How the Mighty Fall: The Undisciplined Pursuit of More (Jim Collins)

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How the Mighty Fall: The Undisciplined Pursuit of More >

Drive through the streets of Atlanta's northern suburbs, and you'll be greeted by saddening evidence of the weakened economy. Pristine retail space sits empty. "For Sale" signs adorn the lawns of countless unsold properties. In vain, real estate agents advertise price cuts on vacant, newly constructed homes and townhomes.>

In sum, the empty edifices bear witness to America's undisciplined quest for wealth. Families incurred hefty mortgages on homes they could not afford. Mortgage brokers fudged numbers to gain commissions on homes sold to unqualified buyers. Banks underwrote shady, subprime mortgages since they knew the loans could be peddled to investment firms for a profit. Investment firms invented dubious financial instruments to obscure the presence of risky securities in their funds. Collectively, our ambition exceeded our discipline, and the entire economy careened downward as a consequence.>

In his newest title, How the Mighty Fall, Jim Collins peers into the causes underlying the decline of greatness. In light of our economic plight, one of Collins' observations loudly rings true. He identifies the "undisciplined pursuit of more" as a key stage in the breakdown of a once-mighty business or nation. In doing so, he makes three points worthy of a closer look.>

1) Fear Excessive Ambition More Than IdlenessIn examining the histories of companies that regressed from great to good, Collins expected complacency or loss of initiative to be a common denominator. Instead, research showed the reverse to be true. As opposed to laziness, "Overreaching much better explains how the once-invincible self-destruct.">

Collins points to Rubbermaid to illustrate. In the mid-'90s Rubbermaid committed itself to introducing a new product every day of the year. Although the company won acclaim for innovation, it abandoned cost discipline along the way. In its efforts to develop thousands of new products, Rubbermaid lost its grip on core competencies and eventually sunk into bankruptcy.>

2) Do Not Confuse Growth with ExcellenceCollins recounts Merck's decline as a cautionary tale of a company who floundered after pursuing a growth-above-all strategy. In 1995, Merck chose growth as its number one organizational objective. Chasing the holy grail of growth, Merck bet heavily on the success of prescription drug, Vioxx at the turn of the century. Bent on expansion, Merck neglected to investigate troubling data on the cardiovascular risks associated with Vioxx. As time went on, concerns about Vioxx became undeniable. Merck did voluntarily pull Vioxx off the shelves, but not before the company had taken a massive PR hit and had suffered a $15 billion drop in market value.>

As Collins observes,>

"The greatest leaders do seek growth - growth in performance, growth in distinctive impact, growth in creativity, growth in people - but they do not succumb to growth that undermines long-term value. And they certainly do not confuse growth with excellence. Big does not equal great, and great does not equal big." >

3) You Grow Only as Fast as You Can Attract the Right PeopleMore often than not, the attempt of a business to grow its operations becomes its undoing. In the words of David Packard, "More companies die of indigestion than of starvation." Why? Most companies don't bring in the right personnel to handle an uptick in business, and they go under as a result. Growth must be staffed with the talent.>

Drawing inspiration from HP's co-founder, Collins and his team coined Packard's Law: "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." Internally motivated, self-disciplined people are the foundation for growth. Without them, new business ventures collapse. >

SummaryIn another groundbreaking leadership text, How the Mighty Fall, Jim Collins has hit upon a root cause of organizational / societal decline: The Undisciplined Pursuit of More. To maintain a healthy sense of discipline, leaders ought to be wary of the hazards of excessive ambition. In a similar vein, leaders must put growth in perspective. Bigger isn't necessarily better. Finally, leaders would be wise to realize that growth has to be fueled by the right people. Otherwise, the expansionist urge will bleed an organization of its resources.>

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"This article is used by permission from Leadership Wired, GiANT Impact's premiere leadership newsletter, available for free subscription at www.giantimpact.com."

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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.