Thursday, February 14, 2013

How the Mighty Fall

This is a business book that attempts to unify the behavior of a disparate businesses into a few "rules". The fall of a big business from greatness usually takes place as they go through these steps. The phases include Hubris, Undisciplined Growth, Denial of Risk, Grasping and Capitulation. The book uses anecdotes to describe various companies that have following into the trap.

I was intrigued by the stories of Ames Department Stores and Adressograph. These were a couple companies that I had never heard of before, but that once had dominant positions in their market. Competitors (Walmart and Pitney Bowes) are still thriving in the same markets, yet these earlier goliaths failed.

One of the key points the author had was that great companies often fail by overreaching. The companies introduce too many new products, strive for too much growth, all while their core market drifts away.

Some companies have drifted down the steps to extinction, only to revive themselves. Often it is a more humble leader rather than a superstar (IBM vs. HP) that helps them make it.

The conclusions seem to work out well with the sample size mentioned, but would they apply generally?

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