Five steps to Death

by Didier Marlier on Saturday October 1st, 2011

I am profoundly grateful to those wonderful people who manage to summarize otherwise long and repetitive business books, in an article of 4 to 6 pages. A great company for this is obviously “Executive Book Summaries” (and now you know how consultants appear to find the time to read so many books…) Recently, I received from our partner Ben Clayton-Jolly an article reporting an interview of Jim Collins by two Egon Zehnder partners which attempts to save you the time of reading another long book.

I am “healthily suspicious” of the depth and quality of the “researches” claimed by management gurus, since the “In search of excellence” disaster (five years after the book’s publication only a quarter of the organizations trumpeted to be excellent still deserved that title). It is therefore less the “research” undertaken by Collin and his associates than the common sense of his findings that I found worthy sharing with you, in less than 6 pages.

Collins’ latest opus focuses on the drift, the “boiled frog syndrome” to use Peter Senge’s expression, which is affecting companies on their way to irrelevance. For him, there are five stages of decline:

  • Hubris born of success: I will never forget the incapacity of the French coaching team to understand and analyze the true reasons behind their triumph at the Football World Cup of 1998, prompting an easily predictable and shameful defeat in the following World Cup… I always will keep in minds the words of a fellow Villars resident, Craig Pollock, when he was at the summit of his glory, being the coach and manager of rookie Formula 1 World Champion, Jacques Villeneuve: “I carefully watch, recognize and respect all those faces I have been passing on the way to the top as they surely will be there when I’ll go down and I’ll need their help then”… Carmen Migueles and Marco Tulio Zanini are amongst the best in the world to help organizations understand what made then successful, beyond the obvious: As anthropologists they support companies in identifying their intangible assets (and liabilities).
  • Undisciplined pursuit of more: As one of our posts suggested: “Everybody wants to grow but aren’t we leading ourselves to exhaustion instead?” This stage is the world of “too much growth, giant acquisitions that don’t fit with what a company truly can be the best at”, says Collins who also quotes Packard Law: “No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth”.
  • Denial of risk and peril: This is what Nick van Heck and Paul Verdin call the Dream or Illusion box in their matrix. Quoting Collins here: “The company still looks fabulous, but there are warning signs. Little things start to come apart, often internal things that are not visible from the outside – like irritated customers who didn’t use to be irritated and changes in certain economic metrics, none of which of itself is catastrophic. But all the warning signs and the risks are there, and they are denied. Maybe the most important sign is the erosion of a healthy team dynamic. There is a marked decline in the quality and amount of dialogue and debate. Instead there is a shift toward either consensus or dictatorial management.” This is the boiled frog syndrome. Whistle blowers (externals like us or internal just alike) are not welcome!
  • Grasping for salvation: Now we are into Van Heck’s and Verdin’s “Hell” box… Quoting Collins again “It is the search for that game-saving acquisition; the single charismatic heroic leader; the dramatic new strategy; the bold new vision; the program; the cultural revolution. But the problem is, if these don’t take you back to the basic disciplines that made your enterprise great, they don’t work. Each of these actions may initially produce an upturn; a sense of hope. The enterprise may get some initial momentum out of it and that’s what makes it so dangerous: It doesn’t have any sustained momentum behind it, then bang! the downslide starts again. People try another silver bullet, then bang! down they go again.” This is what Nick and Paul call the “horizontal game, focusing on Value Capture and forgetting the Value Creation…
  • Capitulation to irrelevance or death: After playing for too long the “Horizontal game”, organizations are bloodless and helpless. All the courageous, sometimes heroic efforts people consented to seem to have brought only temporary relief but have, of course not solve the fundamental issue of the Relevance of the organization to its market. Irrelevant enterprises die, unfortunately…

The recommendations brought by Collins are about organizations going back to their deep rooted values, as he already stated in his famous book, “Built to last”, whilst staying on their toes and constantly challenging and re-inventing themselves.

Back from Buenos-Aires, Angoulemes (a lovely medieval city next to… Bordeaux) and Amsterdam this week. Have a great week all…

Didier

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4 Responses to “Five steps to Death”

  1. Caro Didier,
    Seus últimos posts ficam martelando insistentemente as mensagens que você me passou em nossa última conversa telefônica sobre Value Creation. Oxalá consigamos achar o caminho para traduzir a matriz do Nick em ação efetiva!
    Abraço,
    F. Ferraroli

    Reply
    • Obrigado Francisco,
      Tenho certeza que apesar da dureza, atravesar o deserto nos força a pensar de modo inovador… Sempre la para conversar. Um abraço

      Reply
  2. Dear Didier
    Thank you for all this recommandation, i will try to work on all the subjects deal in Angouleme with my purchasing team,but also for my MBA’s these
    best regards

    Nicolas

    Reply
    • Thank you Nicolas and all my wishes for your own journey!

      Reply

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