Good to Great to Gone

ONE of the keys to being an inspirational management speaker is not to dwell too long on the negative. No wonder Jim Collins is almost apologetic in his new book on corporate failure, “How the Mighty Fall”. As he writes, “When I sent a first draft of this piece to critical readers, many commented that they found our turn to the dark side grim, even a bit depressing.” Happily, he reaches an upbeat, empowering conclusion: “Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.” He expands on this theme by quoting Winston Churchill’s injunction to “Never give in, never give in, never, never, never, never…”

The risk for a management guru with a sunny outlook is that writing books praising companies creates hostages to fortune. One well-known title, “In Search of Excellence”, left its authors wiping egg from their faces when many of the firms they profiled quickly proved to be anything but excellent. Even worse was Gary Hamel’s celebration of Enron, “Leading the Revolution”, which was still arriving in bookstores when the energy-trading company blew up in 2002.

So Mr Collins has wisely grasped this nettle before any of his critics could sting him with it. As he readily admits, several of the firms praised in his bestsellers, “Built to Last” and “Good to Great”, have since fallen from grace. These include Circuit City, a now-bankrupt electronics retailer, and Fannie Mae, a giant mortgage lender that was taken over by the American government last September to stop it going bust and taking the global financial system with it. Oops.

In his new book Mr Collins examines 11 of the 60 “great companies” studied in his two earlier books that have since deteriorated to “mediocrity or worse”. Mr Collins says that when he charted the factors that led these firms to greatness, he had never claimed that they were certain to remain great. …