Hubris Born Of Success — Ways Your Company Can Fall

As the author of ‘Good to Great’ , ‘How the mighty fall and why some companies never give in’, ‘Built to last’ and many other best-sellers, Jim Collins is an American researcher, author, speaker and a consultant focused on the subject of business management and company sustainability and growth Jim Collins is an American researcher, author, speaker and a consultant focused on the subject of business management and company sustainability and growth serves as a teacher to leaders throughout the corporate and social sectors.

Whether you prevail or fail, endure or die, depends more on what you do yourself then what is the worlds to you - Jim Collins

I see this book as a guide to how the great companies fall to bankruptcy and also a caution to how not to run a company. Jim through his extensive research on many successful failures in the business world has come up with a close to precise framework through which the businesses flow their way to bankruptcy.

The framework consists of 5 stages of decline.

Stage 1 : Hubris born of success

Stage2 : Undisciplined pursuit for more

Stage 3: Denial of risk and peril

Stage 4 : Grasping for salvation

Stage 5 : Capitulation to irrelevance or death

This frame work can give us an view and perspective of how not to run and structure our own organizations to sustain the height.

HUBRIS BORN OF SUCCESS

The first stage every organization steps into in the path of death is hubris .

Motorola one of the history’s great organizations. When the Jerry Porras and Jim interviewed 165 CEOs in 1989 Almost everyone chose Motorola as the most visionary organization and the company was included in ‘Built To Last’ by Jim Collins.

Motorola was also known for its Six Sigma Quality, adherence to core values, willingness to experiment and mechanism of self improvement.

In the 1990s Motorola had increased its revenue from nearly $ 5 billion to $26 billion in an decade. This gigantic increase in revenue changed the culture of Motorola from humility to arrogance. In 1995 Motorola had already come up with world’s smallest phone — StarTAC — which used analog technology when the world started to demand digital. Due to hubris born of their previous success they ignored this. When an journalist from Business week interviewed an Motorola executive, he replied “ 43 million analog customers can’t be wrong”. They tried a strong arm carrier company Bell Atlantic. And the conditions were laid to buy the StarTac.

Conditions laid by Motorola :

1. 75 percent of all your phones must be Motorola.
2. You must promote our phones with stand — alone display

Motorola’s arrogant and “you must” attitude opened way to new competitors. Due to which Motorola’s market share being 50 %, diminished to 17 % in 1999. Motorola’s failure began in stage 1 — HUBRIS BORN OF SUCCESS.

THE PROBLEM

Hubris means excessive belief on ones ability to attain success which in-turn leads to demise.

Organizations which gain momentum and see various gigantic leaps of success become arrogant and discount the role of luck in their success.

This leads them to take a number of actions and risks overestimating their ability to achieve it.

Some of the actions that portray that companies have entered the first stage are:

• Success, entitlement, arrogance : Success is viewed as deserved. People start to believe that success will continue no matter what the organization decides to do or not to do.’
• Neglect a primary business : Distracted by other opportunities that come by , the leaders neglect to look after the primary business, and focus on the new opportunity only to come back and see the primary business weak and fragile.
• They forget ‘Why’ : Over the course after attaining success the leaders forget ‘Why’ they started in the first place, which made them successful and focus on what they do. Eg : Focus shifts from — “ We’re successful because we understand why we do these specific things and under what conditions they would no longer work “ — to — “We’re successful because we do these specific things”
• Decline in learning — Since leaders think success as deserved no matter what they stop learning.
• Discounting the role of luck