The Five Stages of Decline

You might feel like Superman, but kryptonite is real.

Success goes sideways when leaders feel invincible.

5 companies that were great once:

  1. Borders
  2. Sears & Roebuck
  3. Blockbuster (Blockbuster has 1 store in Bend, Oregon. That’s a decline from 9,000.)
  4. ToysRus
  5. Howard Johnson’s Restaurants (From 1000 locations to none.)

Twentieth century car brands that declined and died:

  1. AMC
  2. Mercury
  3. Oldsmobile
  4. Plymouth
  5. Pontiac (No more GTOs!!)
  6. Saturn
  7. Hummer (Discontinued in 2011 – resurrected in 2021)

Business that trends up always trends down.

Complacent koala bear.

Those who have answers don't seek answers.

5 stages of decline:

The decline of great companies often occurs in five stages. Jim Collins

#1. Hubris born of success.

Hubris is taking credit for success that has more to do with good fortune than skill.

Those who ‘have’ answers don’t seek answers.

#2. Undisciplined pursuit of more.

Fast growth often results in mediocrity. High standards are easy to maintain when growth is manageable. But when growth is an untamed mustang, you lose sight of small compromises.

Excellence requires more diligence after success.

#3. Denial of risk and peril.

During stage 3, “… leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data.” Jim Collins.

Denial uses success to diminish threat and belittle alternatives.

#4. Grasping for salvation.

When the inevitable decline comes, and lean years ALWAYS come, you choose between quick fixes or returning to the core beliefs and practices that made you great to begin with.

Grasping for salvation often expresses itself by seeking charismatic leaders to save the day.

#5. Capitulation to irrelevance or death.

“In Stage 5, accumulated setbacks and expensive false starts erode financial strength and individual spirit to such an extent that leaders abandon all hope of building a great future.” (How the Mighty Fall)

What causes good leaders and great organizations to become mediocre?

How might leaders anticipate future decline without losing momentum today?

Note: The five stages of decline are listed in, How the Mighty Fall, by Jim Collins.