Page 105 - (DK) The Business Book

LIGHTING THE FIRE 103

US homeowners were prey to
companies such as Lehman, which made
big profits in mortgage-backed securities
in the 2000s. Lehman’s managers ignored
warnings of unrepayable mortgages.

other brands. The once-mighty
company has finally fallen. A
management buy out, merger, or
takeover may save the business
and protect some jobs, but the
company is unlikely to ever
recapture its former glory. Most,
having slipped this far, survive (if
they survive at all) as niche brands
trading on past history.
Return to glory
Decline is, of course, not inevitable
for all successful companies. Those
that reach the later stages of Group. By 1997, Apple was months simplified product line, sold through
corporate decline do so because from bankruptcy, as the business a limited number of outlets. He
managers failed to heed the early continued to spiral out of control. stabilized Apple and allowed a
warning signs of change or were A new board assembled and called return to its core values—a focus
irrationally sure of their ability to for the return of one of the on innovation and quality—that
“beat the odds.” However, it is cofounders—Steve Jobs—as CEO. later brought iconic products such
possible to reach stage 4 and Many expected him to respond as the iMac, iPod, iPhone, and iPad.
recover. According to Collins, with a slew of new products, but
this involves taking a calm, clear- he did the opposite. He shrank the The pursuit of less
headed approach and reaching not company to a size that reflected Hubris is not the single cause of
for savior strategies, but for the its niche position, and cut back the business failure. Even the most
basic core values and disciplines desktop computer models from skilled management may fail when
that made the organization great 15 to one. He ended production of faced with turbulent markets, the
in the first place. printers, cut software development, collapse of a key supplier, or other
Steve Jobs did just that at and moved production abroad. He factors beyond their control (the
Apple. In the late 1980s and early redesigned the company around a 2008 credit crunch, for example,
1990s, the company’s management was the final blow for an already
perceived Apple as vastly superior, struggling Woolworths). Hubris
ignored increasing competition may occasionally be a factor in
from PC manufacturers, and corporate decline, but failure may
expected customers to dismiss also result from poor business
quality and compatibility issues as Success comprises in practice or simply from bad luck.
“quirks.” After the 1995 release of itself the seeds of its However, if overconfidence
Microsoft’s Windows 95 operating own decline. leads to an “undisciplined pursuit
system, Apple fell into decline. Pierre de Coubertin of more,” the remedy seems to be
Sales, profits, and Apple’s image the disciplined pursuit of less—a
French educator (1863–1937)
tumbled. BusinessWeek called it return to a company’s strategic
“the fall of an American icon.” The roots. Ego, though, is a powerful
CEO, Gil Amelio, cut costs, thing, and humility is too rarely
reorganized the company, and the tool managers reach for when
added a new Internet Services fighting for survival. ■