Though every company is vulnerable to decline, successful organizations often fall in predictable stages. Arrogance from achievement can breed complacency. Growth without discipline leads to mediocrity. Denying risks and putting positive spin on data amplifies peril. Attempts to grasp salvation through quick fixes rarely succeed; returning to core values is key. Finally, accumulated setbacks erode spirit until leaders abandon hope of a great future. However, by recognizing subtle clues and applying the brakes early, companies can reverse course and avoid self-inflicted decline1. As Jim Collins wrote, "Whether you prevail or fail depends more on what you do to yourself than on what the world does to you."
When companies experience rapid growth, they can easily become arrogant and lose touch with their customers. Leaders may start to believe their own hype, forgetting the factors that contributed to their success, including the role luck played. This hubris can lead to a predictable cycle where companies, once focused on a core product that met a fundamental need, begin to explore new areas, leaving space for competitors to hone in on that original need. Improving the core business is always a challenge, but often the best growth opportunities still lie within these core offerings. Jim Collins warns against neglecting your primary flywheel in pursuit of the next big thing. He advises that even if a core business is declining, it should not be allowed to drift; it should be exited purposefully or renewed with obsession. There's a natural tension between investing in past successes and preparing for the future. To manage this, leaders should regularly question whether their core business has eroded beyond revival or if environmental changes have fundamentally undermined their original success factors. As long as the answers are no, there should be a focus on improving existing products with creativity and vigor. To sustain success, a balance is needed between maintaining excellence in your field and seeking creative enhancements to your offerings. This balance prevents the problems caused by constant change without logic, as well as the risks of missing new markets by rigidly sticking to the past. Great leaders remain curious, constantly asking "why" and avoiding dogma in business practices to steer clear of hubris. Reflecting on potential indicators of hubris can be a useful exercise. Consider whether you view your success as solely deserved, believe your company will thrive no matter what, neglect the product that initially brought success, focus on the "whats" of success rather than the "whys," maintain a learning mindset, or discount the role of luck in your achievements. If you find yourself leaning towards these tendencies, it's a sign that hubris may be setting in. To counteract this, renew your focus on core offerings, revisit the foundations of your initial success, and reconnect with customer needs. Maintaining a learning orientation and an inquisitive nature, while avoiding dogma, will help sustain success over time.
book.moreChapters
