CONGO

CONGO

COLTAN

Consumers are ultimately funding this bloody conflict through the purchase of small

electronics such as mobile phones and playstations.

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COST

The mining of Coltan is thought to have claimed upwards of 5 million lives.

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HOW THE MIGHTY FALL:

AND WHY SOME COMPANIES NEVER GIVE IN

Jim Collins (2009)

HarperCollins

THE DANGER OF DEMOTIVATING

Jim Collins reflects on findings from

How the Mighty Fall:

The Danger of Demotivating

YouTube

HOW THE MIGHTY FALLJIM COLLINS (2009) HARPERCOLLINS

FIVE STAGES OF DECLINE

Stage 1: Hubris Born of Success

Stage 2: Undisciplined Pursuit of More

Stage 3: Denial of Risk and Peril

Stage 4: Grasping for Salvation

Stage 5: Capitulating to Irrelevance or

Death

MARKERS FOR STAGE ONEHUBRIS BORN OF SUCCESS

Success Entitlement, Arrogance

Neglect of a Primary Flywheel

“What” replaces “Why”

Decline in learning orientation

Personal interests placed above

organizational interests

MARKERS FOR STAGE TWOUNDISCIPLINED PURSUIT OF MORE

Unsustainable quest for growth,

confusing big with great

Undisciplined discontinuous leaps

Declining proportion of right people in

key seats

Easy cash erodes cost discipline

Problematic succession of power

MARKERS FOR STAGE THREEDENIAL OF RISK AND PERIL

Amplifying the positive, discount the

negative

Big bets and bold goals without empirical

validation

Incurring huge downside risk based on

ambiguous data

Erosion of healthy team dynamics

Externalizing Blame

Obsessive reorganizations

MARKERS FOR STAGE FOURGRASPING FOR SALVATION

A series of silver bullets

Grasping for leader-as-savior

Panic and haste

Radical change and “revolution” with fanfare

Hype precedes results

Initial upswing followed by disappointments

Confusion and cynicism

Chronic restructuring and erosion of financial strength

MARKERS FOR STAGE FIVECAPITULATING TO IRRELEVANCE OR DEATH

Capitulation to irrelevance or death

CIRCUIT CITY SIX

SIX FATAL MISTAKES OF A ONCE

“GOOD TO GREAT” COMPANY

Don Eames

President & CEO of

Eames Management Group

Former Senior Vice President of Best Buy

THE WORLD ASKS THE QUESTION

How could this happen?

Jim Collins wrote: “Circuit City became to the consumer electronics retailing what McDonald’s became to the restaurants–not the most exquisite experience, but an enormously consistent one.” In the early 1980’s the company had built a culture of discipline that produced superior execution of the “4-S” model (service, selection, savings, satisfaction). “It was because of this consistency that Circuit City took off in the early 1980’s and beat the general stock market by more than 18 times during the next 15 years.”

GENERAL PROBLEMS

External threats:

weakening consumer demand,

growing unemployment,

tight credit and

collapsing housing markets.

Internally threats

several years of declining sales,

a weak balance sheet,

skeptical vendors worried about getting paid

increasing competition from low service/no service retailers.

SIX FATAL MISTAKES

“Aside from these current realities, in my

opinion, Circuit City made six fatal mistakes

which resulted in one of the most significant

business failures in retail history. These

mistakes undermined their own progress and

ultimately killed them.”

1. ARROGANCEHOW IT ALL STARTED

HAVE EDGE, NOT ARROGANCE

Humility is always better than arrogance

Never be satisfied, always keep moving the

ball

Stay ahead of the competition –never give up

ground

2. REAL ESTATEPRIORITIZING “B” SITE LOCATIONS IS NEVER A GOOD STRATEGY

BE STRATEGIC

Always go for “A” locations as long as NPV is

positive and IRR is within your acceptable

range

Be faster than your competition

Hire the best real estate experts in the

industry

3. HOME APPLIANCESFROM WHITE GOODS TO RED INK

THINK BIG

Always test your assumptions before you act,

look for unintended consequences

Many financial decisions have another side

to them which may often hurt other aspects

of the company’s business

Focusing on short term can lead to trouble –

think long term

4. COMMISSION MODELLISTEN TO YOUR CUSTOMERS, THEY DON’T LIKE THIS EXPERIENCE

CHANGE MANAGEMENT

When changing strategies, understand the

impact on your business, customers and

employees and manage the risk accordingly

In order to make a successful change in your

operating model, ensure organizational

alignment (process, structure, systems,

compensation, training, culture, etc)

5. FIREDOG“BETTER LATE THAN NEVER” DOESN’T ALWAYS WORK

STAY TUNED

Be the leader

If you are not the leader, at least be a fast

follower

Invest in profit opportunities

Listen to your customers, know what they

want

6. TALENTYOUR BEST EMPLOYEES ARE YOUR GREATEST ASSET. KEEP THEM

ANY ORGANIZATION IS ALL ABOUT PEOPLE

Make retention of your best people one of the top priorities

Create a great culture inside your organization where your employees would love to belong

Invest in training. Untrained or under-trained employees are usually dissatisfied with their jobs which negatively affects themselves , other employees and customers