Why the Mighty Fall

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In his latest book How The Mighty Fall, Jim Collins describes the five stages through which a proud and thriving company passes on its way to becoming a basket case:
- hubris born of success
- undisciplined pursuit of more
- denial of risk and peril
- grasping for salvation
- capitulation to irrelevance or death

Toyota's president Akio Toyoda, who took over in June 2009, believes his company, world's largest carmaker since it surpassed GM in June 2008, is in the fourth stage. He surprised business journalists and his own company by making this announcement at a press conference in October 2009.

Collins elaborates that companies in the fourth stage 'react frantically to their plight in the belief that salvation lies in revolutionary change usually hastening their demise'. Such companies 'need calmness, focus, and deliberate action'.

Mr Akio Toyoda is the grandson of the founder of Toyota. His approach is not visionary. It is simple, incremental and requires painstaking attention to what the customers want. That, experts believe, is its virtue.

Comments

Parth Ghosh said…
Somewhere, it was mentioend that recession of yesteryear was result of quick panicky created by media- thanks to electronic and net media. In those rush hours, many companies responded the crisis by firing employee, cutting down expansion projects and even necessary expenditures and created a whole world of chaos. Just see, after a space of one year, two big bull China and India are back on track of progress. Not less the USA, where NBC basketball players are earning 100 million $ per year.

So bottom line is that today's financial experts and analysst have not wisdom more that we like general folk. It si their clout, word power, prior exposure to international arena and above all our less enthusiasism to express opinion on any burning topic that these so called fortune teller and assessment agents are running the show.

Mr Toyota is generour enough to classify themselves in any category, but mind that when they can occupy slot no-1 in recession period, it implies that company is in very good state.
December 30, 2009 at 10:35 AM
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