How The Mighty Fall by Jim Collins - Book Report/Review Example

How The Mighty Fall by Jim CollinsSummary The book titled “How The Mighty Fall” was authored by Jim Collins and this book was compiled with the purpose of informing why companies that experience ample amount of success end up failing (Collins, 2009). While compiling this book, the author researched the decline of several companies and identified five stages that all huge and successful organizations experienced before completely running out of business. The author states that all the companies that were once very huge and successful ended up failing because they all experienced that these companies became proud of themselves and instead of focusing on elements that lead to their success, they start exploring new arenas.

The author has named this state experienced by a company as “Hubris Born of Success” and states that this is the stage 1 of failure (Collins, 2009). The second stage identified by the author is “Undisciplined Pursuit of More” and the author states that companies tend to lose their focus on their main products when they seek new opportunities that seem to be more profitable (Collins, 2009). For this stage, the author uses the example of Rubbermaid that was innovating and exploring new products on daily basis and ended up failing.

The author states that the third stage of failure is “Denial of Risk and Peril” and in this stage the company tends to look over or ignore information and signs regarding the initiation of their failure (Collins, 2009). In this stage companies tend to hold the external factors responsible for the signs and believe that positive turnaround is right around the corner due to the expectation of external environment changing positively. The fourth stage is “Grasping for Salvation” and in this stage companies realize that they are in trouble up to their necks and they try to make changes by looking for a CEO who can make immediate changes and they believe that the CEO will be the game changer (Collins, 2009).

The last stage identified by the author is “Capitulation to Irrelevance or Death” and the author states that companies rarely experience this stage as before reaching this stage they tend to either change their strategies or they end up closing down the company and companies even opt to sell themselves to other companies (Collins, 2009).Application The book provides ample amount of insight regarding number of reasons businesses fail and there are lessons provided by the book that can be used in different departments of the organizations to avoid failure.

For example: businesses might enter stage 1 either because they may feel that their current employees are not important or the marketers may shift their focus from promoting a key product that already exist to promoting a product that is favorably new and has some potential to benefit the organization. Due to this the business may enter stage two as their current employees may leave or the sales of their current products may decline and the company may enter stage three as it may old external factors responsible such as better benefits offered to employees by other companies or changes in preferences for a product.

The companies need to realize that old is gold and they need to keep milking old in order to benefit more and apply those benefits to new options.ReferencesCollins, J. C. (2009). How the mighty fall: and why some companies never give in. London: Random House Business.