How The Mighty Fall

This week I was going to start a series teaching how to get big clients for your business. But in light of yesterday’s news, I’m putting off the start of that series until next week…

If you follow me on Facebook or Twitter, then you heard the news: GKIC, a company I’ve represented for the past four-and-a-half years as one of their “Certified Independent Business Advisors,” made a long overdue move and ousted their CEO to try to save the business from complete ruin.

I certainly wasn’t the only one who knew that this change had to be made. Plenty of people much smarter than me voiced their concerns in private. But I was certainly the most openly outspoken about it.

Many people expressed their concern to me for being so vocal about my criticism of the company’s recent actions. One key GKIC associate wrote to me:

“HEADS UP -Be careful what you post when…that person has deep pockets and access to lawyers. My advice, the only thing you are going to get from this post is pure heartache, wasted time and legal bills.”

I thanked that well-meaning friend for the advice. But I replied just as I told this ex-CEO herself during our final conversation a few weeks ago: I’m a “No B.S.” guy, and I feel very strongly about my responsibility to my fellow entrepreneurs to not hide from or candy-coat the truth.

I’m proud of the fact that my mother raised me to speak up and take a stand against injustice – even if it means putting myself squarely in the line of fire. I’m a firm believer in the famous quote by Edmund Burke:

“All that is necessary for the triumph of evil is that good men do nothing.”

Someone very close to the top of GKIC told me that this ex-CEO declared me to be her #1 enemy, because I was “the only person who would stand up to her and tell it like it is.”

Another key insider told me yesterday that “everyone is happy there” thanks to the removal of the CEO, and that “YOU are now their hero!!!”

That’s great. But the real winners here are the small business owners, entrepreneurs and sales professionals around the world who now once again may have the opportunity to be helped by GKIC… IF the company takes some more of the right steps to get back to operating based on the core values that made it a great company in the first place.

And to be clear: This ex-CEO waged multiple personal attacks against me and my business for the past six months or so, but my criticisms were never anything personal against her. She’s been successful in business before, and she may be successful someday again. But she was definitely not a good fit for GKIC, in my opinion.

I refused to compromise my integrity by promoting GKIC while under her command. And I sincerely hope the company can recover and get back on the right track before it’s too late, so I can wholeheartedly promote them again.

We’ll see if that happens…

Meanwhile, there’s a big lesson in this for all business owners. As Jim Collins wrote in his 2009 best-seller, “How The Mighty Fall”:

“Anyone can fall, and most eventually do. But decline, it turns out, is largely self-inflicted.”

I’ve seen Jim Collins speak in person on four separate occasions. He is amazingly passionate and dedicated to the study of business success and failure.

I happen to be a first-hand expert in how to destroy a successful business, having done it more than once myself. The most spectacular example was the first business I built from scratch to a multi-million dollar success nearly 30 years ago.

I learned a lot from my own personal experiences. And I’ve made a career of spotting the danger signs of impending business failures. I’ve helped dozens of small business owners and entrepreneurs (the ones who heeded my warnings, of course) to right their sinking ships before it was too late.

That’s why I instantly recognized the genius of Jim Collins’ book, where he outlined what he calls “The Five Stages Of Decline.”

With the first two stages, Collins explains some of the causes of corporate failure. The final three stages address dysfunctional management’s response to the problems:

STAGE 1: HUBRIS BORN OF SUCCESS

This stage begins when people become arrogant and feel entitled to success, but they lose sight of what actually created their success in the first place. Collins warns that decline is just around the corner when people feel entitled to success but fail to understand why they do specific things that made them successful.

STAGE 2: UNDISCIPLINED PURSUIT OF MORE

Companies in Stage 2 stray from the discipline and creativity that led them to greatness in the first place. When a company no longer fills its key seats with the right people, it has set itself up for a fall.

A big red flag is a group of leaders who use the organization primarily as a vehicle to increase their own personal success – more wealth, more fame, more power – at the expense of the company’s long-term success. A major sin, Collins writes, is “to compromise your values or lose sight of your core purpose in pursuit of growth and expansion.”

STAGE 3: DENIAL OF RISK AND PERIL

As companies move into Stage 3, internal warning signs begin to mount. But in this stage, leaders make excuses for negative data, exaggerate positive data, and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks instead of accepting responsibility. Collins cites a concept put forth by Bill Gore, founder of W.L. Gore & Associates, called the “waterline” principle:

“If you blow a hole above the waterline (where a ship won’t take on water and possibly sink), you can patch the hole, learn from the experience, and sail on. But if you blow a hole below the waterline, you can find yourself facing gushers of water pouring in, pulling you toward the ocean floor.” (Note: Gore said nothing about trying to blame “loose lips.”)

STAGE 4: GRASPING FOR SALVATION

Here, the company is in sharp decline visible to all. But as I pointed out above, most people won’t openly state their concerns on the record. At this stage, “the critical question is: How does leadership respond?”

Collins warns that those who grasp for a quick fix have fallen into Stage 4, and “by grasping about in fearful, frantic reaction, late Stage 4 companies accelerate their own demise.”

STAGE 5: CAPITULATION TO IRRELEVANCE OR DEATH

In this final stage, financial strength and individual spirit are dimmed to such an extent that leaders abandon all hope of building a great future.

Here Collins explains: “In some cases the company’s leader just sells out; in other cases the institution atrophies into utter insignificance; and in the most extreme cases the enterprise simply dies outright.”

It’s possible for companies in Stage 5 to recover. But it’s a monumental challenge.

Collins concludes:

“The signature of the truly great vs. the merely successful is not the absence of difficulty. It’s the ability to come back from setbacks, even cataclysmic catastrophes, stronger than before. Great nations can decline and recover. Great companies can fall and recover. Great social institutions can fall and recover. And great individuals can fall and recover. As long as you never get entirely knocked out of the game, there remains hope.”

It is my sincere hope that GKIC continues to make the bold moves necessary to right their ship before it’s too late.

And no matter what the state of your particular business, I hope you learn from this example and take the right steps as well – whenever you spot the warning signs in your own business.

Start by asking yourself if you are in any of these 5 Stages of Decline. If so, get professional help and do something about it.

On a final note…

I’m a firm believer in Jim Collins’ words of hope and advice to all business owners:

“Never give up on the principles that define your culture. Be willing to embrace loss, to endure pain, to temporarily lose freedoms, but never give up faith in your ability to prevail. Be willing to form alliances with former adversaries, to accept necessary compromise, but never – ever – give up on your core values.”

If you want help getting unstuck, turning around a troubled business or building a successful one from the start, take advantage of my SSSMarketingUniversity.com FREE test drive and gain access to an amazing wealth of resources, tools and coaching.