Management books are a tricky genre.
All too often they are either glib and clich?-ridden works that provide quick fixes for executives and their companies or dry numbers-filled tomes that are a pain to wade through.
If only someone could write a book that is the result of rigorous scholarship yet presents the findings in an engaging and accessible manner.
In How the Mighty Fall: And Why Some Companies Never Give In, Jim Collins has done just that.
Through case studies developed from rigorous number crunching, Collins shows how companies at the top of their fields can fall into irrelevance or oblivion.
The essence of his argument is that once successful companies that failed generally shared the following traits: Hubris born of success, undisciplined pursuit of more, denial of risk and peril, grasping for salvation, and capitulation to irrelevance or death.
Collins, a consultant and author of the best-selling book Good to Great, argued that most companies die not because they are too complacent but because they made many preventable mistakes while trying to innovate. Also, he is skeptical of leaders' ability to perform miracles.
"The best leaders we've studied had a peculiar genius for seeing themselves as not all that important, recognizing the need to build an executive team and to craft a culture based on core values that do not depend upon a single heroic leader," he writes. "While no leader can single-handedly build an enduring great company, the wrong leader vested with power can almost single-handedly bring a company down."
He contrasts the effective and low-key approach of Louis Gerstner when he became CEO of IBM that helped turn the fabled company around with the high-profile cult of personality style of Carly Fiorina when she took over Hewlett-Packard, which ultimately failed and caused her to be fired.
Collins didn't include any credit unions in his book, but he discusses the problems of two giants in the financial services sector: Bank of America and Fannie Mae.
Bank of America started as a local financial institution that helped rebuild San Francisco after the 1906 earthquake and grew into the world's largest bank. However, the company lost its way and a new CEO tried to reverse course by bringing in consultants to change the culture, buying discount broker Charles Schwab and making the largest interstate banking acquisition in history up to that time. These efforts failed and the company hemorrhaged millions of dollars. The company was eventually bought by NationsBank, which kept the BofA name, but most of the leaders were from NationsBank and the headquarters moved to Charlotte, N.C.
"Clearly, the solution to decline lies not in the simple bromide 'change or die'; Bank of America changed a lot and nearly killed itself in the process."
Mortgage buyer Fannie Mae responded to increased pressures from Wall Street by employing questionable accounting practices that not only led it to pay millions of dollars in civil penalties but also caused it to lose ground to other companies. Collins noted that the firm also entered the subprime market and wound up buying mortgages it might previously have avoided. The firm's problems caused the government to place it-and fellow mortgage giant Freddie Mac-into conservatorship.
Collins attributed part of Fannie Mae's problems to "hubris that can arise in conjunction with missionary zeal." The company said many of its decisions were necessary to help it further its goal of helping more Americans become homeowners.
Credit unions, which have long maintained that they are for "the little guy," would do well to learn from Fannie Mae's failures.
Collins' book would have been even better if he had included interviews with leaders rather than just analyzed data.
Despite that shortcoming, How the Mighty Fall is worth reading for anyone wanting to keep his or her organization strong and avoid the pitfalls that have sunk former industry leaders.