies Five Stages of Decline:
1. Hubris born of success
2. Undisciplined pursuit of more
3. Denial of risk and peril
4. Grasping for salvation
5. Capitulation to irrelevance or death
A sidebar has an illuminating comparison of "The Dynamics of Leadership-Team Behavior" in which behaviors of teams on the way down are compared to behavior of teams on the way up. He is the list of the behavior of teams on the way down:
- People shield those in power from unpleasant facts, fearful of penalties and criticism for shining light on the rough realities
- People assert strong opinions without providing data, evidence, or a solid argument
- The team leader has a very low questions-to-statements ratio, avoiding critical input and/or allowing sloppy reasoning and unsupported opinions
- Team members acquiesce to a decision but don't unify to make the decision successful--or worse, undermine it after the fact
- Team members seek as much credit as possible for themselves, yet do not enjoy the confidence and admiration of their peers
- Team members argue to look smart or to further their own interests rather than argue to find the best answers to support the overall cause
- The team conducts "autopsies with blame," seeking culprits rather than wisdom
- Team members often fail to deliver exceptional results and blame other people or outside factors for setbacks, mistakes, and failures
As I read this list I couldn't help but see in my mind's eye meetings in media companies I am familiar with. Read the two lists again and then close your eyes and imagine one or two large media companies today. Which ones do you see that are in any one of the Five Stages of Decline. Which ones do you think will make it and which won't?
Here are my picks:
Won't Make It (Stage Three, Four, or Five)
Time Warner (not including AOL) - Hubris and Undisciplined Pursuit of More personified.
CBS -- Hubris and Denial of Risk and Peril plus Sumner Redstone equal bye-bye.
News Corp. -- Undisciplined Pursuit of More and Murdoch's age. What will News Corp. do without the wily, strategically brilliant, ferociously competitive Murdoch? A slower death than Time Warner and CBS, but Miller at MySpace has made too many dumb moves to recover.
Yahoo! -- If it doesn't become Microhoo, it'll be toast. Portals are buggy whips.
Conde Nast -- Virtually an all-print company - worse than buggy whips.
Will Make It
Google -- Like it or not, it'll last as long as the Egyptian Old Kingdom.
Disney -- Brands such as ESPN and Pixar are positioned for the digital age.
Viacom -- Only if its solid assets are acquired by someone who knows how to manage them properly; has to get out from under the Redstone anchor that's pulling it down.
NBC -- As long as it has GE's deep pockets and management expertise, NBC will stick around if eventually as only a news brand.
Might Make It
AOL -- Armstrong is off to a good start, but the deck may be stacked against him unless he and his new AOL people can develop extraordinary content.
Scripps Howard -- Transitioning out of print as fast as possible and doing it well.
The New York Times -- Has to make it; someone has to get it away from the Sulzberger's and admit it's a non-profit national treasure.
What companies are on your lists?