Business writer Jim Collins has written a new book about how good companies go bad. A primer:
Stage 1 is hubris born of success. The company’s people become arrogant, regarding success as virtually an entitlement.
Stage 2 is the undisciplined pursuit of more — more scale, more growth, more acclaim. Companies 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.
Stage 3 is denial of risk and peril. Leaders of the company discount negative data, amplify positive data and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks rather than accept responsibility.
Stage 4 is grasping for salvation. Common “saviors” include a charismatic visionary leader, a bold but untested strategy, a radical transformation, a “game changing” acquisition or any number of other silver-bullet solutions.
Stage 5 is capitulation to irrelevance or death. Accumulative setbacks and expensive false starts erode financial strength and individual spirits to such an extent that leaders abandon all hope of building a great future. In some cases their leaders just sell out. In other cases the institution atrophies to utter insignificance.
A friend writes, “Just replace ‘company’ with ‘country’ and see if this doesn’t fit the current state of affairs in D.C.”