Wednesday, June 17, 2009

How the Mighty Fall

Wow, I haven't blogged in a while. A little while ago, I went to Europe for a week to see my parents and friends. Since then, I've been busy working on a new version of reMail, which has been consuming most of my time.

On the way back, I ran out of reading material for the flight. At Amsterdam Schipol airport, I bought How the Mighty Fall, Jim Collins' new book, at an unprecedented level of markup, even for an airport bookstore. But it was worth it.

Unlike Collins' previous books, this isn't about how to build a great company or turn a good one into a great one. It's about how great companies die, and how some of them almost die, and then recover.

For me, the main takeaway was this: Usually, when great companies start struggling, they don't die because they ignore their problems, or stop innovating. Instead, what happens is often they see that their current model isn't working, and then try to branch out into various, disconnected directions in an uncoordinated fashion.

A great example from the book is Rubbermaid, which in the 1990's was churning out one new product a day. Another common example of grasping for salvation seems to be bringing on a new, charismatic CEO or a game-changing acquisition.

Contrast this with Louis Gerstner's approach to turn around IBM. He didn't make big flashy moves in his first 100 days in office. Instead, he talked to customers and employees, came up with a single plan to turn IBM into a services company, and executed against that plan in a focused and disciplined manner, making IBM great again.

This is one common theme that runs through Collison's books: Avoid the flashy, the bold, the excessive. Be clear about the company's core values. Build your business through disciplined thought, disciplined action, and one small step at a time.

Update: Here's a great contrary opinion on this book.

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