Are You On The Verge of A Fall?

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Are You On The Verge of A Fall?

The Idea:  In 1930 the average S&P company lived for 90 years now it is only 17 years!  Success seems to come quicker and failure sneaks up even faster.  What’s really going on and how do we thrive in a hyper-competitive world?

A chief executive of one of America’s most successful companies asked Jim Collins, critically-acclaimed business thinker: How do I avoid falling, even when I am the best at what I do?  And how would I know I’m falling, if I were?

History shows that the proverbial Goliath is always at risk of failing, but Collins tells us one simple fact about when most failing starts to unfold:

“When the rhetoric of success replaces penetrating understanding and insight, decline will very likely follow.”

We become over confident, and think of our success as virtually an entitlement, and we lose track of the drivers that created success in the first place.  In some ways, Collins is saying that the best way to ensure success is to never believe you’ve found the recipe to it.

We end up neglecting the little things that make a difference and decline follows. Or organizations become undisciplined  in their pursuit of more, and stray from real innovation that essentially made them great in the first place.

This reminded me of a story I once heard by Peter Lynch, Magellan fund manager.  He said that he could predict the state of the market by listening to people talk at a cocktail party.

While the market is recovering from a downturn, he says, people don’t talk about stocks with him. But as soon as the market is noticeably improving, Lynch’s popularity rises exceptionally. “Even the dentist is asking me what stocks he should buy,” he recounts.

Before long, he says, people talk to him to tell him what stocks he should buy. Lynch says that when this happens, “it’s a sure sign that the market has reached a top and is due for a tumble.”

Both Collins and Lynch know one thing to be true: success is fragile and it requires constantly checking one’s true abilities.  When these things aren’t present, decline may be close behind.

 

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