BusinessWeek Logo
Book Excerpt May 14, 2009, 5:00PM EST

How the Mighty Fall: A Primer on the Warning Signs

(page 5 of 5)

For 2000 and 2001, Xerox posted a total of nearly $367 million in losses. By 2006, Xerox posted profits in excess of $1 billion and sported a much stronger balance sheet. And in 2008, Chief Executive magazine selected Mulcahy as CEO of the Year. At the time of this writing in 2008, Xerox's transition has been going strong for seven years—no guarantee, of course, that it will continue to climb, but an impressive recovery from the early 2000s.

Xerox. HP. Nucor. IBM. Merck. Texas Instruments (TXN). Pitney Bowes (PBI). Nordstrom (JWN). Disney (DIS). Boeing (BA). What do these companies have in common? Each took at least one tremendous fall at some point in its history and recovered. Sometimes the tumble came early, when they were small and vulnerable, and sometimes the tumble came when they were large, established enterprises. But in every case, leaders emerged who broke the trajectory of decline and simply refused to give up on the idea of not only survival but ultimate triumph, despite the most extreme odds.

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.

We all need beacons of light as we struggle with the inevitable setbacks of life and work. For me, that light has often come from studying Winston Churchill. In the early 1930s, Churchill's career had descended into what biographer Virginia Cowles called "a quagmire from which there seemed to be no rescue."

At the end of Volume I of his series, The Last Lion, William Manchester captures Churchill's position in 1932. Lady Astor visited with Joseph Stalin, who quizzed her on the political landscape in Britain. Astor prattled on about the powerful, the up-and-coming, naming Neville Chamberlain as the star.

"What about Churchill?" asked Stalin.

"Churchill?" Astor's eyes widened. Then with a disdainful wrinkle of her nose, "Oh, he's finished."

Not only would Churchill redeem himself by giving voice to Britain's resolve to stand against the Axis powers during World War II, he also went on to win the Nobel Prize in Literature, return again as Prime Minister at age 77, be knighted by the Queen, and sear into the Cold War lexicon the term "Iron Curtain" in his prescient warning about Soviet aggression. Churchill's simple mantra: Never give in—never, never, never, never.

Never give in. Be willing to kill failed business ideas, even to shutter big operations you've been in for a long time, but never give up on the idea of building a great company. Be willing to evolve into an entirely different portfolio of activities, even to the point of zero overlap with what you do today, but 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.

The path out of darkness begins with those exasperatingly persistent individuals who are constitutionally incapable of capitulation. It's one thing to suffer a staggering defeat—as will likely happen to every enduring business and social enterprise at some point in its history—and entirely another to give up on the values and aspirations that make the protracted struggle worthwhile. Failure is not so much a physical state as a state of mind; success is falling down—and getting up one more time—without end.

From the book, How the Mighty Fall and Why Some Companies Never Give In By Jim Collins, © 2009 By Jim Collins

Return to the Jim Collins Table of Contents

Reader Discussion

 

BW Mall - Sponsored Links